Protecting Endangered Species in the United States

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Critics of the Canadian government's environmental record are quick to equate a failure to introduce new regulations to a failure to protect the environment. For example, Canada, unlike the United States, does not have federal endangered-species legislation, and has been targeted as, therefore, not having a serious commitment to the fate of the environment in general and to endangered species in particular. This belief that more regulation is the solution to environmental problems is so strongly held that people will often vehemently defend it even when it flies in the face of basic economic theory and years of evidence.

The idea that imposing more restrictions on land use would protect endangered species and their habitat was so intuitively appealing to people in the United States that federal legislation, the Endangered Species Act (ESA), similar to the type that has been proposed in Canada, passed virtually unopposed in 1973. Today, however, the Endangered Species Act is highly controversial in the United States and is targeted for major revision. Its critics include environmentalists, politicians, and property owners, who charge that in addition to its high costs and heavy-handed approach, the legislation fails to accomplish its mission of protecting endangered species.

The basic problem with the American legislation is that it creates the perverse incentive for landowners to view endangered species as a liability. If evidence of endangered species are found on your property in the United States, you can be told by the Fish and Wildlife Service, under the authority of the Endangered Species Act, that you cannot build, cut down trees, plow fields, dig, or fill ditches, or in any other way alter your land. These controls have often led to substantial uncompensated reductions in property values. As a result, in order to protect themselves from the uncompensated taking of private property in the name of protecting wildlife, some in the United States have resorted to what has been called a policy of "shoot, shovel, and shut-up." In the extreme, landowners will kill endangered species and dispose of them in order to prevent their property from coming under the control of the Fish and Wildlife Service. The best way to understand this perverse incentive caused by the American legislation is to consider some cases where the law has affected property owners.

Consider Benjamin Cone (Stroup 1995a: 81-83). After Cone inherited 7,200 acres of land in North Carolina, he cleared underbrush to attract wildlife and selectively harvested small areas of timber. Likely as a result of his land management, red-cockaded woodpeckers, a rare species of bird on the American endangered species list, were discovered on his property. Initially, this was not an unwelcome discovery. But when Cone wanted to cut some of his timber, the Fish and Wildlife Service informed him that no timber could be harvested within a half-mile radius of each woodpecker colony. Any harvester, he was told, would face severe fines or imprisonment under the Endangered Species Act. There was no compensation for the loss of over 1,100 acres of land that thus came under the control of the Fish and Wildlife Service. In fact, Cone is still required to pay taxes on the land's value before it was dramatically reduced by the logging restrictions. As a result, Cone has increased the size of clear-cuts and shortened the cutting cycle from a 75-year to 80-year rotation to a 40-year rotation in order to discourage any additional woodpeckers from nesting on his property. According to Michael Bean of the Environmental Defense Fund, the red-cockaded woodpecker is closer to extinction today than it was when protection began in 1973 (Stroup 1995b: 1).

Margaret Rector's story provides another example of the perverse incentives that landowners face. She was planning to sell her 15-acre plot of land in Texas Hill County to finance her retirement. But when the Fish and Wildlife service in the United States listed the Golden-cheeked Warbler as endangered, most of her retirement savings evaporated. The value of her land fell from $870,000 to roughly $30,000 (Smith 1996: 4). Ironically, she suffered this loss even though the Golden-cheeked warbler has never even been spotted on her land. According to the American law, property can be designated as endangered species habitat even if the endangered species in question does not actually live within the habitat. In Ms. Rector's case, because the endangered bird might take up residence on her property at some future time, she is not allowed to cut down cedar trees, where the birds like to nest, to build a house or to make any other improvements to her land.

In yet another example, people in Riverside County, California suffered enormous losses as a result of the listing of the Stephens' kangaroo rat in 1988. Michael Rowe owns 20 acres that are affected by the listing. He bought the property in the late 1980s in order to build a house for his family but, when he tried to file plans for building the house with the county, he was told that he would have to pay thousands of dollars to have his property surveyed for kangaroo rats. Mr. Rowe's neighbors, the Domenigonis, were told that 800 acres of their farm that had been fallowed had kangaroo rats on it. They were also told that if they replanted the 800 acres they would face penalties of up to $50,000 and a year in jail for each violation under the ESA. The Domenigonis estimate that the annual production losses from the lost farming activity exceed $75,000. In addition, they spent $175,000 on legal fees and biological surveys. In October of 1993, a fire in the area caused 29 families to lose their homes. Many of the home owners had been unable to create the firebreaks that may have saved their property because under the ESA they might have disturbed kangaroo rat habitat (Hollingsworth 1998: 3-5).

How have landowners responded? Not surprisingly, many--even those who previously enjoyed having diverse flora and fauna on their property--have taken steps to make their land unattractive to wildlife. In Riverside County, for example, many farmers now disk and plow their fields several times a year and have reduced the number of fields they leave fallow in order to prevent kangaroo rats from taking up residence on their property (Hollingsworth 1998: 14). In another case, landowners have eliminated wildflowers on their property to deter the Quino checkerspot butterfly.

To prevent the presence of the butterflies, and since it is difficult for laymen to identify the particular wildflowers the butterflies use, many landowners are now sterilizing their land of all wildflowers by mechanical or chemical means. Some of the most beautiful California vistas (to say nothing of the chances for the butterfly) threaten to be snuffed out as the unfortunate result of a failed system of conservation. (Hollingsworth 1988: 15)

What can Canadians learn from America's 25 years of experience with endangered species legislation? First, incentives matter. In order to achieve the goal of protecting endangered species, landowners must not view them as a liability. At the very least, landowners must be compensated for any loss in the value of their land that they experience as a result of efforts to save species. Otherwise, the perverse incentive to "shoot, shovel, and shut-up" will likely harm more species than legislation could ever hope to protect. Compensation is also critical to ensure the success of conservation groups, such as Operation Burrowing Owl, that rely on the co-operation of landowners to protect critical habitat.

