is in the ‘public interest.’ The Committee has the power to designate an administrative judge, secure
information, hold hearings, subpoena witnesses, and allow cross-examination. The type of infor-
mation that might be included in any particular hearing could be wide ranging e.g. economic
impacts, distributional concerns, and evidence on nonmarket values. In practice, the critical habitat
exclusion process is commonly used while the exemption process has been rarely used.
In summary, the exclusion process under the ESA allows the exemption of individual areas
from designated critical habitat if inclusion would entail severe economic impacts, and a second level
decision process can allow species to be com- pletely exempted from protection. Comparably,
the SMS approach would allow the extinction of a species if the economic consequences of preser-
vation were judged to be somehow intolerable, which might include distributional concerns.
Taken together, the ESA’s exclusion and exemp- tion processes are consistent with the extraordi-
nary decision making process of Randall 1991 under the SMS approach.
3
.
2
. Related modeling considerations The previous discussion focused on conceptual
links between the ESA and the SMS approach. However, in practice the ESA requires that crite-
ria be developed for determining the severity of economic impacts for foregoing preservation ac-
tions. Criteria for such choices are not articulated in the ESA itself, and appear to be implemented
on a case-by-case basis. The related issue is that regional modeling decisions e.g. region of analy-
sis, choice of analytical method can affect the accounting
of aggregate
impacts and
their distribution.
Of concern is the role of distributional conse- quences in determining the severity of economic
impacts. Distributional considerations arise at both a spatial and a sectoral level, and the eco-
nomic analysis must choose the appropriate re- gion and level of sectoral detail. Much of the
design is left to the judgement of the analyst, and the choices are not innocuous. For example, these
modeling choices are likely to be connected to the exclusion criterion that is selected in any particu-
lar case. This is seen in the two case studies discussed below; they differ in that the endan-
gered fishes case addresses distributional conse- quences by assessing the geographic distribution
of impacts, while the owl case focuses on sectoral distribution.
Defining the region for analysis is always prob- lematic and somewhat imprecise. An artificially
small region may fail to capture all of the resource reallocation that accompanies the designation of
critical habitat, while a large region may mask the impacts imposed on a subset of the population or
particular sectors of the economy. The region must be sufficiently large to contain substantially
all of the direct and indirect impacts associated with habitat designation, but not so large as to
obscure impacts. The region must cover at least the areas that are expected to incur direct impacts
from preservation actions; extension to indirect impacts is less clear-cut.
4. Case studies described
Two prominent case studies are used to illus- trate the connection between the ESA and the
SMS approach, and examine how distributional concerns were incorporated. These studies repre-
sent two of the most comprehensive undertaken to date by the USFWS, especially with respect to
explicitly accounting for economic impacts. Table 1 summarizes the two cases, which use results
from various economic studies, conducted by or for the USFWS, that analyzed the impacts of
designating critical habitat. The first case involved two phases, with the latter of interest here. The
first phase consisted of an economic analysis Brookshire et al., 1993 of the impacts associated
with critical habitat designation for four endan- gered fishes in the Colorado River basin Maddux
et al., 1993. The second phase consisted of a follow-up study involving a small portion of this
region, the San Juan River basin Brookshire et al., 1997. The second case involved the economic
analysis Schamberger et al., 1992 of predicted impacts associated with designation of critical
habitat for the northern spotted owl Thomas et
Table 1 Summary of the case studies
Case study
1
: Endangered fishes in the Colorado ri6er system San Juan basin
b
Colorado basin
a
Colorado squawfish, humpback chub, Colorado squawfish, humpback chub,
Listed species bonytail, razorback sucker
bonytail, razorback sucker Proposed critical habitat
200 km of river 3500 km of river
Operation of federal reservoirs, flow Operation of reservoir, flow requirements
Proposed changes requirements
Arizona, California, Colorado, New Impacted region
Ten counties in New Mexico, Arizona, Colorado and Utah
Mexico, Nevada, Utah, Wyoming Time horizon
1995–2040 1995–2020
Regional impact modeling I–O
I–O, CGE 13
20 Number of sectors
Case study
2:
Northern spotted owl in the Pacific Northwest
c
Northern spotted owl Listed species
Portions of 52 counties in Oregon, Proposed critical habitat
Washington, and California 1.69 million acres
Proposed changes logging restrictions
Impacted region Oregon, Washington, California
1990–2040 Time horizon
I–O modeling and multiplier analysis Regional impact modeling
1 logging related Number of sectors
a
Sources: Brookshire et al. 1993 and Maddux et al. 1993.
b
Source: Brookshire et al. 1997.
c
Sources: Thomas et al. 1990 and Schamberger et al. 1992.
al., 1990. The distributional component of each case arose from different but similar factors. In
the San Juan case, the impetus was relatively high economic impacts to the sub-region, and special
concern for Native American Tribal lands. The owl case involved adverse impacts primarily
imposed on a declining industry logging in rural areas with few alternative opportunities.
4
.
