Conserving habitat requires better incentives, not more regulatory mandates

Loss of habitat is one of the chief threats to endangered and threatened species. Consequently, the Endangered Species Act provides for the designation of “critical habitat,” a designation that triggers greater scrutiny for activities requiring federal approval. Last week, the U.S. Fish and Wildlife Service and National Marine Fisheries Service, the federal agencies charged with implementing the Endangered Species Act, proposed to finally define what constitutes habitat and is, therefore, eligible for designation as critical habitat. That proposal has teed up an important debate over how best to conserve and encourage the restoration of habitat. Ultimately, incentives for private landowners to restore habitat and recover species are likely to be far more effective than more regulatory mandates.

The genesis for the proposed definition is the Supreme Court’s 2018 Weyerhaeuser v United States Fish and Wildlife Service decision. In 2012, the U.S. Fish and Wildlife Service designated 1,544 acres of private land in Louisiana as critical habitat for the dusky gopher frog. The owners objected that there were no frogs on their property, none had been seen in the area in half a century, and the land wasn’t suitable for the frog in its current condition. The land contained an ephemeral pond, which dusky gopher frogs require to breed. But the surrounding forest was the wrong type. Converting it would require establishing an open-canopied longleaf pine forest and performing frequent prescribed burns to maintain the correct groundcover. Nevertheless, the Service designated the land because, in its view, it could be restored with “reasonable effort.”

In 2018, the Supreme Court agreed to consider whether this was a permissible use of the Endangered Species Act. In a unanimous opinion, the Court held that land could not be designated as critical habitat unless it currently qualifies as “habitat.”

According to the ordinary understanding of how adjectives work, “critical habitat” must also be “habitat.” Adjectives modify nouns—they pick out a subset of a category that possesses a certain quality. It follows that “critical habitat” is the subset of “habitat” that is “critical” to the conservation of an endangered species.

However, the Court deemed this narrow holding sufficient to overturn the lower court’s decision. So, instead of explaining what constitutes habitat, the Supreme Court left that question open for a lower court or the agencies to answer.

The Service’s proposed rule defines habitat as “physical places that individuals of a species depend upon to carry out one or more life processes. Habitat includes areas with existing attributes that have the capacity to support individuals of the species.” By limiting consideration to an areas “existing attributes,” the proposal would preclude critical habitat designations where the necessary habitat features would have to be created or restored.

Critics have charged that this will frustrate efforts to conserve and recover species that currently lack adequate habitat. But are regulatory designations the best means to incentivize landowners to create or restore habitat for such species?

There are strong reasons to doubt it. The Endangered Species Act has a well-known “private land problem.” Because the statute imposes significant regulatory burdens on landowners based on the presence of rare species or their habitat, they are from the landowners’ perspective significant liabilities to be minimized rather than assets to be conserved. Studies have shown, for instance, that landowners will harvest timber prematurely , if necessary to prevent the development of habitat for listed species, even if it also reduces the profit that can be made from the timber. As a 2007 study concluded, Endangered Species Act regulation “appears to have adverse consequences for species recovery” compared to spending on active recovery efforts. “The ESA works when it is backed up with money, and not otherwise.”

Neuse River waterdog | U.S. Fish & Wildlife Service

Consequently, the proposal’s reduced reliance on controversial and burdensome critical habitat designations can benefit species, if federal agencies turn their focus instead to the incentives for landowners to conserve or restore habitat. There is some indication that the Fish and Wildlife Service is coming around to this view. In a recent proposal to list the Neuse River waterdog, a threatened salamander, the Service asked whether “there are threats to the species from human activity, the degree of which can be expected to increase due to the designation [of critical habitat], and whether that increase in threat outweighs the benefit of designation.” Although this question has been rarely asked by regulators, it is essential to getting recovery incentives right.

Recovering endangered species can be an incredible challenge, especially where that recovery depends on restoring rare and fragile habitat features. But it’s a challenge that can be met. The Nature Conservancy, for instance, has undertaken tremendous effort to restore habitat and reintroduce dusky gopher frogs on its land.

The proposed definition of habitat, while an important and positive step, should be followed by a broader effort to reduce counterproductive regulatory mandates and, instead, provide positive incentive for habitat restoration and species recovery efforts.

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