The perverse incentives created by uncompensated environmental land-use controls are well documented. The Endangered Species Act (ESA), in particular, is notorious for encouraging the destruction of species habitat on private land. By restricting the use of land with ecologically desirable characteristics, the ESA effectively punishes private landowners for maintaining habitat on their land. As a consequence, landowners often engage in preemptive habitat destruction to avoid the Act’s proscriptions. I’ve written on this subject at length (see here and here).
The ESA is hardly the only law creating such perverse incentives, and not the only law that encourages the destruction of resources it is supposed to protect. Today’s NYT reports on the “preemptive demolition” of historic buildings in New York City before they can be classified as landmarks. Basically, when developers learn that a building may be designated as a landmark — a status that will restrict their ability to modify or renovate the building — they rush to destroy the historic aspects of the building, if not the building itself.
The strategy has become wearyingly familiar to preservationists. A property owner