Field Notes

ECONOMISTS CALL IT THE Noah’s Ark problem: Given that we can’t save every plant and animal we might like to, how do we decide which ones to save? Or, as the economists prefer to put it: How do you allocate finite societal resources among competing demands?

It is not an abstract question. By design, the controversial Endangered Species Act (ESA) presumes that all plant and animal species are worth saving. While that is a noble notion, it has little correspondence to reality. For example, of the 1,104 species listed as threatened or endangered in this country, only about 40 percent have recovery plans in place. And the ESA budget has failed to keep pace: The money allotted per species for recovery programs is now only 60 percent of what it was twenty years ago.

So with budgets dropping and the act itself under threat from Republicans (who think it hurts landowners) and from Democrats (who think it’s too easily skirted), some thick-skinned economists have entered the tussle. In a symposium on the ESA published this summer in the Journal of Economic Perspectives, the participants raised a cold-blooded question of cost versus benefit.


Think of one approach as the Amazon rain forest technique. It goes like this: The Pacific yew tree yields the drug taxol, which is used to treat ovarian cancer, a market worth $1 billion in 1996. Perhaps other drugs will come from other threatened flora or fauna, so we should save those species. But as economists Gardner Brown of the University of Washington and Jason Shogren of the University of Wyoming point out, protecting the right species is a crapshoot. You have to sample many species to get relatively few profitable new products. If, for example, you have to test 250,000 species to have a 95 percent chance of getting ten modestly successful products, and a $300 million investment will yield you $450 million in profits, then the maximum value of saving a species is about $10,000. While that’s nice, it’s not enough economic incentive to save Hungerford’s crawling water beetle, let alone the northern spotted owl (on which $26.4 million was spent between 1989 and 1991 alone).

Well, what about saving a species by shooting it? This is no joke. Some economists wonder whether species protection can be justified by recreational or consumer uses. After all, angling and fishing were worth $60 billion in 1996. Commercial and recreational salmon fishing in the Pacific Northwest were worth $1 billion in 1995. Global spending on eco-tourism has been estimated at $90 to $200 billion, with about 15 percent spent in North America. But outdoor enthusiasts and eco-tourists won’t save many species. Unlike spotted owls or seals or mountain lions, few endangered insects or threatened fungi will ever make the menu at even the most exotic restaurants, nor will they suddenly become photogenic.

Economists have their own euphemism for the cute and furry animals that people like to save: They call them "charismatic megafauna."

Charismatic megafauna bother ever rational economists. "People...have preferences about protecting species...that they will rarely ever, if at all, see or use," Brown and Shogren write wonderingly. Those preferences derail most economists’ attempts to come up with specific values for animals. For example, using contingent-valuation surveys (a series of questions wherein people are asked to put a value on their preferences), one study showed that the average person was willing to pay $95 for spotted owl preservation but only a measly $6 to save the striped shiner (a fish).

While that is interesting (if sad news for striped shiner supporters), contingent-valuation surveys create some serious problems for nature lovers. For instance, if you add up the values people put on various endangered species, and then multiply that sum across the U.S. population, it works out to paying 1 percent of gross domestic product (GDP) to preserve less than 2 percent of endangered species. Put another way, to preserve all currently threatened species we would have to be willing to pay more than half our GDP.

What if you just jump the valuation queue and work backward from what we’re already doing? That was Harvard economists Andrew Metrick and Martin Weitzman’s promising tack. After all, they point out, we’re already spending money under the ESA. At least in theory, we’re spending the money according to some sense of the value of the species and the cost of saving that species.

Unfortunately, the results are equally frustrating. According to Metrick and Weitzman’s analysis, we like to spend money on species that aren’t particularly threatened. Their explanation? "Either terribly perverse priority setting" or "an overpowering role for omitted, unobservable, charisma-like factors negatively correlated with" endangerment. Translation: We’d rather save cute plants and animals than ugly ones. Either we need either to rethink the way we go about deciding which species to save or at least to be honest about our love for the best-looking ones. It’s a difficult and serious question, because those charismatic megafauna are awfully cute.


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