Supply, Demand, and Uncertainty: Implications for Prelisting Conservation Policy

The Endangered Species Act (ESA) faces a shortage of incentives to motivate the scale of conservation activities necessary to address and reverse the decline of at-risk species. A recent policy proposal attempts to change this by allowing landowners to generate credits for voluntary prelisting conservation activities. We explore the proposed policy from the perspective of potential participants. We find that uncertainty present in species listing processes complicates the decision to undertake conservation activities, leading to less conservation being supplied than when a listing decision is certain, while also delaying implementation until late in the listing determination process. Incentives created by the prelisting policy may likewise push species status closer to a listing threshold and thus exacerbate uncertainty in the listing process. To counter this tendency and encourage a more efficient allocation of conservation activity, early-actor bonuses, weighted credits, or limited windows of eligibility could be used to target or place increased premiums on early conservation activity. Though these findings are most directly applicable to the specific prelisting policy considered here, they are nonetheless relevant to a wider array of conservation policies that seek to encourage voluntary early action in advance of a regulatory alternative.

Duke Scholars

Author David McAdams Fuqua School of Business