Save a Species, Save on Taxes

By Mitch Tobin

A couple of years ago, I met with some Arizona ranchers to learn how they might help an endangered frog without endangering their livelihoods. In 2002, the state’s livestock industry balked when the federal government listed the Chiricahua leopard frog as threatened. Much of the species’ natural habitat—streams, springs, and marshy wetlands—was either gone or infested with rapacious, non-native predators, leaving the leopard frog dependent on the stock ponds that dot the region’s high-desert grasslands and wooded highlands. About half of the remaining frog populations were found in cattle tanks and water holes built for livestock. Ranchers feared that environmentalists would use the heaviest hammer in their toolbox—the Endangered Species Act (ESA)—to further restrict grazing.

When the U.S. Fish and Wildlife Service listed the frog, it acknowledged ranchers’ concerns by crafting a special rule: If a leopard frog was harmed or killed on non-federal lands while livestock were using a water hole or while ranchers were maintaining a stock pond, this “incidental take” would be exempt from prosecution. Local ranchers, seeking even more regulatory certainty, joined with the Nature Conservancy to create a “safe harbor agreement” that would afford ranchers immunity from added restrictions if they improved habitat for frogs (see page 15).

These measures increased ranchers’ comfort level, but many still had deep reservations about the frog and the ESA. As we swayed in rocking chairs and sipped ice tea on his porch that afternoon, rancher Bill McDonald told me the government needed to take the next step. “There still aren’t the incentives we ought to have. People ought to actually be paying people to raise these frogs,” McDonald said. “You’ve got an endangered species in trouble, we’ve got places out here where they do well, and there should be out-and-out incentives, not just elimination of penalties.”

Several years and many bruising ESA battles later, McDonald’s idea of using carrots—not just sticks—to conserve biological diversity is at the heart of a proposal in Congress to improve the ESA’s performance on private land. The federal government isn’t about to send a check to ranchers who nurture tadpoles, but a bipartisan bill introduced earlier this year—the Endangered Species Recovery Act of 2007—would provide $400 million in tax breaks to property owners who conserve valuable habitat, either through an agreement with the federal government or by creating an easement on their land (see page 14).

This effort to turn endangered species from liabilities into assets has attracted support from sworn enemies in ESA fights, including hard-line environmental groups like the Center for Biological Diversity and Defenders of Wildlife, plus fervent defenders of property rights like the American Farm Bureau and National Cattlemen’s Beef Association. Anyone who follows environmental politics knows that ESA legislation co-sponsored by Bay Area Democrat George Miller and Alaska Republican Don Young is like the species the bill aims to protect: exceedingly rare and worthy of our attention.

The ESA, born in an era of command-and-control regulation and still the “pit bull” of environmental law, is a polarizing statute because it compels the public and private sector to avoid harming species, no matter the economic impact. Across the political spectrum, friend and foe of the ESA agree that the law could be doing a much better job recovering imperiled plants and animals. Approximately 20 species have recovered and been discharged from nature’s emergency room since 1973—a pretty sorry success rate given that more than 1,300 U.S. species have been listed. On the plus side, however, only nine species have gone extinct after winning ESA protection, so the law has at least kept more than 99 percent of its patients on life support.

The bill before Congress attempts to loosen a Gordian knot that has hamstrung the ESA since its inception. Critics have long argued that federally protected animals carry so much regulatory baggage that people who find them on their land may be tempted to “shoot, shovel and shut up.” This adage is rooted in anecdotal accounts, but peer-reviewed research has supported the underlying idea. Economists Dean Lueck and Jeffrey Michael looked at patterns of timber harvest in North Carolina and found that the closer a forest plot was to a red-cockaded woodpecker colony, the more likely the trees were to be harvested. Southern pines that were near existing woodpecker colonies also tended to be cut when the trees were much younger, apparently because landowners feared that the endangered birds would colonize their property and impede logging. “Such preemptive activity would be a legal land-use decision spurred by the potential for costly regulations,” Lueck and Jeffrey and Michael wrote in an April 2003 article in the Journal of Law and Economics.

