Accounting for Species:

The True Costs of the Endangered Species Act )

Author: 

Executive Summary

By Randy T. Simmons and Kimberly Frost

Arational public dialogue about the value and effectiveness of the Endan- gered Species Act (ESA) must consider the costs incurred by the regulators and those being regulated. The U.S. Fish and Wildlife Service�??s report Three-Year Summary of Federal and State Endangered Species Expenditures, Fiscal Years 1998-2000 (U.S. Fish and Wildlife Service [FWS] 2003b) identifies some federal and state costs, but anyone wishing to understand the true costs of the ESA must look beyond it. The report understates government expenditures and does not include economywide losses.

An extensive analysis of the FWS report was undertaken to determine whether the report provides comprehensive and accurate information on ESA costs�??data that can be relied upon by members of Congress, policymakers, the media and the public in general. Unfortunately, a review of the study reveals that the FWS report does not come close to accounting for the costs to taxpayers and to the private sector of complying with the ESA. Our analysis concludes that a more accurate figure for the annual ESA costs would place those costs in billions, not millions, of dollars.

LIMITATIONS AND INACCURACIES

The following limitations and inaccuracies of the Fish and Wildlife Service report were found:

  • While the FWS reports that the estimated expenditures on endangered species protection for fiscal year 2000 totaled $610.3 million, the actual government costs are probably four times that estimate. From 1989 to 2000, the FWS estimates that a little over 3.5 billion of taxpayer dollars was spent on ESA-related activities. We recognize today that the actual cost of protecting species, including private costs as well as government expenditures, may easily reach or exceed that figure per year.

  • Not all of the appropriate federal agencies and departments reported ESA-related expenditures, even though many agencies are involved in implementing the ESA and are incurring costs. For example, the only estimates provided by the Department of Energy are from the Bonneville Power Administration. None of the other power administrations�??Southeastern, Southwestern, Western Area�??submitted estimates. Yet we know there are ESA-listed species throughout these regions.

  • The federal government under reports ESA costs because it only collects estimates of what it has spent on ESA implementation. We know that actual federal expenditures are far greater than these estimated costs. For example, based on a House Resources Committee report, our analysis shows that the actual costs of just five of the twenty agencies reporting exceed $1.2 billion per year.

  • Other costs absorbed by state and local governments and private parties are not reported at all. These costs are in the billions of dollars for the period during which the property remains under regulation.

 

WHY THE REPORTED COSTS ARE INCOMPLETE AND INACCURATE

The Fish and Wildlife Service omits critical information in its cost report. A list of key omissions follows:

Costs Not Reported

  • ESA implementation costs that benefit multiple species
    We know, for example, that the FWS�??s general budget contains $70.9 million for fish conservation per year, but the FWS ESA report does not quantify how much of the money is spent on endangered fish.

  • ESA implementation administrative costs and ESA implementation costs that are incurred abroad
    The annual budget of the Fish and Wildlife Service identifies $8.6 million for international wildlife trade and international conservation per year, and some of this taxpayer money is spent on ESA-listed species.

  • Government-wide costs
    Only a handful of the many federal agencies and departments affected by the ESA reported expenditures to the FWS.

  • Actual costs to taxpayers
    Only estimates are provided.

  • Costs to taxpayers of litigating ESA cases

  • Costs to state and local entities of implementing species recovery
    Since there are no standardized or required reporting procedures, only those state and local expenditures voluntarily reported are estimated in the report. Many other state and local expenditures remain unaccounted for. For example, in San Diego County, California, implementing ESA recovery strategies through a single countywide Habitat Conservation Plan (HCP) will impose an estimated $650 million in costs to state, local, and private entities for the period the property remains under regulation. Yet such costs are not included in the FWS cost report.

  • Additional costs to local governments from ESA-caused interference with building schools, hospitals, roads, and other infrastructure projects
    On a $55 million high school in Vista Murrieta, California, for example, an ESA-caused delay of one year cost over $1 million.

  • Economic impacts relating to FWS regulation of 38 million acres of private land through conservation plans
    Seventy-five percent of all listed species have portions or all of their habitat on private lands, and landowners are not compensated for their losses from ESA regulations. The economic costs of designating critical habitat just for the coastal California gnatcatcher will average $300 million per year.

  • Private costs such as development projects being denied, delayed, or their scope reduced
    Previously approved developments are denied building permits or substantially modified because of endangered species.

  • Social costs from regulatory burdens placed on agricultural production, water use, forest management, mineral extraction, and recreation
    Farmers in the Klamath Basin of Oregon, for example, lost an estimated $53.9 million of crop value in 2001 when their irrigation was cut off to protect endangered fish, the Lost River and shortnose sucker and Klamath coho salmon. Yet costs of this kind are not included in the FWS report.

  • Overall financial costs to society when people lose their jobs or have to pay higher prices for necessities
    According to the U.S. House of Representatives Subcommittee on Forests and Forest Health, at least 130,000 jobs have been lost and more than 900 sawmills, pulp and paper mills and other forest products facilities have been closed since mid-1990�??all due to protection of the northern spotted owl.

  • Costs of reduced or terminated business activities and jobs; increased costs to provide services; reduced tax revenues from reduced or terminated business income, personal income, or property devaluation; and costs of public assistance provided to individuals who lose jobs
    In just one year, ESA-mandated water reductions in the Westlands Water District cost the California economy more than $218 million and 4,500 jobs statewide while the federal government lost about $2.3 million in revenue.

 

IMPORTANT CONCLUSIONS FLOWING FROM THIS ANALYSIS


  • The costs of implementing the Endangered Species Act are far larger than the government leads its citizens to believe.

  • The Endangered Species Act may be a waste of taxpayer dollars since only a few species benefit from the government�??s expenditures. Fifty percent of reported expenditures are for seven species, just 0.6 percent of the ESA list.

  • Reporting inadequacies will continue as long as the current collection methodology remains in place.
Type: 
Media Source: 
Randy T. Simmons is a political scientist who emphasizes the importance of economic reasoning to better understand public policy. He believes the study of politics cannot be separated from the study of markets. Simmons uses this framework to evaluate environmental and natural resource policies. The real challenge of the social process, as he sees...
Read More > More Articles by Randy Simmons >