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Is the Endangered Species Act bad for endangered species? John List thinks it might be.

My colleague and co-author John List is one of the most prolific and influential economists around.

He’s got a new working paper with Michael Margolis and Daniel Osgood that makes the surprising claim that the Endangered Species Act — which is designed to help endangered species — may actually harm them.

Why? The key intuition is that after a species is designated as endangered, a decision has to be made about the geographic areas that will be considered critical habitats for that species. An initial set of boundaries is made, after which there are public hearings, and eventually a final decision on what land will be protected. In the meantime, while this debate is ongoing, there are strong incentives for private parties to try to develop land that they may in the future be prevented from developing by the endangered species status. So destruction of habitat is likely to actually increase in the short run.

Based on their theory, they analyze the data for the Cactus Ferruginous Pygmy Owl near Tucson, AZ. Indeed, they find that land development speeds up substantially in the areas that are going to be designated a critical habitats.

This result, combined with Sam Peltzman’s observation that only 39 of the 1,300 species put on the endangered species list have ever been removed, do not paint a very optimistic picture of the efficacy of the Endangered Species Act.