The Cost of Endangered Species Protection: Evidence from Auctions for Natural Resources

54 Pages Posted: 21 Apr 2016 Last revised: 22 Apr 2016

See all articles by Branko Bošković

Branko Bošković

University of Alberta - Department of Marketing, Business Economics & Law

Linda Nøstbakken

Norwegian School of Economics (NHH) - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 5, 2016

Abstract

This paper examines the effect that endangered species regulation has on natural resource development. Specifically, we use data from competitive auctions to estimate the effect that land-use regulation protecting endangered caribou in the Canadian province of Alberta has on the price producers pay for the right to extract oil. We exploit a regression discontinuity design to evaluate how prices differ along regulation boundaries that constrain resource development. The auction format and the regulation discontinuity allow use to measure the total cost of the regulation. We find that producers pay 24% less on average for oil leases that are regulated and that the total net present value cost of the regulation exceeds $1.15 billion for leases sold between 2003-2012, all of which is borne by the government. In spite of these costs, the populations of endangered caribou remain in widespread decline.

Keywords: Endangered species regulation, auctions, natural resources, oil

JEL Classification: Q58, D44, Q52, L71

Suggested Citation

Bošković, Branko and Nøstbakken, Linda, The Cost of Endangered Species Protection: Evidence from Auctions for Natural Resources (April 5, 2016). NHH Dept. of Economics Discussion Paper No. 06/2016, Available at SSRN: https://ssrn.com/abstract=2766865 or http://dx.doi.org/10.2139/ssrn.2766865

Branko Bošković

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada

Linda Nøstbakken (Contact Author)

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway
+47-55959134 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
40
Abstract Views
442
PlumX Metrics