Posts Tagged ‘Endangered Species Act’

Kahneman on the Precautionary Principle

January 10, 2013

In Daniel Kahneman’s Thinking, Fast and Slow, there is an interesting discussion of how moral intuitions behind the precautionary principle conflicts with efficient risk management:

The intense aversion to trading increased risk for some other advantage plays out on a grand scale in the laws and regulations governing risk. This trend is especially strong in Europe, where the precautionary principle, which prohibits any action that might cause harm, is a widely accepted doctrine. In the regulatory context, the precautionary principle imposes the entire burden of proving safety on anyone who undertakes actions that might harm people or the environment. Multiple international bodies have specified that the absence of scientific evidence of potential damage is not sufficient justification for taking risks. As the jurist Cass Sunstein points out, the precautionary principle is costly, and when interpreted strictly it can be paralyzing. He mentions an impressive list of innovations that would not have passed the test, including “airplanes, air conditioning, antibiotics, automobiles, chlorine, the measles vaccine, open-heart surgery, radio, refrigeration, smallpox vaccine, and X-rays.” The strong version of the precautionary principle is obviously untenable. But enchanced loss aversion is embedded in a strong and widely shared moral intuition; it originates in System 1 [the thinking fast system]. The dilemma between intensely loss-averse moral attitudes and efficient risk management does not have a simple and compelling solution[p. 351, italics in original].

I suspect similar morals lie behind the US Endangered Species Act, which actually prohibits any kind of risk management; any specie should be conserved at any cost. One of my favorite economists, Jason Shogren, have written extensively on the problematic aspects of the Endangered Species Act. In one of his memorable passages, he writes:

Essentially, the approach of the Act that prohibits any activity that harms a listed [endangered] species puts a very large or infinite value on avoiding extinction. This view places endangered species beyond the reach of economic tradeoffs, and the economist is relegated to helping find the least cost solution to achieve a biological-based standard [Brown and Shogren 1998, Economics of the Endangered Species Act, The Journal of Economics Perspectives, Vol. 12, No. 3, pp. 3-20, p. 10].

Superfreakonomics by Steven D. Levitt and Stephen J. Dubner

September 10, 2010

After having it on my shelf for quite a while, I finally sat down and read Superfreakonomics; Levitt and Dubner’s follow-up to their bestselling book Freakonomics. Superfreakonomics is laid out much the same way as Freakonomics was, although less time is spent on declearing Levitt to be a genius.  However, with chapter titles as How is a street prostitute like a department-store santa?, Why should suicide bombers buy life insurance?, and What do Al Gore and Mount Pinatubo have in common?, the similarity to Freakonomics is unmistakeable. The similarity also makes Superfreakonomics feel like an act of duty more than a work of inspiration.

Just like John Whitehead, I enjoyed Freakonomics more than I did Superfreakonomics. I also agree with Whitehead that the highlight is the epilog on monkeys learning to use money. Levitt and Dubner do a great job, however, coming up with surprising conclusions:

This is a strange twist. Many of the best and brightest womenin the United States get an MBA so they can earn high wages, but they end up marrying the best and brightest men, who also earn high wages which affords these women the luxury of not having to work so much (p. 46).*

So, perhaps there’s more to getting an MBA than high wages? Bright men, for example. Next, do what you want to do:

Deliberate practice has three key components: setting specific goals; obtaining immediate feedback; and concentrating as much on technique as on outcome. The people who become excellent at a given thing aren’t necessarily the same ones who seemed to be “gifted” at a young age. This suggest that when it comes to choosing a life path, people should do what they love […] because if you don’t love what you’re doing, you are unlikely to work hard enough to get very good at it (p. 61).

Partly beg to differ. I think many of those really good at something (like, world-class-good), at least has to begin practicing at an early age.

Other amusing and at times unsettling conclusions are that death rates in Los Angeles drop when doctors go on strike (p. 81), in Singapore they have the the Manitenance of Parents Act (p. 106), economists believe more in theory than in the real world (“Sure, it works in practice, but does it work in theory?”, p. 115), the Endangered Species Act endanger rather than protect species (p. 139), buying locally produced food increases greenhouse-gas emissions (p. 167), and the movement to stop global warming has taken on the feel of a religion (p. 169).

Perhaps the most controversial part of the book is the chapter on global warming, where Levitt and Dubner embrace geoengineering as the short-term solution. The noise around the chapter was seemingly so annoying to someone that critical posts on the Freakonomics blog were removed (see here, for example). Among the disturbing claims Levitt and Dubner provide is that climate scientists ‘turn their knobs’ such that their model do not provide outlier estimates, because an outlier model is hard to get funded. The economic reality of research funding generate a scientific consensus, rather than independent research (p. 182). The claim ressonates with a seminar I recently attended. The seminar was given by a Danish climate scientist who were concerned that the famous hockey stick graph, hailed as the undisputable proof of man-made climate change, resulted from lack of data, inappropriate methods, and an assumed stable temperature prior to the industiral revolution. The discussion in Superfreakonomics do, however, seem fairly balanced in places, see for example the discussion on page 199.