1
. Colorado and San Juan Ri6er basin studies The original Colorado River basin study in-
volved proposed designation of 3350 km of river as critical habitat Brookshire et al., 1993. En-
demic fish populations have been declining due to physical and biological changes in the river and its
natural hydrograph due to economic develop- ment. Recovery requires changes in current flow
regimes and operation of this regulated river sys- tem. Predicted impacts of ESA protection affect
all seven states in the basin Arizona, California, Colorado, Nevada, New Mexico, Utah and Wyo-
ming. The value of economic output of the re- gion was approximately 1.3 trillion annually at
the time of the study, with a diversified economy and growth rate above the national average over
the last several decades. The Colorado River study estimated the economic impact of critical
habitat designation for four listed fish species: Colorado squawfish Ptychocheilus lucius, the ra-
zorback sucker Xyrauchen texanus, the hump- back chub Gila sypha, and the bonytail Gila
elegans. The economic study covered 1995 – 2020, based on the USFWS recovery plan. Because of
considerable overlap in historical habitats, the four species were considered jointly. Additionally,
considerable time had elapsed since the original listings, and the critical habitat designation pro-
cess was conducted under a federal court order Berrens et al., 1998. The Colorado study cov-
ered a broad geographic area and used an applied general equilibrium regional model, which al-
lowed assessment of potential offsetting economic impacts arising from the resource reallocation
Brookshire et al., 1993.
The economic impact analysis for the San Juan River sub-basin updated the Colorado basin
study to capture the specific effects of critical habitat flow requirements on water development
projects on Native American Tribal lands and surrounding counties Brookshire et al., 1997.
Affected Tribal units were the Jicarilla Apache, Navajo, Southern Ute and Ute Mountain Ute.
Although the focus of the follow-up phase was on impacts to Tribal economies, the regional
model encompassed a total of ten counties located in Arizona, Colorado, New Mexico, and Utah
incorporating the Tribal lands. There were sev- eral justifications. First, species preservation ac-
tions would affect developments on the Animas and La Plata Rivers in Colorado, the San Juan
River in New Mexico and Utah, and the Navajo Reservoir. Since these represent a linked physical
system, any direct impacts in one part of the system would have effects elsewhere. Second, the
ten counties defined an economic region, linked through employment and commercial transac-
tions. Third, constructing a model of the entire regional economy allowed comparison of alterna-
tive water development scenarios Brookshire et al., 1997.
The method of analysis used in the San Juan study was to construct a regional I – O model to
generate scenarios that projected economic activ- ity under two conditions. The first was a baseline
scenario, and the second considered preservation actions, which involved some restriction of water
resources development.
5
Designation of critical habitat involved changes in the flow regime of the
river. A mixed modeling approach was used, where
agricultural impacts
were generated
through a supply-side shock used to generate an exogenous level of output in agriculture sectors.
Direct impacts in remaining sectors were modeled as final demand changes. Lacking data at the
individual Tribal level, the impact analysis was undertaken for the entire 10-county region. Then,
identifying impacts to the Tribal economies in- volved ‘sharing’ or simply proportioning from
total regional impacts either population-based or employment-based see Brookshire et al., 1997.
6
4
.
2
. Northern spotted owl study The northern spotted owl Strix occidentalis
caurina inhabits old growth forests in the Pacific Northwest; it has commonly been regarded as an
indicator species for old growth forest ecosystems, where a decline in the health of the ecosystem
would be signaled by a decline in the owl popula- tion Thomas and Verner, 1992Booth, 1994. The
recognized decline in the population of the owl was attributed to increased timber harvests over
the past 30 years Schamberger et al., 1992. Rem- nant old-growth habitat is now restricted almost
entirely to public lands Booth, 1994.
The USFWS listed the owl as threatened in 1990 [see, 55 Federal Register 26114] and pro-
posed critical habitat in 1991 USDI, 1991. The actual federal listing was preceded by more than a
decade of biological concern state listings and proposed federal listings, and considerable scien-
tific study including the recommended regional conservation strategy by the federal Interagency
Scientific Committee ISC Thomas et al., 1990. Both before and after the listing there were nu-
merous legal and political actions over proposed protection Booth, 1994Marcot and Thomas,
1997, eventually including the initiation of the multi-species Clinton Forest Plan that involves an
80 reduction in public timber supply in the Pacific Northwest Thomas, 1993.
In the economic impact analysis for the final critical habitat designation Schamberger et al.,
1992, habitat preservation was discussed solely in terms of reductions in timber harvests on selected
lands. Schamberger et al. 1992 did not construct a full regional I – O model to conduct the analysis.
Rather, they utilized the IMPLAN database and
5
The primary data source was the IMPLAN database USDA, 1993, which was augmented by various sources.
Actual I – O models were written in GAUSS; the code is available upon request from Mike McKee, Department of
Economics, University of New Mexico, 87131.
6
At the time of the study, the Native American population was 29 144 627 of the regional total 491 418, while
employment was 16 27 798 out of 172 359 Brookshire et al., 1997 p. 50.
software to derive employment and output multi- pliers for the sectors with direct effects primarily
logging. These were used to estimate the total direct and indirect economic impacts associated
with reductions in timber harvests necessary to provide owl habitat. Specifically, the IMPLAN
models were used to construct job response coeffi- cients that were applied to the planned reduction
in timber harvest to obtain the projected job losses in each of the affected counties.
Of note in this study is the narrow economic focus. Attention was restricted to the logging-re-
lated industries, which omitted the possibility of other uses of the forest resources, and to the rural
communities affected
by logging
reductions. Schamberger et al. 1992 suggest that this focus
was intentional given that logging in this area was in decline and there were limited economic alter-
natives for displaced forestry workers. Consider- able effort was made to adjust employment
multipliers to remove metropolitan area effects. Schamberger et al. 1992, p. 44, state that the
adjustment
was intended
to: ‘remove
large metropolitan economies from the analysis... based
on the goal to measure impacts within the regions which contain labor and enterprises closely associ-
ated with the timber industry.’
5. Results of the case studies
