Local Perception of Public Goods: Recent Assessments of Willingness-to-Pay for Endangered Species

I. INTRODUCTION Biological diversity has become a controversial issue in Orange County, California. Recent Endangered Species Act (ESA) critical habitat designations covering some 85,000 acres in the county have been subject to several court cases. (1) Questions about both the direct and indirect costs of preserving endangered species are being raised, yet there has been little attention to the benefits of biodiversity. This study offers contingent valuation estimates of local residents' willingness to pay for several controversial species. It also provides estimates of the aggregate benefits from species protection for future policy discussion. The critical habitat for the Arroyo toad, (2) the Riverside fairy shrimp, the California gnatcatcher, and the tidewater goby (originally designated in 2000) covered a large swath of coastal sage scrub and other grasslands, vernal pools, rivers, and streams of southern California. Some areas overlap those relevant to some of the other endangered species in Orange County, such as the Southern California steelhead trout, the Santa Ana sucker, the southwestern willow flycatcher, least Bell's vireo, and the Pacific pocket mouse, among others. Environmental organizations state that habitat designations are necessary to prevent fragmented species habitat, severed wildlife corridors, damaged watersheds, and further urban sprawl. But clear opposition to the designations has arisen from some landowners, developers, and tollway planners. They suggest housing or road building projects--which require federal permits--may be halted because the land in question, although private, is now critical habitat. This could reduce the number of newly constructed units and raise the price of permitted building. Additional consultation costs could follow. Broader debates about the future of the ESA are also emerging. The ESA, first passed in 1973, has aimed to address the market failure of the underpriced social benefits of endangered species. The Act allows staff of the U.S. Fish and Wildlife Service (FWS) or the National Marine Fisheries Service to list an animal or plant species as endangered or threatened. Critical habitat designations are supposed to follow promptly after listing (yet rarely do). These targeted species enjoy strong protections through the ESA's section 9 that prohibits any "taking" of the species; section 7 also requires federal agencies (or private parties obtaining federal permits) to ensure that any action they authorize, fund, or carry out will not jeopardize the existence of the species or adversely modify its critical habitat. The FWS aims to eventually delist endangered species through the implementation of recovery plans and restoration efforts written by scientists knowledgeable about species history, status, and threats. Currently, traditional cost-benefit analyses of listing or habitat decisions do not occur. A 1978 amendment to the ESA requires some economic analysis at the critical habitat stage; areas may be excluded if the benefits of exclusion outweigh the benefits of specifying the area as habitat, unless the failure to designate leads to species extinction. Direct costs of species recovery appear quite modest in many of the published recovery plans. The recovery plans are vague regarding expensive private land acquisition with much of the cost to secure pools and other lands "to be determined." But the indirect (opportunity) costs of housing and transportation development opportunities forgone on critical habitat areas remain the largest source of controversy in the West. Changing land use designations represent a transfer of present producer/consumer surplus to future generations, and calculation difficulties usually preclude including these opportunity costs in policy making. (3) Despite the press coverage of the spotted owl and Klamath River debates, little attention has been paid to the potential benefits of species preservation in southern California and other areas of the West affected by the recent habitat designations. …