Ecological Economics 30 1999 461 – 474
ANALYSIS
Incorporating distributional considerations in the safe minimum standard approach: endangered species and local
impacts
Robert P. Berrens
a,
, Michael McKee
a
, Michael C. Farmer
b
a
Department of Economics, Uni6ersity of New Mexico, Albuquerque, NM
87131
, USA
b
School of Public Policy, Georgia Institute of Technology, Atlanta, GA
30334
, USA Received 28 April 1998; received in revised form 5 November 1998; accepted 22 February 1999
Abstract
Explicitly incorporating current distributional concerns into the safe minimum standard SMS approach is the objective of this study. The SMS approach is a collective choice process that prescribes protecting a minimum level
of a renewable natural resource unless the social costs of doing so are somehow excessive or intolerably high. More complete implementation of an SMS approach, if it is to be a pragmatic policy tool, requires that distributional
considerations be included in determining whether the economic consequences of preservation actions are intolerable. Two case studies involving the US Endangered Species Act are used to illustrate how distributional concerns might
be incorporated into the SMS approach. © 1999 Elsevier Science B.V. All rights reserved.
Keywords
:
Safe minimum standard ; Distributional consequences ; Endangered species www.elsevier.comlocateecolecon
1. Introduction
Explicitly considering current distributional concerns in the safe minimum standard SMS
approach is the objective of this study. The SMS approach is a collective choice process that pre-
scribes protecting a minimum level safe standard of a renewable natural resource unless the social
costs of doing so are somehow excessive or intol- erably high. More complete implementation of an
SMS approach, if it is to be a pragmatic policy tool, requires that distributional considerations be
included in determining whether economic effects of preservation actions are intolerable. Two
prominent case studies involving the US Endan- gered Species Act ESA are used to illustrate how
distributional concerns might be incorporated into the SMS approach.
First advanced by Ciriacy-Wantrup 1952, the SMS approach has been widely discussed e.g.
Corresponding author. Tel.: + 1-505-2779004; fax: + 1- 505-2779445.
E-mail address
:
rberrensunm.edu R.P. Berrens 0921-800999 - see front matter © 1999 Elsevier Science B.V. All rights reserved.
PII: S 0 9 2 1 - 8 0 0 9 9 9 0 0 0 3 4 - 8
Bishop, 1978. The SMS approach is argued to apply in situations involving true Knightian un-
certainty and irreversibility, but actual applica- tions remain rare. Appeals to the SMS approach
are common in discussions of sustainability Folke et al., 1994Turner et al., 1994Castle, 1996,
often with respect to protecting at-risk species and biodiversity Randall, 1991Bishop, 1993.
In applying an SMS approach to protecting an at-risk species or set of species, the burden of
proof lies in demonstrating that the economic consequences of preservation activities are intoler-
able. What constitutes intolerable is to be decided by the social or political consensus process in any
particular case Farmer and Randall, 1998. How- ever, investigation of the types of considerations
that might constitute intolerableness is critical to the SMS approach as a pragmatic policy tool.
Following Randall 1991, invoking the intolera- ble cost argument to circumvent preservation
ought to require some ‘extraordinary decision process’.
Several sources have noted that the general structure of the ESA, as amended, is consistent
with the SMS approach Castle and Berrens, 1993Woodward and Bishop, 1997. In reviewing
the lengthy ESA process for the northern spotted owl in the Pacific Northwest, Thomas and Verner
1992 p. 637 make a similar argument, albeit without explicitly identifying the SMS approach
and see Booth, 1994 p. 238. For the case of endangered fishes in the Colorado River, Berrens
et al. 1998 use the results from federal court-or- dered US Fish and Wildlife Service USFWS
implementation to illustrate how the ESA was consistent with the SMS approach. Specifically, in
the exclusion process for designating critical habi- tat, the lack of severe economic costs was deter-
mined by comparing expected aggregate regional economic impacts against historical fluctuations
in the regional economy. However, this step to- wards implementing the SMS approach fails to
incorporate distributional concerns, which may be important in defining intolerable economic costs
of species preservation actions. Endangered spe- cies debates are often focused on the distribution
of economic consequences Brown and Shogren, 1998. Randall and Farmer 1995 acknowledge
that an SMS approach might be amended to included distributional considerations.
The case studies involve results from previous economic analyses done by or for the USFWS in
two prominent ESA cases: 1 endangered fishes in the Colorado River; and 2 the northern spot-
ted owl in the Pacific Northwest. These cases illustrate the general link between the ESA and
the SMS approach, but also bring out the impor- tance of including distributional and compensa-
tion issues in considering what might constitute intolerable costs.
2. The SMS approach: from ethical issues to providing practical guidance
