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Reform Endangered Species Act to Contain Costs

The Endangered Species Act (ESA), passed in 1973, has had several decades to accumulate a record of costs and benefits. Despite bureaucrats and activists often pointing to it as a success story of environmental policymaking, its record is one of enormous costs and shockingly few benefits. The time is long since due for a formal reckoning of the ESA’s economic impact—and a plan for how Congress and the executive branch can reform it. You can find the beginning of such a plan in the new CEI study “‘Whatever the Cost’ of the Endangered Species Act, It’s Huge.  

When the government identifies and lists a species as threatened or endangered, both taxpayers and private landowners can be on the hook for millions of dollars in costs and lost economic value. Due to a 1978 federal court decision, agencies like the U.S. Fish and Wildlife Service (FWS) and the National Oceanic and Atmospheric Administration (NOAA) implement wildlife protection measures “whatever the cost.” Four decades later, “whatever the cost” is, it is far greater than generally recognized, and the ultimate price of the program easily reaches up into the tens and more likely hundreds of billions of dollars.

The economic impact of the Endangered Species Act is so large, in fact, that states often impose their own regulations and management regimes as part of an effort to prevent the federal government from adding new species to the list. According to a recent study, for example, the listing of the sage grouse alone would cost the U.S. more than $5.6 billion in annual economic output. With no meaningful cost-benefit process in place, agencies involved have no incentive to prioritize or contain these costs.  

Some argue that high costs are justified in order to rescue the over 1,600 species currently listed as threatened or endangered. But here, too, the ESA’s record is weak. Only forty species have ever been removed on the grounds that they have recovered. Unfortunately, even this small number is an exaggeration. About half of these species did not really recover, but were misclassified to begin with: found to be more numerous or widespread than originally believed, to have faced overestimated threats, or to have been taxonomically invalid.

To improve this expensive and ineffective system, policymakers should:

  • Implement a process to correct falsely “recovered” and wrongly listed species.
  • Increase accountability and transparency by encouraging states to fully report annual ESA expenditures.
  • The Fish and Wildlife Service and National Oceanic and Atmospheric Administration should conduct standardized analyses of the economic impact of each species listing and “critical habitat” designation.
  • Agencies should present conclusions of their economic analyses on proposed species listings and critical habitat designations clearly and consistently.