Do Regulations to Protect Endangered Species on Private Lands Affect Local Employment? Evidence from the Listing of the Lesser Prairie Chicken

By Melstrom, Richard T.; Lee, Kangil et al. | Journal of Agricultural and Resource Economics, September 2018 | Go to article overview

Do Regulations to Protect Endangered Species on Private Lands Affect Local Employment? Evidence from the Listing of the Lesser Prairie Chicken


Melstrom, Richard T., Lee, Kangil, Byl, Jacob P., Journal of Agricultural and Resource Economics


(ProQuest: ... denotes formulae omitted.)

Introduction

Endangered species conservation has a controversial yet poorly understood connection to the broader economy. Species extinction rates have risen and current estimates classify one-fifth of all species as endangered, meaning those species are likely to become extinct in the near future. Without conservation, this number would be substantially higher (Hoffmann et al., 2010). Habitat modification from human activity is the greatest contributor to the decline of most species (Millennium Ecosystem Assessment, 2005). As a result, conservation policies focus on protecting endangered species habitat by i) managing public lands to serve as wildlife habitat and ii) regulating private lands through a combination of land use restrictions and incentives. Both of these policies invite controversy. In particular, land use restrictions are controversial because the costs fall disproportionately on private landowners and developers (Innes, Polasky, and Tschirhart, 1998). There is widespread public concern that protecting wildlife damages local industry and labor markets (Burke, 2004; Goodstein, 1999). Considering the scope of the conservation issue and the amount of public backlash, there is remarkably little published research quantifying the effects of endangered species regulations on local markets.

This paper contributes empirical evidence to this controversy by estimating the local employment consequences of listing an endangered species in the United States. Under the Endangered Species Act (ESA), species listed as endangered or threatened cannot be harmed, which includes acts that kill, injure, or significantly modify habitat essential to the species. The threat of regulatory restrictions and substantial civil and criminal penalties places a burden on landowners and industries that rely on natural resources. Many Americans fear that listing a species restricts development and reduces employment in areas with protected habitat (Goodstein, 1999; Greenstone and Gayer, 2009). We test whether this hypothesis holds for the lesser prairie chicken, whose habitat in the Great Plains intermixes with farms, ranches, and energy development. We hypothesize that employment in areas occupied by the lesser prairie chicken declined following its listing.

A large and growing research effort is investigating the economic impacts of environmental policies and environmental change using quasi-experimental methods (Greenstone and Gayer, 2009; Kuminoff, Parmeter, and Pope, 2010). Concerns about omitted variable bias have pushed empirical researchers to adopt techniques such as instrumental variables and difference-in-differences-which have a long history in public and labor economics-to identify causal relationships in economic activity (Angrist and Pischke, 2008). Recent applications in environmental economics have used these methods to identify the effects of acid rain regulations on the behavior of polluting firms (List et al., 2003; Hanna, 2010; Di Maria, Lange, and Van der Werf, 2014; Ferris, Shadbegian, and Wolverton, 2014); carbon emission regulations on low-carbon technology development (Calel and Dechezlepretre, 2016), natural amenities, and landscape change on residential property values (Horsch and Lewis, 2009; Heintzelman, 2010; Currie et al., 2015; Locke and Blomquist, 2016; Sunak and Madlener, 2016); shale gas extraction on local employment and wages (Cosgrove et al., 2015; Komarek, 2016); and farmland subsidies on the adoption of green practices and ecosystem services (Roberts and Bucholtz, 2005; Chabé-Ferret and Subervie, 2013). Recently, several papers have applied quasi-experimental methods to measure the impacts of endangered species protection on land use and development (Boskoviç and Nøstbakken, 2017; Melstrom, 2017; Wietelman and Melstrom, 2017). Our study contributes to this literature by applying difference-in-differences to measure the local labor market effects of ESA regulations. …

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