People or Prairie Chickens: The Uncertain Search for Optimal Biodiversity

46 Pages Posted: 20 Mar 2000

Date Written: February 1999


A quarter of a century ago, Professor William Baxter published a widely read and influential book on the law and economics of pollution control entitled People or Penguins: The Case for Optimal Pollution. This paper pays tribute to Professor Baxter by using the logic of People or Penguins to examine current efforts to preserve biodiversity in the United States. The paper criticizes the failure of the Endangered Species Act to fully consider the costs of its regulatory mandates, but recognizes the complications of determining and balancing the benefits and costs of biodiversity preservation. The paper examines the Safe Minimum Standard Approach, urged by some economists as an alternative to traditional cost-benefit analysis in contexts such as species preservation, but ultimately rejects it as neither justifiable nor helpful. The paper suggests that domestic biodiversity policy should start by eliminating public subsidies that encourage the economically inefficient destruction of ecosystem components, by finding ways of commodifying ecosystem services, and by establishing a system of taxes and subsidies that send correct economic signals to property owners. Because many of these goals will be politically difficult to achieve at least in the short run, the "tailored commands" of the Endangered Species Act will continue to play an important role in protecting valuable species and ecosystems. But incorporation of rough cost-benefit considerations (taking account of uncertainties, irreversibilities, and intergenerational tradeoffs) into the Endangered Species Act would help the nation achieve a more optimal use of its scarce societal resources.

An earlier version of this article was announced as Stanford Law School, John M. Olin Program in Law and Economics Working Paper No. 173. The working paper can be downloaded from

JEL Classification: Q28, Q38

Suggested Citation

Thompson, Barton H., People or Prairie Chickens: The Uncertain Search for Optimal Biodiversity (February 1999). Available at SSRN: or

Barton H. Thompson (Contact Author)

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States
650-723-2518 (Phone)
650-725-8509 (Fax)

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