Spending the Endangered Species Tax Dollars Wisely
The Economist August 10th 2002
The science of ecology is helping to bring "ecosystem services" to market.
RESTORING damaged habitats to something like their pristine condition is a relatively recent idea. For most of humanity's history, the trend has been in the opposite direction, as people have logged forests, drained marshes, and cleared land for agriculture. But as folk have grown more knowledgeable, they have realized that some habitats are useful in their original condition. The result is an increasing desire to recover part of what has been lost. It is helping to change ecology from an academic to a practical science, as the subject's insights are applied both to the task of restoration and to hard-headed assessments of the value of that restoration.
To help the flow of theory into practice, Margaret Palmer, a biologist at the University of Maryland, ran a symposium on the subject at a recent meeting of the Ecological Society of America and the Society for Ecological Restoration in Tucson, Arizona. According to Dr. Palmer, every habitat has an "envelope" of natural variation in its possible structure and composition. Knowing what lies within this envelope is crucial to knowing what to restore and when to stop. Thus, successful habitat restoration requires an understanding of theories about population biology, competition between species, biodiversity, and the stability and variation of ecosystems.
Putting theory into practice, Steve Handel, at Rutgers University in New Jersey, has shown that derelict urban lands, including such unpromising sites as landfill rubbish dumps, can be restored to resemble old fields with the help of pieces of ecological science known as metapopulation theory and patch-dynamics. These rely on the idea that populations of animals and plants are not permanent, contiguous collections of organisms, as was once believed, but are actually shifting collections of smaller groups that are partly isolated from one another and often exist only temporarily. By manipulating the sizes of patches of plants, Dr. Handel has been able to improve insect pollination and seed dispersal, and thus kick-start the restoration process in landfills near New York.
The restoration of surplus agricultural land, too, can benefit from the appliance of science. Sara Baer at Southern Illinois University, and her colleagues, has shown that previous tillage hampers the restoration of prairie on former farmland in the Great Plains. Ploughing homogenises the soil. That is fine for crops, which are monocultures, but no good for wild plants, which come in a range of species that prefer subtly different conditions. By tweaking the soil's moisture and nutrient content to increase its heterogeneity, Dr. Baer has found that she can affect how well a piece of habitat functions once it has been restored, and Dr. Palmer has found something similar in aquatic systems.
There, having a variety of different particle sizes in the sediment of a stream will affect the rate at which it recovers from environmental damage, and also its eventual biological productivity.
Similar ideas apply to marine environments. Charles Peterson of the University of North Carolina at Chapel Hill has found that mathematical models of the communities of animals and plants in oyster reefs can help to show which animal species may successfully be re-established in a damaged reef.
The most effective attempts at restoration, though, have been those in wetlands. Besides pleasing people who like nature, restoring wetlands brings practical benefits. Not only has ecology shown how to do this, it has also demonstrated that wetland habitats provide valuable "ecosystem services" such as recharging groundwater, attenuating floods and acting as natural filter beds that remove pollutants.
Applied ecology is also helping, in America, to lubricate "trade" in wetlands. It is not the wetlands themselves that are bought and sold, but rather "wetland credits." These are issued by so-called mitigation banks to companies or other organizations that protect or restore pieces of wetland. They can then be sold to third parties who wish to destroy some wetland elsewhere. Such transactions are, however, meaningless unless ecologists can confirm that a newly constructed piece of wetland has real environmental benefits that involve measuring factors such as nutrient uptake, flood alleviation, and the presence of suitable plants. Researchers are still learning about what, precisely, makes one piece of wetland equivalent to another. Indeed, in less understood habitats such as the Grand Canyon, attempts at restoration are proving to be a powerful test of the accuracy of ecological theory.
The first mitigation banks appeared at the start of the 1990s, as a result of regulations drawn up by the country's Environmental Protection Agency for the granting of permits for the removal of wetlands. A state's department of transport that wishes to build a road through a wetland, may, for example, be required by the regulations to create an equivalent piece of wetland elsewhere. Rather than actually sending its navvies to install a new marsh, the state can buy an appropriate amount of wetland credit from people who have earned it the hard way.
There are now around 300 mitigation banks in America, and loo more are planned. John Ryan, until recently, the president of the Wetland Mitigation Banking association, estimates that 8,000 acres' worth of credits was issued last year. Generally, restored wetland costs between $25,000 and $130,000 an acre, depending on the amount of engineering required, the type of wetland, and the risk that the restoration project in question may not succeed. It also depends, of course, on the local price of other sorts of land. In New Jersey, wetland credits have been sold for as much as $250,000 an acre.
Such sums are having an impact on the property business. Companies such as GreenVest, based in New Jersey, call themselves "environmental capitalists" and help landowners to value their property in a way that takes account of "eco-assets" such as potential wetland credits. Indeed Tenneco Energy, a utility firm based in Houston, Texas, which has large land holdings in New Jersey, used such a procedure to wipe out the cost of its liability for cleaning up contaminated soil on its property. Restoring the land to wetland not only removed the contaminants, it also allowed Tenneco to sell wetland credits. Furthermore, since conservation areas are not taxed in this part of New Jersey, it saved the firm $300,000 a year in land taxes.
Not surprisingly, some individual mitigation banks and restoration projects have been environmental failures. But the environmental capitalists hope that progress in reconstructing wild places will eventually provide a robust way of establishing that a wetland really works, and thus has a market value.
Link to Economist article
Reforming the Endangered Species Act to Protect Species and Property Rights
The Endangered Species Act should encourage—not discourage—the provision of habitat to endangered species. As Richard L. Stroup of the Political Economy Research Center observes,
It is ironic that the Constitution explicitly forbids the U.S. Army, even in the name of national defense, from requiring that a citizen quarter a soldier (that is, provide food and shelter for a soldier). Yet the government can require the same citizens to quarter a grizzly bear, a spotted owl, or any other member of a threatened or endangered species, at the landowners’ expense. 52
Congress should reform the ESA so that it provides just compensation to landowners in exchange for becoming stewards of habitat for American species. It should seek reforms that make the ESA less strong-arm and more helping hand. This reorientation alone would help to make landowners more inclined toward welcoming rare wildlife to their property and less likely to feel compelled to get rid of them. Until Congress weighs in on the constitutional first principles of property rights and just compensation, both endangered species and landowners will continue to suffer.
–Alexander F. Annett is a Research Assistant in The Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.