It is generally assumed that requiring compensation for regulatory takings would hamstring environmental conservation efforts. Forcing the federal government to pay landowners who lose the ability to modify their own land because it is designated as endangered species habitat or a jurisdictional wetland could well reduce the regulatory appetite of federal agencies (assuming the compensation came out of their budgets, rather than judgment fund), but would environmental protection suffer as a result?

In a new paper,"Money or Nothing:The Adverse Environmental Consequences of Uncompensated Land-Use Controls," I argue that the conventional wisdom is wrong. Compensating landowners for the costs of environmental land-use controls could actually enhance environmental conservation. Why? First, such compensation would reduce, if not eliminate, the incentives uncompensated land-use controls create to destroy or degrade ecological amenities on private land. Several recent empirical studies confirm theoretical predictions that such incentives are substantial, and lead to the significant loss of habitat. Because most endangered species rely upon private land, this is a big deal. Second, there is reason to believe that environmental agencies over-rely upon land-use control as a conservation strategy, and that substituting other conservation strategies could be more cost-effective. Requiring compensation, and mandating that such compensation be paid from agency budgets, could encourage greater consideration of trade-offs and thereby enhance the effectiveness of conservation programs.

A draft of the paper is now available on SSRN. I hope to expand on some of these points in a series of posts next week.

For decades land rights activists have complained that Section 9 of the Endangered Species Act punishes private conservation. Under the Act, the reward for maintaining or creating endangered species habitat is the imposition of federal land-use controls. Specifically, landowners are prohibited from modifying such land without permission from the U.S. Fish & Wildlife Service. Commented one state wildlife official in 1993, "The incentives are wrong here. If I have a rare metal on my property, its value goes up. But if a rare bird occupies the land, its value disappears." This perverse incentive discouraged landowners from maintaining habitat. At the extreme, it induced landowners and resources users to "shoot, shovel, and shut up."

While such claims were common, the only direct evidence that landowners responded to such incentives was anecdotal. There was no doubt that some landowners took preemptive action to destroy or degrade potential habitat before it could become subject to federal regulation -- as happened in Boiling Springs Lakes, North Carolina -- but there was little evidence documenting the extent of such responses to the Act's restrictions. Defenders of the ESA could argue, with some justification, that the occasional horror did not demonstrate that there was anything fundamentally wrong with the Act.

In recent years, however, more substantial empirical evidence has started to roll in, confirming that the ESA's perverse incentives encourage the destruction and degradation of species habitat on private land. As I detail in "Money or Nothing: The Adverse Environmental Consequences of Uncompensated Land-Use Controls," there are now four empirical studies examining the effect of the ESA on landowner willingness to maintain habitat. All four of these studies find the predicted effect. Taken together, these studies provide powerful evidence that the ESA may be endangering endangered species on private land. Interestingly enough, only one of these studies has received any meaningful attention in the environmental law literature to date. (I searched Westlaw for all four this morning.)

Two of the four studies look at the ESA's effect on private timber management practices and habitat for the endangered red-cockaded woodpecker (RCW). The two studies utilize slightly different methodologies, but both found that landowners have responded to the risk of ESA regulation by altering timber management practices so as to make private timberland less hospitable for RCWs. Specifically, landowners increase the rate of cutting, and decrease the age at which timber is harvested, so as to avoid land-use restrictions. This matters for the RCW. Cutting timber stands prematurely deprives RCWs of habitat because the woodpeckers rely upon older trees for nesting cavities. Cutting trees prematurely is perfectly legal. But over time it will result in a significant reduction of RCW habitat.

A third study examined landowner responses to the listing of the Preble's Meadow jumping mouse. This study, a survey or private landowners, found that a significant number of landowners took actions to make their lands less hospitable to the mouse after it was listed as an endangered species. It also found that landowners became significantly less likely to grant wildlife biologists access to their land for research purposes. This is important because accurate data on species populations and their habitat is essential to successful conservation efforts.

A fourth study looked at preemptive habitat destruction near Tucson, Arizona. Consistent with the other studies, this study found that the threat of regulation of habitat for the Cactus Ferruginous pygmy owl accelerates the rate at which privately owned species habitat is developed. These findings are reinforced by additional data showing that the value of undeveloped land designated as critical habitat fell relative to other lands in the study area. Although as a strict legal matter, critical habitat designation is not necessary for land to be burdened by the ESA's regulatory strictures, it provides a signal to landowners about the likelihood of future regulatory restraints.

These studies, taken together, provide powerful evidence that the ESA is discouraging species conservation on private land. They help explain why the ESA has been particularly ineffective at conserving endangered species on private land. Only a handful of species have been "recovered" since the ESA was enacted in 1973, and none of the recoveries -- not one -- is attributable to the enforcement of Section 9 on private land. Since most endangered species rely upon private land for some or all of their habitat, this is a particularly egregious failing of the Act. The purpose of the ESA is to conserve endangered and threatened species. Instead it appears that the Act may be endangering them.