I would recommend Superfreakonomics to anyone unfamiliar with Freakonomics, but, honestly, it’s a Freakonomics 2, and not any more super than it’s predecessor, which is, notwithstanding, quite superb. Superfreakonomics is perhaps an easier read (or I’ve become a better and quicker reader), but lacks a character like Sudhir Venkatesh.

* Page numbers refer to the Allen Lane UK edition.

Rebuilding Global Fisheries

September 15, 2009

Boris Worm, Ray Hilborn, and, among others, Chris Costello, recently had the article ‘Rebuilding Global Fisheries’ in Science (Vol 325, pp. 578 – 585). It discusses trends in the rebuilding of fisheries and marine ecosystems. The inherent problem in fisheries is the tragedy of the commons; many fisheries are poorly managed and access rights are not distributed properly. ‘Rebuilding Global Fisheries’ touches upon it in the introduction:

[…] progress toward curbing overfishing has been hindered by an unwillingness or inability to bear the short-term social and economic costs of reducing fishing [p. 578].

And again, while discussing species collapse:

Rebuilding […] collapsed stocks may require trading off short-term yields for conservation benefits [p. 581].

Short-term costs are like an investment in future abundacy; if fishermen are uncertain whether the promised future will enrich themselves, they will probably avoid the investment if they can. Accordingly, Worm et al. list access rights and economic incentives among tools for rebuilding fisheries:

Assingning dedicated access privileges, such as catch shares or territorial fishing rights, to individual fishers or fishing communities has often provided economic incentives to reduce effort and exploitation rate […] Realigning economic incentives with resource conservation (rather than overexploitation) is increasingly recognized as a critical component of successful rebuilding efforts [p. 583].

Another problem for many fisheries is simply that they are located in the developing world:

On a global scale, a key problem for rebuilding is the movement of fishing effort from industrialized countries to the developing world […] This north-south redistribution of fisheries has been accelerating since the 1960s […] and could in part be a perverse side effect of efforts to restore depleted fisheries in the developed world, as some fishing effort is displaced to countries with weaker laws and enforcement capacity [p. 584].

Collapsed fisheries in the developed world, like the Canadian Northern Cod scandal, are also a likely source of effort movements to the developing world. Further, the technological ability to fish far from, and even independent of, (home) port, poorly regulated fisheries, limited enforcement of regulations, corrupted, political systems, and lack of knowledge are all probable reasons for the sorry state of many fisheries in the developing world. Also, many fisheries in the developing world are small-scale, artisanal fisheries and such fisheries cannot be managed in the same way as industrial fisheries (p. 582).

Finally, Worm et al. discusses open questions in relation to the rebuilding of fisheries. One I found interesting (I’m doing related research) relates to by-catch problems of vulnerable, and, one might add, endangered species:

[An area] of inquiry relates to the question of how to avoid contentious trade-offs betweeen allowable catch and the conservation of vulnerable or collapsed species. Recovering these species while maintaing global catches may be possible through  improved gear technology and a much more widespread use of ocean zoning into areas that are managed for fisheries benefits and others managed for species and habitat conservation. Designing appropriate incentive for fishers to avoid the catch of threatened species, for example, through tradable catch and by-catch quotas has yielded good results in some regions [p. 584].

In conclusion, Worm et al. has a grand view for fisheries science:

We envision a seascape where the rebuilding, conservation, and sustainable use of marine resources becomes unifying themes for science, management, and society. We caution that the road to recovery is not always simple and not without short-term costs. Yet it remains our only option for insuring fisheries and marine ecosystems against further depletion and collapse [p. 584].

Maybe the most important message I take home from ‘Rebuilding Global Fisheries’ is the crucial role the economist must play in order to make conservation and rebuilding strategies work; incentives matter and are very important. The same message, by the way, is made by Gardner Brown & Jason Shogren  in relation to the Endangered Species Act (I’ve posted excerpts from their article here).

Hat-tip: Legal Planet

Unintended Consequences of the Endangered Species Act

May 15, 2009

I’ve posted on research on the Endangered Species Act earlier. Yesterday, Freakonomics’s Stephen J. Dubner mentioned an earlier post of theirs which discusses the unintended consequences of it (Dubner draws a parallel to other protective laws with similar unintended consequences):

Consider the Endangered Species Act (E.S.A.) of 1973, which protects flora and fauna as well as their physical habitats. The economists Dean Lueck and Jeffrey Michael wanted to gauge the E.S.A.’s effect on the red-cockaded woodpecker, a protected bird that nests in old-growth pine trees in eastern North Carolina. By examining the timber harvest activity of more than 1,000 privately owned forest plots, Lueck and Michael found a clear pattern: when a landowner felt that his property was turning into the sort of habitat that might attract a nesting pair of woodpeckers, he rushed in to cut down the trees. It didn’t matter if timber prices were low.

