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within designated boundaries. <br />Economic Analysis <br />Section 4 of the ESA also requires that an analysis of the potential economic impacts of <br />designating critical habitat be conducted as part of the designation process. The analysis <br />estimates the possible costs of the proposed critical habitat on federal actions involving private <br />landowners, tribes, and Federal, State, and local agencies. The estimated costs include possible <br />future consultations under Section 7, and project modifications resulting from these <br />consultations. Based on recent court decisions, the Service is completing economic analyses <br />which reflect the co- extensive economic impacts of critical habitat designation and the economic <br />impacts associated with the listing of a species. <br />Areas may be excluded from the critical habitat designation if the benefits of excluding it <br />outweighs the benefits of designating the area as part of critical habitat, unless the Secretary of <br />the Interior determines that the failure to designate critical habitat will result in the extinction of <br />the species. <br />Outcomes of Critical Habitat Designation <br />The principal outcome of a critical habitat designation is the requirement, under Section 7 of the <br />ESA, that Federal agencies consult with the Service before taking actions, issuing permits, or <br />providing funding for activities that might adversely modify critical habitat. In some cases, the <br />designation creates no new consultation workload for an activity. This is because consultation for <br />Federal activities that may affect species listed as threatened or endangered is already required, <br />whether or not critical habitat has been designated. <br />The Service seeks to work with landowners and Federal agencies as early as possible in the <br />consultation process to identify measures to reduce or eliminate effects to listed species or <br />designated critical habitat. Most projects go through unmodified. Some projects are modified <br />through informal consultation with input from landowners and Federal agencies. In some cases, <br />8 <br />