7887

• UCREFRP Catalog Number: 7887
• Author: Fischer, H., ‎(Wendy E. Hudson, ed.)‎.
• Title: Building Economic Incentives Into The Endangered Species Act, Third Edition.
• USFW Year: 1994.
• USFW - Doc Type: Washington, D.C.
• Copyright Material: NO

incentives such as property tax credits may make it more financially attractive to
conserve important habitats. Properly structured, the right system of incentives
and disincentives would slow the rate of land conversion and development and
still provide some economic return to private landowners.
In other instances, tax incentives and disincentives will simply have no effect on
project profitability. Coastal development projects in southern California or south
Florida affecting large segments of endangered species habitat may be so finan-
cially profitable that they remain unaffected by all but the most extreme levels of
positive or negative incentives. In these instances, the regulatory authority of the
ESA is currently the only means of safeguarding important biological habitat.
Such situations beg a deeper analysis of: 1) the economic decision framework in
toto; 2) the myriad perverse incentives created by federal subsidies and tax con-
siderations that promote consumption over conservation; and 3) the way govern-
mentdecisions on such basic necessities as roads and other infrastructure induce
development that might not otherwise occur. Ultimately, the conservation of
nature and the very character of the American landscape demand a coherent
policy that steers development in the right direction. The opportunity exists now
to integrate better our emerging sense of the broad values of natural habitat into
our economic decision making.
In the following sections, we present a series of financial incentives, both positive
and negative, that can begin to integrate the protection of natural habitats into
private economic decision making. Many of these ideas were drawn from work
done in wetlands and farmlands preservation; fee and tax-based pollution control;
and tradeable permitting. Together, they are intended to address a broad spectrum
of economic agents: from the family farm to commodity interests to the land
development sector.
For several reasons, many of the tools we describe rely on changes in federal tax
policy. First, a centralized tax system serves as the mechanism needed to supple-
ment the transfer of money -the proxy for value -among the various parties in
our society and economy. It is vastly more efficient to distribute tax dollars to
those landowners striving to integrate endangered species habitats into their
economic ventures than it is for all concerned citizens to write checks to these
landowners. Second, the federal tax code is used regularly to stimulate and shape
investment and development decisions for many facets of our economy. Farm and
timber production levels, manufacturing sectors, areas of technological research
and development, and local economic development are just a few examples of the
way tax credits, deductions, depreciation allowances, and capital gains tax levels
are used to guide economic activity in this country. Third, the federal tax code is a
central locus that reaches all economic agents in the United States.
Our proposed economic incentives, disincentives, and market preservation mecha-
nisms are:
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