A Model of Environmental Compromise Between Regulators and Landowners Under the Endangered Species Act

EPA Grant Number: U914971
Title: A Model of Environmental Compromise Between Regulators and Landowners Under the Endangered Species Act
Investigators: Hsu, Shi-Ling
Institution: University of California - Davis
EPA Project Officer: Packard, Benjamin H
Project Period: January 1, 1996 through July 16, 2002
Project Amount: $102,000
RFA: STAR Graduate Fellowships (1996) RFA Text |  Recipients Lists
Research Category: Academic Fellowships , Environmental Justice , Fellowship - Economics


The objective of this research project is to study regulatory bargaining and compromise in the context of a particular federal environmental statute, the Endangered Species Act (ESA) of 1973. Parties subject to regulation under the ESA (e.g., private landowners) have threatened to challenge the regulatory authority of the U.S. Fish and Wildlife Service (the Service) under the ESA, and assert their private property rights to exploit their property vis-a-vis the Service's authority to regulate it. In response to this pressure, the Service has become amendable to compromising with landowners.


The Service has made extensive use of a policy mechanism known as the Habitat Conservation Plan (HCP) to implement regulatory compromises with landowners. HCPs are voluntary agreements between the Service and a landowner, whereby the Service permits the landowner to harm endangered or threatened species in exchange for a promise by the landowner to undertake a long-term program of mitigation measures and habitat development to aid endangered or threatened species. Although the HCP program lay dormant for the first 12 years of its existence, a surge in interest in HCPs took place in 1994, leading to the implementation of more than 200 HCPs over the next 4 years. A game-theoretic model of regulatory bargaining was developed to model the HCP process, which posits that the landowner may sue the Service to challenge a regulation. The model was used to derive the conditions under which a regulatory compromise such as an HCP can occur, and the conditions under which the parties may instead forge ahead with litigation. A more complex model also was developed that accounts for the possibility that a future need may arise for mitigation or restoration measures in addition to those set forth in the HCP. This model also simulates the policy mechanism that the Service adopted in 1994 to cope with this uncertainty-the "No Surprises" policy, whereby the Service provides a landowner with the assurance that the HCP constitutes an exhaustive list of his or her obligations with respect to the ESA.

The model produces the theoretical result that the No Surprises policy makes it more likely that sufficient scope for negotiation exists so that the parties can bargain to an HCP compromise. As well, it produces a pair of comparative static results that represent dual competing hypotheses regarding whether it is the Service or the landowners who are appropriating the surplus from the HCP process. These dual hypotheses are tested using a data set of 21 HCPs for the endangered Golden-Cheeked Warbler. I find no evidence to suggest that either the Service or landowners are consistently appropriating the surplus from the HCP process. On the contrary, the data suggest that the Service and the landowners appear to be sharing the surplus. In addition, other empirical case studies of HCPs for the Florida Scrub Jay, the Northern Spotted Owl, and the Alabama Beach Mouse indicate that the Service tends to use a rule of thumb as a starting point for negotiations over HCPs. Due to data limitations, empirical results in this research project are generally only suggestive.

Supplemental Keywords:

fellowship, Endangered Species Act, ESA, habitat conservation plans, regulatory compromise, regulatory bargaining, voluntary agreements, regulatory takings, RFA, Economic, Social, & Behavioral Science Research Program, Scientific Discipline, ENVIRONMENTAL MANAGEMENT, Resources Management, Economics, decision-making, Ecology and Ecosystems, Economics & Decision Making, Environmental Law, economic research, Habitat Conservation Plan, environmental decision making, Endangered Species Act, conservation, environmental policy, regulatory bargaining, comparative study, environmental protection, game theoretic model, landowners

Progress and Final Reports:

  • 1996
  • 1997
  • 1998
  • 1999
  • 2000
  • 2001
  • Final