Economics of the Endangered Species Act

T he Endangered Species Act of 1973 addresses the market failure associated with the unpriced social benefits of such species. Robert Barnwell Roosevelt might have been envisioning such an act in his 1865 book Superior Fishing, where he wrote: ‘‘By these means can the seductive little beauties, whether of the feathered, furred, or scaly tribe . . . be preserved through endless time in undiminished abundance, furnishing the incentive that leads us away from our dull books or wearying cares, the crowded streets, the congregations of eager men, the trials and excitement of business, . . . strengthening our nerves, renewing our hold of life, and elevating our moral nature.’’ The Endangered Species Act is probably the most comprehensive of all our environmental laws. It is often portrayed as the exemplar of ‘‘prohibitive policy . . . one of the most extreme forms of government intervention’’ (Yaffee, 1982). As such, it is no wonder the Act has proven controversial. Although the benefits of protecting endangered species accrue to the entire nation, a significant fraction of the costs imposed by the Act are borne by private landowners. About 90 percent of the nearly 1,100 species of plants and animals listed as endangered or threatened under the Act are found on private land. The combination of broad benefits and concentrated costs can fan political firestorms, and many landowners complain that the costs of complying with the Act are too high (GAO, 1995a). The pressure to answer the question of whether these costs exceed the social benefits has thrust economics into the heat of the debate over reauthorization of the Endangered Species Act.