PS 89-97
Identifying the incremental impact of critical habitat on land-cover change

Friday, August 14, 2015
Exhibit Hall, Baltimore Convention Center
John C. Withey, Florida International University
Erik J. Nelson, Department of Economics, Bowdoin College, Brunswick, ME

The US Endangered Species Act (ESA) regulates what landowners and land managers can do on lands occupied by listed species. The Act does this in part through the designation of critical habitat (CH), i.e. lands (and waters) considered critical for the recovery of listed species. However, more than half of listed species still do not have CH designated. Critics have argued that the designation of CH has substantial economic impacts on landowners above and beyond the costs associated with listing in general. Here, we examine the effect of CH designation on land-cover change in areas subject to ESA regulations. We use matching analysis to select "control areas" that are in areas with listed species, but with no CH designated, and compare them to individual CH areas. Each match is based on a number of biophysical, demographic and economic variables estimated for both CH and control areas. We then measure the change in developed and agricultural land cover from 1992 to 2001, and 2001 to 2011 in order to estimate a “treatment effect” of CH designation on land cover change in CH vs. control areas.


We find that, on average, the rate of change in developed land (urban and residential) and agricultural land is not significantly affected by CH designation.  In addition, our estimate of the effect of CH designation is not strongly correlated with the costs of CH as predicted by economic analyses published in the federal register. While CH designation on average does not affect the overall rates of land cover change, CH designation does appear to modify the impact of land-cover change drivers.  Generally, land prices had more of an effect on land cover decisions within CH areas, than in areas subject to ESA regulations but with no CH designation.  CH designation may have increased landowner uncertainty, and conversion to developed and agricultural use in CH areas, on average, requires a return premium.  Overall, however, this different reaction to land prices in and outside of CH areas has not been strong enough to differentiate the average rates of developed or agricultural land change in CH areas vs. matched control areas.