The purposes of the Endangered Species Act, or ESA, are to “provide a means whereby the ecosystems upon which endangered species and threatened species depend may be conserved,” to establish a “program for the conservation of such” species, and to take action to accomplish the goals of certain international agreements (Endangered Species Act 1996).

The act contains four key requirements designed to achieve its purposes. First, the secretary of the interior is directed to list species in need of protection. Second, federal agencies must conserve the populations and habitats of listed species and may not take any action that would...

Most economists believe that economic incentives help guide human behavior, even when dealing with nonmarket goods like endangered species and biodiversity. Endangered species inhabiting private land can be better protected if economic incentives encourage landowners to preserve their property. Currently, the Endangered Species Act (ESA) provides some regulatory incentive for landowners to cooperate with species conservation policy through habitat conservation plans (plans that allow a landowner to alter habitat under certain management restrictions), but current financial incentives may induce landowners to prevent government biologists from looking for listed species on private property, or to destroy habitat for listed species, or...

The possibility of offering financial incentives to encourage landowners to protect endangered species on private property raises questions about how economic and ecological well-being can be connected in environmental policy. These questions are not new. Roughly 70 years ago, Aldo Leopold set down his ideas on this matter in “A Conservation Ethic” (an early version of his more famous “Land Ethic” essay). Using the wildlife conservation movement as an example, Leopold suggested, “At the inception of the movement fifty years ago, its underlying thesis was to save species from extermination. The means to this end were a series of restrictive...

The ESA undoubtedly can be made more effective in achieving its conservation and recovery goals, and the use of incentives would assuredly encourage greater and more willing landowner efforts to that end. However, many observers, including this author, do not believe that an incentives-based approach would solve all of our habitat ills. An imperiled species conservation program should be multifaceted, and a strategy that depends too heavily on monetary incentives has at least four shortcomings:

Finite funds (in both government and private coffers), and a seemingly infinite array of good causes on which to spend them, will always limit the...

The conservation of scarce biological resources on private lands commonly involves the biological and market valuation of the resources in ways that identify targets for conservation and facilitate negotiations between property owners and potential buyers. For our purposes, a buyer can include any individual or institution with an interest in conservation, the “conservator” of Parkhurst and Shogren (chapter 3). The problem of estimating the values of biological resources and the benefits of conserving them are complex and cross disciplinary boundaries between science, policy, and economics. Our goal is to help create markets for the conservation values of species and habitats...

As residential, commercial, and industrial developments continue to erode the integrity of natural areas, public interest in interactions between ecological and economic systems has intensified. This interest registers in frequently contentious debates about the validity of goals to preserve natural areas and the efficiency and the equity properties of the means to do so. Arguably this same public has denied the goals of environmental protection more frequently than necessary because regulatory authorities have used unnecessarily costly means of implementation.¹

The devices used to implement the goals of the Endangered Species Act (ESA) seem a prime example of those means of...

Most people interested in protecting endangered species would agree that imperfect information about population biology and the role of species in ecosystems confounds the design of preservation policy. In like manner, imperfect information about economic behavior and preferences further complicates preservation policy design and implementation. For instance, a private landowner might be the only individual who knows a listed species is on his or her land. In such a case the government would need landowner cooperation to gain the information necessary to administer conservation policy. If, however, regulation leads to an unattractive economic outcome, the landowner will likely withhold the...

A U.S. senator once said in private conversation that “if we pay landowners to grow endangered species, we will have more critters than we know what to do with.” The question is how to do this in the most cost-effective manner such that biological needs are met, landowner concerns are addressed, and government budgets are solvent. We have presented the practical pros and cons of each incentive mechanism in Chapter 3, and the other authors have raised numerous concerns about these methods in the chapters following it. We conclude by evaluating each economic incentive based on three broad criteria that...