The Impacts of Subsidies
on Listed Species

by Jeff Opperman

Table of Contents

Introduction

The Endangered Species Act requires the federal government to conserve and protect endangered species. However, many federal policies remain inconsistent with this goal, and in fact many may work at cross purposes. Policies or programs that provide subsidies for the conversion of endangered species' habitat are particularly noteworthy.

Taxpayer's Double Burden, a 1993 report by the Wilderness Society and the Environmental Defense Fund, describes subsidies that promote habitat conversion or degradation as a "double burden" because taxpayers must pay to subsidize a particular industry or activity, and then pay again to recover species and protect them from subsidized activities.

That report was based on a database for all listed species that was developed by staff of the Wilderness Society and the Environmental Defense Fund. Most of its information was derived from the listing packages that Fish & Wildlife Service provides when a species is officially listed. Information that could not be acquired from this source was obtained from the World Wildlife Fund's Guide to Endangered Species.

Taxpayer's Double Burden showed that a majority of listed species on federal lands are threatened by subsidized activities. However, that report considered only species occuring on federal land and those threatened by federal water projects.

This article updates Taxpayer's Double Burden to include species listed since 1993 as well as threats from federally subsidized activities that take place on non-federal land. Environmental Defense Fund ecologist David Wilcove has kept the database up to date as new species were listed, and generously provided the database to the Thoreau Institute for the preparation of this article.

This article assesses, on a broad scale, how many and which species are affected by activities that are subsidized. The article will focus on ten economic activities that are subsidized and contribute to the loss of endangered species and their habitat.

The word "subsidy" has been defined in many different ways and for different purposes. A Congressional study on the economics of federal subsidy programs defined the word fairly inclusively as "any one-way governmentally controlled income transfer to private sector decision making units that is designed to encourage or discourage particular private market behavior."

For the purposes of this article, a subsidy is defined as any government policy where income is directly or indirectly transferred from taxpayers in general to specific recipients, or where the beneficiaries of a specific policy do not pay full costs for a project, access to resources, or for a service. Programs that are largely or completely under government control, such as highway construction and defense, are also counted as "federal activities."

An example of a direct subsidy is the USDA's deficiency payment program--when the price of a crop does not meet a threshold level determined by the government, USDA pays farmers the difference between the fair market value and a predeterrnined price. The tariff and import quota for refined sugar is an example of an indirect transfer of income; sugarcane farmers do not receive direct payment from the government but they benefit from a greatly inflated price at the expense of sugar consumers.

Methodology

For each listed species, Wilcove's database provides a variety of information. For the purposes of this paper, the most important data were: The database rates threats on a scale of one to five where:

1 is the only or most significant factor;
2 is one of two or more significant factors;
3 is a secondary factor;
4 is a potential factor; and
5 is a historical factor.

For the purposes of this paper, only magnitude 1 and 2 threats were considered. In the database, species may face from one to as many as ten magnitude 2 threats. Only about a quarter of the species are listed as facing a magnitude 1 threat, and by definition no species faces more than one such magnitude 1 threat.

The database included the following threats:

The database breaks each of these into as many as 13 subcategories. Water, for example, includes, among other things, "diversion of water for agriculture," "stream channelization," and "dams."

For the purposes of this article, "federal programs or subsidized activities" were defined to include all agriculture, defense, fire suppression, livestock grazing, highway construction, navigational maintenance, land conversion for agriculture, and water projects for irrigation, flood control, hydropower, and channelization. Also counted, but only for species at least partly found on federal land, were recreation, timber, fire, animal damage control, and mining (except oil & gas and geothermal) activities. In total, 40 percent of the threats to listed species were considered federal programs or federally subsidized.

In assessing the role of federal activities, species were classed in one of five different groups:

Table one shows that 526, or 58 percent, of the species in the database are at least partly threatened by federal activities. Of these, 112, or 12 percent, are primarily threatened by federal activities, while another 104 are mainly threatened by subsidies. These percentages exclude the 55 species with unknown threats.

Table One
Relative Importance of Federal Activities as Threats to Listed Species
(numbers of species in each threat category)

                	Primary	Main	Partial	Not	Unknown	Total
Amphibians      	  1	  4	  3	  4	  0	 12
Birds           	  6	 10	 16	 47	 12	 91
Crustaceans     	  1	  6	  4	  7	  0	 18
Fish            	 24	 14	 53	 16	  1	108
Mussels & clams 	 11	  8	 37	  1	  0	 57
Insects         	  1	  4	  8	 16	  1	 30
Arachnids       	  0	  0	  0	  3	  0	  3
Mammals         	  7	  5	 11	 33	  9	 65
Plants          	 56	 50	160	224	 29	519
Reptiles        	  2	  3	 10	 18	  0	 33
Snails          	  3	  0	  8	  6	  3	 20
Total           	112	104	310	375	 55	956
This table shows the numbers of species primarily, mainly, partly, or not threatened by federally subsidized activities; as well as the number for which threats are unknown.

