The Economics of Endangered Species: Why Less is More in the Economic Analysis of Critical Habitat Designations
86 Pages Posted: 17 Nov 2003 Last revised: 19 Nov 2011
Date Written: November 18, 2011
The Endangered Species Act (ESA) is the paradigmatic "absolutist" statute of American environmental law. One provision, however, allows economic considerations to play a role in a particular determination - the designation of an area as "critical habitat" for an endangered species. Though largely ignored for many years, this provision has been recently reinvigorated by a landmark decision from the Tenth Circuit, New Mexico Cattle Growers Association v. U. S. Fish and Wildlife Service, 248 F.3d 1277 (10th Cir. 2001). This article examines recent economic analyses performed by the U.S. Fish and Wildlife Service in the wake of this decision, observing an emerging trend toward increased quantification, formalization, and complexity. This reflects a more general trend toward an increasing faith in cost-benefit analysis in both government and academia. But the ascendancy of cost-benefit analysis has distracted our attention from other ways of taking economic costs into account in environmental standard setting. In fact, throughout the 1970s, Congress generally eschewed the use of formal economic cost-benefit analysis and opted instead for "short-cut" standards that provide for some consideration of the costs of regulation - through, for example, a rough apples-to-oranges comparison of costs and benefits - without requiring the substantial investment of resources necessary for a fully quantified analysis. Considering this provision of the ESA against the backdrop of this rich tradition of "short-cut" standards in American environmental law, this article concludes that application of formal economic cost-benefit analysis to critical habitat designations is inconsistent with congressional intent and, moreover, simply a bad idea. It illogically forces incommensurable values into a common metric; it produces hopelessly indeterminate results; it clouds transparency and undermines public participation by giving controversial and uncertain predictions a false patina of scientific accuracy and objectivity; and it delivers all this regulatory imperfection for a price that is outrageously high, draining needed resources from the real business of saving species.
Keywords: environment, environmental law, Endangered Species Act, Cost-Benefit Analysis
JEL Classification: K32, K00
Suggested Citation: Suggested Citation