Association for Public Policy Analysis & Management

The Endangered Species Act (ESA) is arguably faced with a shortage of incentives to motivate the scale of conservation activities necessary to effectively address the decline of at-risk species. A July 2014 policy proposal from the Department of Interior attempts to change this dynamic by allowing landowners to generate mitigation credits for voluntary conservation actions undertaken before a species is listed under the Act. The approach outlined in Interior’s recent proposal provides an opportunity for substantial value to be generated for both participating landowners and affected species, but the ultimate reach and potential of such an approach remain unclear. By seeking to create increased value for conservation actions undertaken prior to a species being listed, the policy can help forestall the decline of at-risk species, possibly preventing them from ever being listed in the first place. But by associating the value of conservation actions to listing itself, the policy also sets up competing incentives – landowners might undertake actions only if they believe a species will be listed, but there is less to be gained from a conservation perspective if a species has already declined to a point where listing is imminent.

Using game theory and a stylized construct of the average participating landowner, we explore how these competing incentives, along with the structural constraints of the ESA and its implementing regulations, are likely to influence landowner decision-making as it pertains to voluntary conservation activities. We begin by reviewing expected landowner behavior under the July 2014 policy as proposed and the ESA as it exists today. Next, we consider how landowner participation in voluntary conservation activities can be enhanced through minor adjustments to the Act’s implementing regulations, thus increasing the scale of conservation activity undertaken. Finally, we examine landowner decision-making under a wholly reimagined approach for conserving species, one that is designed to maximize the benefit to landowners for both reporting species occurrence and working towards their conservation and recovery. We will conclude with a discussion of the importance of understanding landowner behavior in the presence of specific incentives and constraints when developing new policy or reforming existing laws or regulations.