9391

• UCREFRP Catalog Number: 9391
• Author: Watts, G., W. R. Noonan, H. R. Maddux and D. S. Brookshire.
• Title: The Endangered Species Act and Critical Habitat Designation
• USFW Year: 1997.
• USFW - Doc Type: An Integrated Biological and Economic Approach.
• Copyright Material: NO

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I. Introduction

The Endangered Species Act (Act) of 1973, as amended, assigns the U.S. Fish and Wildlife
Service (Service) the responsibility for listing species of plants and animals in the United
States whose existence is either threatened or endangered. After a species is listed, the Service
is responsible for, among other things, developing recovery plans, reviewing proposed federal
actions to ensure that they do not compromise recovery efforts, and designating critical habitat
for listed species. Such critical habitat designations, at least in certain situations, can alter
economic activity in critical habitat areas that might otherwise be of detriment to cenain
species.

Although the Act has no provisions for studying the economic consequences of listing
threatened and endangered species, it does require the Service to assess the economic impacts
of all proposed critical habitat designations. As a result, economists have been participating in
the ongoing process of designating critical habitat for endangered species and assessing the
economic impacts of such designations. 1

It is almost axiomatic that setting aside critical habitat for endangered species involves a
reallocation of resources. Threatened and endangered species are usually listed because the
current allocation of resources has resulted in excessive habitat degradation. Such adverse
modification of natural habitat is generally due to economic activity that has occurred as a
result of human settlement and economic development. Resources are allocated to particular
uses as a result, and stabilizing and/or reversing this development requires that these resources
be allocated to other uses. For example, trees may not be harvested that provide habitat for
birds, water may not be used for irrigation so that stream flows are returned to more historic

I It has been argued that the process of listing a species as endangered or threatened has far greater
economic consequences than subsequent critical habitat designations, an argument that has some merit with respect
to the examples discussed in this paper. As a practical matter, however, most economic studies of critical habitat
designations attempt to estimate the combined effects of both listing and critical habitat designations, and then
allocate a proportion of effects to each administrative action.

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