Compensating landowners would also make the government agency responsible for listing species accountable for its actions. If compensation does not have to be paid, it is relatively cheap for regulators to list a species and secure its habitat; there is no incentive for governments to prioritize and be discriminate about their listings. Evidence of this problem abounds in the United States where many species are listed and then later delisted when it is discovered that populations are much higher than originally suspected. These mistakes are very costly to private landowners. When the United States Fish and Wildlife Service mistakenly listed the fairy shrimp, for example, private property owners lost hundreds of millions of dollars. The listing closed a gold and gravel mine. It delayed construction of roads and city dumps and closed an airport (Madsen 1998: 6).

Grant Madsen, a representative of the organization, Defenders of Property Rights (Washington, DC), sums up the problem:

In the United States, government has confused this question [how best to protect species and who will pay for it] by making it seem that endangered species legislation is really about protecting species with little or no cost to anyone. In fact, it is really about controlling vast swatches of land with a great deal of cost to those most closely connected to it: farmers, ranchers, miners, real estate developers, and ranchers. (Madsen 1998: 8)

In light of this evidence, Ottawa should reconsider the legislative approach to saving species.

Would the legislative approach have different results in Canada?

Some have argued that American experience is irrelevant to Canada because previous legislative proposals in Canada have applied to species found on federal land only. Therefore, supporters of legislation argue, the "shoot, shovel, and shut-up" incentive will not be a problem. Before putting too much stock in this defence of using the legislative approach in Canada, however, two points need to be considered.

First, the original legislation in the United States was meant only to apply to federal land and was then extended to include state land and private land. So, it is not inconceivable that any Canadian legislation originally meant to apply only to federal land could be extended to include other areas.

Second, previous legislative proposals in Canada have actually been unclear about exactly where an endangered species act will apply. The last bill stated that it would apply on "all federal lands including the two territories: the oceans out to the 200 mile limit; this represents approximately 60 percent of Canada" (Environment Canada 1996a: 2). While that statement makes it sound as if the bill would apply only to federal lands, an earlier draft of the legislative proposal had indicated that "the Act would allow for the regulation of the willful taking, killing, harming, wounding, capturing, collecting, molesting, or disturbing of federally listed species, including their parts, derivatives, or embryos anywhere in Canada" (Fox 1998: 21). In addition, under the subheading "Partnership," the following comment appears in the Summary of the last bill: "Species will be protected everywhere in Canada with this Act and through complementary provincial and territorial legislation and programs agreed to in principle under the National Accord for the Protection of Species at Risk" (Environment Canada 1996a: 3). This suggests that the legislative approach will include provincial and private land.

How attractive will regulators find private land in Canada? While estimates suggest that only 20 percent of endangered species live on private land in Canada, compared to 50 percent in the United States, regional concentrations of these species are located mostly on private land in southern British Columbia, Alberta, Manitoba and Ontario (Fox 1998: 1). This concentration suggests that applying restrictions to private land would be attractive from the point of view of those in government who view these restrictions as the best way to protect endangered species.

Even if the legislation in Canada were to apply strictly to federal land, there is still potential for conflict. Although most of the controversy surrounding the United States Endangered Species Act arises from its impact on owners of private land, there have also been conflicts on federally owned lands (Fox 1998: 6). One of the best-known conflicts over public land in the United States involved the protection of the spotted owl. As a result of the ESA, millions of acres of public land in California, Oregon, and Washington were set aside as critical habitat for spotted owls and were no longer available for commercial harvesting of trees. This caused extended and costly battles fought in the political arena over issues that could have been resolved through the normal functioning of the market.

Conflicts can also arise between government departments. In Canada, conflicts may arise between the Department of Fisheries and Oceans and Environment Canada. There also may be conflicts that arise, for example, when federal land is leased for grazing or other activities. Then the law will come into direct conflict with individuals and, to the extent that these individuals are not compensated for cancellations in leases and so on, they will face the incentive to "shoot, shovel, and shut-up." The actual or possible presence of an endangered species on public land weakens and possibly dissolves other property claims to public lands such as rights to timber harvest or other actions that might alter the habitat for the listed species (road development, mineral extraction, grazing). In the United States, environmental groups have taken control of public forest lands by using ESA regulations to limit timber harvests.

By its very nature, the legislative approach is adversarial. For example:

The fact that land owned and managed by cattle producers may now be targeted for legislated wildlife protection is testimony to the responsible management of producers. Many producers resent the implication that somehow they are no longer able or willing to provide the protection that they have historically provided. (Canadian Cattlemen's Association 1998).

Co-operative approaches, such as those described in the previous section, are likely to be more successful and less costly as they do not require monitoring and enforcement.

Even if the perverse incentives are avoided with appropriate compensation, there is still a larger question. Is the top-down legislative approach the best way to accomplish the goal of protecting species? Here again, the American example can be instructive. Consider, for example, the comments of Fish and Wildlife Service officials like Philip Laumeyer during a December public meeting. Of the $1.9 million budget his Columbia Basin office receives each year, he complained that "only $2,000 is designated for actual recovery work. The rest goes primarily to regulating private industry and land" (Madsen 1998: 5).

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