The table also suggests that some classes of species are more threatened by subsidized activities than others. Mussels & clams, fishes, amphibians, and snails are the most impacted by federal activities. Of the mammals, birds, and reptiles, about 20 percent are primarily or mostly threatened by federal activities, while another 20 percent are partly threatened.

One reason for this disparity could be that the federal government is more highly motivated to protect charismatic species such as mammals and birds. The president's Northwest forest plan, which protected the spotted owl but neglected snails and clams, may be typical of the government's general response to endangered species.

Table two shows which programs tend to be the sources of the most threats. Agriculture is the leading problem, especially if grazing is included. Water projects are next.

Table Two
Numbers of Species Threatened by Class of Federal Activities

Category       	Number of Species
Agriculture1          	322
Defense              	 34
Fire suppression     	 19
Grazing2              	153
Highways & navigation	125
Mining (federal)3     	 57
Recreation (federal) 	142
Timber (federal)4     	 80
Water5                	271
Animal damage control	  3
  1. Includes agriculture, pesticides, clearing of land for agriculture, and diversion of water for agriculture.
  2. Includes livestock grazing, range improvements, and diversion of water for livestock.
  3. Excludes oil & gas and geothermal. Except as noted, items with the word "federal" include only species found on federal land.
  4. Includes thinnings and reforestation on private land because many are aided by federal cost sharing.
  5. Excludes diversion of water for agriculture and livestock, since they are included in other categories.
 Surprisingly, recreation threatens more species than mining and timber combined. Off-road vehicles are the leading offender, but hiking threatens 25 species. Defense, fire suppression, and animal damage control are rated as relatively unimportant.

Limitations

The method used to obtain these numbers provides a broad brush measure of the effects of federal subsidies on endangered species. But it must be used with caution: Just because a general activity such as agriculture is federally subsidized doesn't mean that every agricultural practice that threatens a listed species is subsidized. Many timber sales on federal land are subsidized, but many sales in the Pacific Northwest are not subsidized.

On the other hand, federal programs strongly influence some activities that weren't counted as "federal activities" for the purposes of this analysis. Many federal programs influence urban development, and urbanization threatens at least 300 different species. These were not counted in the analysis.

It may also be unrealistic to treat all magnitude 2 threats equally. The average species faces three such threats, and some face up to ten. Some of these threats must be more important than others, and synergistic relationships between threats are often not known. But for the purposes of this article it was not possible to weigh the threats in detail for all 956 species.

Even where federal subsidies clearly threaten a particular species, it is not certain that withdrawal of the subsidies will completely halt the threatening activities. Some below-cost federal timber sales would still be sold if subsidies were eliminated, as would many agricultural activities.

A final problem is that the database is limited by the information provided by the source documents, which mainly came from the Fish & Wildlife Service. For example, the database indicates that more than 100 species are threatened by timber, mining, and recreation without saying whether those species are found on federal land. Without that information, this paper did not count the threats as due to a federal activity.

The limits of the database can also be seen in the small numbers of species that it says are threatened by fire suppression or animal damage control. Animal damage control is not listed as a threat to the black-footed ferret; in fact, no threats are listed for the ferret. Although fire suppression has probably done far more to change forest ecosystems than any other human practice, it is listed as a threat to only one mammal, one bird, and one reptile.

Because of these limits, the database does not reveal with precision whether any single species is primarily threatened by federal subsidies or whether an elimination of subsidies will automatically lead a species to recover. But it does suggest the overall importance of subsidized activities compared with other threats to endangered species.

Reevaluating Subsidies

Most federal subsidies and programs were developed with good intentions and may have been needed at the time they were created. But government programs automatically generate constituencies that lobby for their continuation long after they are no longer needed. Too often, Congress takes the easy road of maintaining subsides year after year without serious evaluation.

Such subsidies and programs should be carefully reevaluated each year for at least several reasons. Often the reasons for initiating subsidies no longer apply. Many agricultural subsidies were created to support family farms, yet the main beneficiaries today are large agribusinesses. Other programs are created with the expectation that they will be self funding, yet they turn out to require subsidies--which are often buried in agency budgets--in the long run.

Subsidies result in market distortions, inefficient allocations of resources, and serve as a transfer of wealth from taxpayers in general to certain favored groups or industries. Subsidies also often have serious unintended consequences, among which are their environmental effects. This analysis indicates that one major consequence is a negative effect on biodiversity.

Reevaluating the Act

Much attention has focused recently on the need to move beyond the single species approach to protecting endangered species. Scientists, economists and policy makers have offered several innovative ideas to correct perceived weaknesses of the act. These weaknesses include: This article will discuss three approaches that have been offered to remedy these weaknesses:
  1. The ecosystem approach;
  2. The broad pattern approach;
  3. Building economic incentives into the act.

