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led to the establishment of the first national wildlife refuges, but the first federal action concerning the general problem of species endangerment was the Endangered Species Preservation Act of 1966. This Act called upon the Secretary of the Interior in consultation with wildlife experts to publish a list of species in the US threatened with extinction and appropriated funds for the acquisition of lands upon which these species would be protected. Extension to foreign speci~s was made by the Endangered Species Conservation Act of 1969, which authorized the listing of foreign species and prohibited the importation of such species into the US except for certain purposes. Finally, in 1973, Congress adopted the first comprehensive endangered species protection program. Whereas previous legislation concentrated on direct predation, this Act recognized that ordinary economic activity was perhaps an even bigger threat because it spoiled endangered species habitat. This feature (Sec. 7) of the Act proved quite controversial, and one controversy in part i- cu1ar--the Tellico Dam case in Tennessee--led to the enactment of amendments to the Act in 1978.* The purposes o~ this paper are to examine the reasons - for controversy and to assess the implications of the amended Act, especially for water resources development. A. General Issues in Endangered Species Protection Generally speaking, policies are controversial because of conflicts over either ends or means (what else is there?) and the problem of endangered species protection is rich in both; therefore, to understand the evolution of endangered species policy and to predict its future course, it is useful to consider in a general way the objectives of the policy and criteria for evalu- ating alternatives. With respect to objectives, why is it necessary to have an endangered species policy, and what do we expect it to accomplish? This may strike many people as obvious or even irrelevant, but it is unclear that everyone is in agreement here. Wild plant or animal populations are what economists call "public goods." Because private interests are rarely able to appropriate all the benefits obtainable from feral populations, there are insufficient private incentives to preserve them. The resulting failure of markets to protect endangered species provides a basis for public intervention. Of course, the market cannot be blamed for the entire vanishing species problem. In the *See Bean (1977) for a discussion of the 1966, 1969, and 1973 Acts, plus a discussion of other measures to protect wildlife. 2