Forest Management under the Endangered Species Act

The regulations imposed by the Endangered Species Act (ESA) have altered the incentives to manage forestland, for both private and public forests. This paper examines the economic incentives for forest management that are created by the ESA and examines some of the implications for forest practices. On private land, the ESA effectively limits the property rights a forest owner has to timber value and thus can create incentives for the owner to preemptively alter suitable habitat for endangered species in order to avoid potentially costly regulations. On public forests, the situation is different because bureaucratic managers and commercial timber companies do not have sufficient property rights to allow preemptive land management. Instead land use is expected to be shifted away from timber production when ESA regulations are binding. This paper examines the forest management incentives for the two types of landowner and examines forest management for two important endangered species – the red cockaded woodpecker and the northern spotted owl. Data from North Carolina landowners are used to examine the effects of potential ESA regulations on the age of timber when it is harvested. The evidence from the 1980s indicates that the greater the likelihood of ESA restrictions the younger the stands will be at harvest, while the evidence from the 1990s finds little evidence of such preemptive activity. Data from National Forest in the Pacific Northwest, however, indicates that ESA regulations lead to a decrease in timber harvest rather than an increase. These differential incentives on private and public land are used to explain the political opposition to amending the ESA

2004-20lueckmichael.pdf (2.72 MB)

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