This happened less than two years ago in Boiling Spring Lakes, N.C. “Along the roadsides,” an A.P. article reported, “scattered brown bark is all that’s left of once majestic pine stands.” As sad as this may be, it isn’t surprising to anyone who has examined the perverse incentives created by the E.S.A. In their paper, Lueck and Michael cite a 1996 developers’ guide from the National Association of Home Builders: “The highest level of assurance that a property owner will not face an E.S.A. issue is to maintain the property in a condition such that protected species cannot occupy the property.”


In a new working paper that examines the plight of the cactus ferruginous pygmy owl, the economists John List, Michael Margolis and Daniel Osgood found that landowners near Tucson rushed to clear their property for development rather than risk having it declared a safe haven for the owl. The economists make the argument for “the distinct possibility that the Endangered Species Act is actually endangering, rather than protecting, species.”

The article concludes: “…if there is any law more powerful than the ones constructed in a place like Washington, it is the law of unintended consequences.”

Stay tuned and I will use that exact quote from the List, Margolis and Osgood paper in my own research!

Related post:

Economics of the Endangered Species Act

April 30, 2009

I’m reading the article by Gardner M. Brown Jr. and Jason F. Shogren (Journal of Economic Perspectives, Vol 12, No 3). Here is some of what I highlighted:

The Endangered Species Act of 1973 addresses the market failure associated with the unpriced social benefits of such species. […] Although the benefits of protecting endangered species accrue to the entire nation, a significant fraction of the costs imposed by the Act are borne by private landowners [p. 3].

Many natural scientists and ecologists view the methods and mindset of economists with grave suspicion. […] [E]conomists can help to raise the chances that when society imposes and bears costs for protecting endangered species, it is more likely to succeed [p. 4].

The intention of the Endangered Species Act is to save all species. There is no explicit recognition of relative costs and benefits in the 1973 Act. […] Recovery plans are typically designed with little regard for total or marginal economic benefits relative to costs, nor with much regard for ecological-economic interactions, including the relative value of information that allows policymakers to discriminate among alternative recovery plans [p. 6].

Since owning land which is hospitable to an endangered species can dramatically circumscribe any development plans for that land, owners have an incentive to destroy the habitat before listing occurs, sometimes known as the “shoot, shovel and shut-up” strategy. [p. 7].

Preferences are not an ingredient of science [p. 8].

[O]nly one with modest expectations would give the Endangered Species Act a high performance rating. Since the inception of the Act in 1973, 11 species of more than 1,000 listed [as threatened or endangered] have recovered and have been removed from the list […] [L]ess than 10 percent of the listed species have exhibited an improved status and the status of four times that amount is declining. […] The ratio of declining species to improving species is 1.5 to 1 on federal lands, and 9 to 1 on private lands [p. 10].

Most of the services provided by the endangered species, including their corresponding levels of biological diversity, are not priced by the market. […] Essentially, the approach of the Act that prohibits any activity that harms a listed species puts a very large or infinite value on avoiding extinction. This view places endangered species beyond the reach of economic tradeoffs, and the economist is relegated to helping find the least cost solution to achieve a biological-based standard [p. 10].

A recent survey found that over 70 percent of Scottish citizens were completely unfamiliar with the meaning of biodiversity [see article for reference], and there is little reason to expect substantially more knowledge in the United States [reference, see article; pp. 12-13].

The opportunity costs of the Endangered Species Act include the foregone opportunities due to restrictions on the use of property due to listings, designation of critical habitat, and recovery plans.  Opportunity costs also include the reduced economic rents from restricted or altered development projects, agriculture production, timber harvesting, minerals extraction, recreation activities, wages lost by displaced workers who remain unemployed or who are re-employed at lower wages, lower consumer surplus due to higher prices, and lower captial asset value [p. 13].

[E]conomists can frame the endangered species debate in benefit-cost terms. Such calculations are bound to be uncomfortable and controversial, especially since the overwhelming fraction of benefits from the preservation of endangered species are likey to be in the nature of public goods whose benefits are received in the future. […] Economists naturally seek criteria and conduct analysis which permit a discrimination among species in recognition of the existence of budget constraints. Of course, anyone who offers analysis which leads to increased risk of a species becoming extinct will suffer attacks, but the present system is assuredly allowing many such actions, without the meliorating grace of admitting or examining them openly [pp. 15-16].

[W]heather and which species are or soon will be endangered are not purely ecological questions, but are in part economic questions too. After all, economic variables influences the likelihood of extinction  and even evolution [see article for reference; p.16].

At present, the Endangered Species Act sets a lofty rhetorical goal of saving every species, while making no distinctions among species except those governed by “science,” a term left largely undefined. It is driven by the belief that risk of extinction is a question best left to the natural sciences; if economics is allowed in the door at all, it is relegated to task of managing the risk levels determined by others [see article for reference]. The Act largely ignores the importance of the incentives facing private landowners. These are shortcoming that economists are well-suited to address [pp.17-18].

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