How the tax breaks would work

The Endangered Species Recovery Act of 2007 would modify the Internal Revenue Code and provide $400 million in tax breaks annually to landowners who help threatened or endangered plants and animals. A property owner could qualify for the credits by entering into a long-term habitat protection or restoration agreement with the federal government. A tax break would also be available to people who place a conservation easement on their land that benefits an imperiled species. The Treasury Department—in consultation with the Interior and Commerce secretaries—would decide how to allocate the credits. Priority would be given to actions that:

— Significantly increase the chances of a species recovering so it no longer needs ESA protection.

—Forestall the listing of a “candidate” species.

—Help eradicate or control invasive species that are jeopardizing an endangered plant or animal.

—Address multiple species and deliver conservation benefits in a cost-effective manner.

—Create neighboring or nearby habitat to benefit an endangered or candidate species.

—Resolve conflicts between the ESA and human activities, in particular military training and operations.

The Senate bill is S. 700; the House proposal is H.R. 1422

In another study, which relied on questionnaires rather than raw data on habitat modification, University of Michigan scientists concluded that the 1998 listing of the Preble’s meadow jumping mouse prompted a backlash against the species. The results of a survey sent to affected landowners in Colorado and Wyoming revealed a disturbing trend: for every acre of private land managed to help the mouse, there was an acre denuded or otherwise altered to drive the mouse away. More than half of the respondents said they had not or would not let biologists survey their property—greatly hampering the collection of data needed to help the species. “So far, listing the Preble’s under the ESA does not appear to have enhanced its survival prospects on private land,” the researchers reported in the December 2003 issue of Conservation Biology. “Our results suggest that landowners’ detrimental actions cancelled out the efforts of landowners seeking to help the species. As more landowners become aware that their land contains Preble’s habitat, it is likely that the impact on the species may be negative.”

Tools for conserving endangered
species on private land

The proposed tax breaks would join a set of existing ESA programs that seek to encourage conservation and restoration, rather than just penalize damage and destruction:

—Safe harbors stop people from being punished with added regulation if they improve habitat. There are already more than three million acres of land covered by such deals.

— Candidate conservation agreements can forestall the listing of a species by rewarding private landowners who take proactive measures. If the animal does get listed, the landowner doesn’t have to go beyond the conservation measures outlined in their agreement.

—Habitat conservation plans and conservation banks inject some flexibility into the ESA by allowing permit holders to offset their impacts by protecting or rehabilitating habitat elsewhere.

—The Private Stewardship Program awards grants on a competitive basis to support local, private, and voluntary conservation efforts.

This perverse set of incentives is a major challenge for the ESA because half of listed species have at least 80 percent of their habitat on private lands. In Hawaii, which has the most endangered species in the country, only 16 percent of the land is owned by the federal government. Texas, fifth on the list of states with the most endangered species, has virtually no federal land. To be sure, our national parks are vital for many listed species, but they often protect freaks of nature like geysers and geologic formations—not necessarily jewels of biodiversity. Our national forests and federal wilderness areas tend to encompass higher elevations where the prevalence of rock and ice may limit species richness. By comparison, the bottomlands along rivers and streams, where people have always lived, are often the most critical for endangered species.

Three-quarters of a century ago, ecologist and environmentalist Aldo Leopold recognized that ordinary citizens and their property would be essential for protecting U.S. wildlife. “Conservation will ultimately boil down to rewarding the private landowner who conserves the public interest,” Leopold wrote in 1934.

Giving conservation-minded landowners tax breaks would jibe with scientists’ growing recognition that in an increasingly human-dominated world we must broaden our conservation efforts beyond nature preserves. There will never be enough money—public or private—to buy or otherwise protect all of the valuable habitat that endangered species need to survive and recover. And our existing parks and wildlife refuges are often too small or too isolated to support viable populations of sensitive species.

With Congress preoccupied with the Iraq war, energy policy, and other issues, the Endangered Species Recovery Act may remain a bill for some time. But with support on both sides of the aisle, the proposal appears to have a good shot at eventual passage. If the tax breaks do become reality, ranchers in Arizona and property owners across the nation may start seeing the conservation of frogs and other endangered species as a wise investment—not just a drain on their pocketbooks.

Mitch Tobin, a former reporter for the Arizona Daily Star in Tucson, was a Lone Mountain Fellow at PER C in December 2006. This piece is adapted from his forthcoming book on the Endangered Species Act. Contact him at mitchtobin@yahoo.com.

 

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