The Ecosystem Approach

The number of species on the list has grown rapidly over the past several years (until a moratorium on new listings in 1995), and the number of candidate species is far greater than the number of listed species. Even more daunting are studies that show that a great number of species are declining which are not even candidates for listing.

It is clear that the Fish & Wildlife Service will most likely never have the numbers of personnel or level of resources necessary to evaluate, list, draft recovery plans, and implement the plans for this vast number of species. Recent initiatives from within the agency have encouraged the drafting of multiple species recovery plans. Many scientists support this and believe that focusing on a broad, ecosystem level is a more cost-effective approach to conserving species.

The following benefits have been offered in favor of the ecosystem approach:

  1. A great number of species can be accounted for by drafting recovery plans for entire ecosystems. This will avoid the need to list and draft recovery plans for each endangered species within the ecosystem.
  2. The geographic scale of an ecosystem approach will be much larger than individual species' critical habitat. This will provide more flexibility to redirect development within the ecosystem. The flip side of the coin, however, is that individual species can still slip to extinction through the coarse filter of an ecosystem approach.
  3. The ecosystem approach can be applied more proactively by determining which ecosystems with their associated species are declining before it is too late, as well as working with ecosystems that are not yet endangered, but would benefit both environmentally and economically from long range vision and planning.
  4. The public may be more receptive to some of the necessary decisions or sacrifices that may need to be made if these changes are to protect their regional ecosystem, rather than for the protection of an endangered, unknown or possibly uncharismatic salamander, fish, or rat.
While the direct causal relationship between a subsidy and a threat to a particular species is difficult given the scale of this article, the relationship between a subsidy and loss of habitat or the degradation of a particular ecosystem can be more clearly demonstrated. Thus, the reevaluation of subsidies in light of their impact on listed species and their ecosystems can be an important part of ecosystem level recovery plans.

This article was organized using a single species approach--sets of individual species were derived that were affected by a particular subsidy. A complementary analysis could examine the impact of subsidies on the level of ecosystems, with each ecosystem containing its complement of listed and candidate species.

For example, the longleaf pine forests of the Southeast contain 27 listed and 99 candidate species. A recovery plan for this ecosystem could potentially provide for the protection of the majority of these 126 species (as well as others that may be declining, and myriad additional species). An analysis of which subsidized activities are contributing to the loss of longleaf pine forests would be an important part of drafting this ecosystem recovery plan. Other ecosystems that contain significant numbers of listed and candidate species include the Everglades, rivers and streams of the Southeast, and Southwestern riparian forests, to name just a few.

The Broad-Pattern Approach

Criticism of the ecosystem approach has focused on its inherent complications, not the least of which is the difficulty of defining and determining ecosystems. As an alternative, Forest Service ecologist Curtis Flather and several colleagues describe the "broad-pattern" method that can potentially complement and augment either a species or ecosystem oriented approach. This method evaluates trends in species endangerment such as location of range, land type, taxa, and threat.

By identifying and addressing these large scale trends conservation efforts may be able to accomplish a great deal that would have otherwise been difficult with a species-by-species, or even an ecosystem, approach. This article identifies large scale trends of threats to listed species that have a subsidized component. The reevaluation, modification and/or elimination of these subsidies will be useful to a broad-pattern approach to conserving endangered species.

The Incentives Approach

Economic incentives are potentially a very important tool for the conservation of endangered species. Economic incentives can be a valuable component of the current act's single-species approach, and would also be essential for successful implementation of either an ecosystem or broad-pattern approach.

Subsidies often serve as perverse incentives that encourage habitat conversion and degradation. To address species conservation on a large scale, we must eliminate the existing misincentives and create positive incentives to conserve habitat.

Congress can focus on economic incentives while creating a broad structure that gives biologists flexibility to use the best tools for any particular situation. The objectives of this approach would include:

Several proposals for improving the act have included provisions, such as tax credits and deductions, that would give landowners an economic incentive to maintain their land as endangered species habitat. These economic incentives will be much more effective if the "perverse" incentives of subsidies that encourage the conversion of habitat are removed.

Conclusions

Reevaluating, modifying, or eliminating subsidies can benefit endangered species in three ways: generating revenue for habitat protection; eliminating market distortions that threaten habitat; and directing development away from endangered species habitat. Many market forces contribute to the loss of endangered species and their habitat. But federal subsidies represent a significant threat to species, and may be the most important threat for most listed mammals, birds, and reptiles. Eliminating subsidies will save taxpayers money and lead the federal government to apply to endangered species an important portion of the Hippocratic Oath: "First, do no harm."

Jeff Opperman (Oppermanjj@aol.com) is a biologist who recently spent two years working for the Smithsonian Institution in Bolivia. He is now working for Conservation International.

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