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2. Efficiency. A very effective preservation policy would be to stop all development from proceeding until exhaustive biological studies are done, and then permit only those activities for which there is no chance that endan- gered wildlife will be harmed. Let us call this a "maximal preservation pol- icy." Such a policy has never been seriously considered because society and its members have other objectives besides the preservation of endangered spe- cies. This means that decisions must be made with respect to "how much" of each objective is to be purchased with society's limited resources. Advocates of particular objectives are often offended by the notion that such tradeoffs are necessary. According to this position, there is no way to place a value on human life or, more to the point, a species of wildlife. However, the very fact that a maximum preservation policy will not be entertained places, albeit implicitly, a maximum valuation on endangered species protection though its estimation may be difficult if not impossible. Ideally, tradeoffs among competing objectives are made to enter social dec isionmaking in the budgetary process. Inasmuch as one rarely knows the relationship between budgetary inputs and program outputs (effectiveness) these tradeoffs must necessarily be very rough. Moreover, even this rough budgetary balancing process is not available for agencies with significant regulatory responsibility because the cost of their regulations are not borne by them but by those regulated. There is a certain irony here. The need for regulation to protect endangered species in the first place arises from the fact that the effects of water resources development on endangered species is an exter- nality. An agency whose only responsibility is endangered species protection in turn imposes externalities on developers (who may, as it happens, be other federal agencies). Socially efficient decisions require that both types of external effects be considered simultaneously, but to devise institutions permitting this is no easy task. Ordinarily, the courts provide the only means whereby such objectives are balanced, but the transaction costs of this approach are high.* Efficiency concerns do not end with the balancing of various policy objectives. One must also be concerned with cost-effectiveness: given an *The 1978 Amendments to the Endangered Species Act provide another approach for really hard cases: the Endangered Species C01IIIlittee, whose operation is discussed below. 6