An Urban's Rural View

When a plant or animal becomes a candidate for endangered-species status, a landowner is tempted to develop now while development is still legal. Critics of the Endangered Species Act argue that by creating this perverse incentive the law defeats its own purpose.

But there may be better ways for landowners to react. The Wall Street Journal recounts (http://tiny.cc/…) a proposal in western Oklahoma to protect the lesser prairie chicken before it's declared endangered by creating a "habitat exchange." The Journal says oil companies, ranchers and the Environmental Defense Fund are pitching the exchange as a "free market solution to help both bird and industry thrive."

The exchange would work like a cap-and-trade scheme for emissions of carbon dioxide. If an oil company wanted to disturb the prairie chicken's breeding grounds and drill new wells, it would pay a rancher to compensate for the disturbance by "tearing out invasive juniper trees or letting land revert to grassland."

As with a cap-and-trade scheme, once government defines how much degradation of the environment is permitted the private sector is allowed to work out the least costly way to stay within the limit.

According to the Journal, habitat exchanges have been tried in Texas for two other species but this one would be the biggest experiment yet. The lesser prairie chicken's habitat includes parts of five states.

It will be interesting to see how this proposed exchange works, assuming the U.S. Fish & Wildlife Service approves it. A habitat exchange won't suffer from some of the measurement problems of a cap-and-trade scheme for carbon. How much land is available to a species is easier to count than how much carbon a no-tilling farmer captures.

Other measurement problems, though, will be worse. Air is fungible: A million cubic feet of it above a farmer's field in Illinois has the same value as a million cubic feet above a coal-burning power plant in Pennsylvania. Land isn't fungible. An acre in one part of a prairie chicken's range might have much less value as a lek -- an area where birds do their mating dance -- than another acre a few miles away.

There are a variety of ways to design a habitat exchange to cope with this problem but all of them face challenges. For an excellent if wonkish review, check out these three articles (http://tiny.cc/…) from the Environmental Law Institute. The Journal doesn't delve into the details of the Oklahoma proposal's design.

Landowners often find themselves arguing that a species on their land doesn't need protection. Sometimes that's true, sometimes it's just self-interest talking. If the landowner loses that argument, a habitat exchange may be preferable to an outright ban on all development. In some cases offsetting someone else's development may even prove more profitable than working a plot of land. Whether an exchange does what's needed to protect the species, time and experience will tell.