Tuesday, September 26, 2006


Cliff Brown

Sunday 24th edition of the NY times, published by the Associated Press (AP) featured an article about endangered Red-cockaded Woodpeckers.

The Federal Fish and Wildlife Service put the town of Boiling Springs Lakes, N.C. on notice that the woodpecker was being threatened due to development. It planned to potentially assign certain neighborhoods as protected habitats. As a result landowners requested logging and some building permits and clear-cut their lands in the hopes that the option value of actually being able to build would be quashed if/when the protected habitats are assigned.

Certainly the landowners have considered the use value of their land, but those who are not actually obtained building permits have not done so efficiently – I doubt whether they considered setting up a wildlife sanctuary and selling bird-watching permits. What they have done is based their decision solely on that of their option value – they have paid to clear cut in the hopes that at some future point they will be able to use their now barren, desolate plots for something of economic value. Their has been no consideration of the non-use value of these lands. They did not allow the Nature Conservancy, or some other agency to pay the landowners for doing nothing to the lands. They simply performed a pre-emptive strike and assumed their lands would hold little value IF it was deemed to be in one of the protected areas.

Indeed it is stated that just because a tree has a woodpecker does not necessarily mean a house cannot be built – providing an alternative home can be found. Surely those tracts of land that were large enough to have both trees and houses on have now declined in value (Surely people would pay more for a plot of land that also provided a home to a rare bird)

One of the landowners who stripped his land of the offending trees after holding his 2, one-half acre-plots of land for 23 years, is now upset because the plot of land had finally obtained some value (to developers). That value has now been taken away (presumably with the announcement of the endangered species) according to the landowner in defense of cutting. Perhaps a better understanding of the environmental economics of “value” would have allowed him, and many other landowners, to re-think their strategy.

Perhaps the reason the value of land was increasing in the area was because of the wildlife around. Now many of the areas are barren and “uglier” perhaps the use value will decline and the landowners will regret that they did not have a better grasp on the economics of the situation – especially those who did not obtain building permits.

1 comment:

Larry Eubanks said...

Your "perhaps" is interesting. I wonder if there are other "perhaps" we might consider as well? Perhaps this is a story of how public policy goes wrong as well?

I suspect those who cut saw incentives to cut because they understood government's policy to involve "taking" THEIR property right to develop THEIR land without paying "just compensation" for the taking.

Suppose we imagine an alternative policy by government? Suppose government can't take land by regulation, but must instead offer a subsidy to landowners who keep their land in a fashion that continues to provide habitat for Woody. Would land owners see a different incentive? And, would that different incentive be consistent or inconsistent with economic efficiency analysis?