Implementing the safe minimum standard approach: two case studies from the U.S. Endangered Species Act.

I. INTRODUCTION

The protection against potentially irreversible losses of at-risk species and the preservation of biodiversity feature prominently in ongoing sustainability debates. As part of this discussion, the safe minimum standard (SMS) approach to the conservation of renewable resources, first proposed by the early resource economist S.V. Ciriacy-Wantrup (1952), is receiving renewed attention by a selection of both economists and non-economists.(1) As a collective choice rule, the SMS approach is to preserve some minimum level or safe standard of a renewable resource unless the social costs of doing so are somehow "intolerable," "unacceptable," or "excessive." The SMS approach has been viewed as falling somewhere between weak and strong sustainability criteria (Turner, Doktor, and Adger 1994). Consistent with strong sustainability criteria, the SMS approach recognizes the imperative to protect critical natural capital (e.g., habitat for at-risk species), but stops short in the conditional nature of the imperative, specifically, the sensitivity to the level of social costs.(2)

The SMS approach has been discussed widely, but implementation attempts remain conspicuously rare (Bishop and Woodward 1994).(3) This is surprising, as a variety of environmental legislation, both in the United States and other countries, is considered to be consistent with the SMS (Foy 1990; Bishop 1993). In the United States, the piece of legislation most directly related is the Endangered Species Act (ESA) of 1973, as amended.

We present two regional case studies from the southwestern U.S., which concern endangered fishes in the Colorado and Virgin River systems, respectively, and are the result of U.S. Federal Court-ordered implementation of the provisions of the ESA. For species recovery, conditions in these river systems must be changed to more closely mimic some determination of natural or original conditions. Alteration of biological conditions, through the listing procedures and designation of critical habitat on behalf of the endangered species, potentially alters human uses of the river systems and thus generates direct and indirect economic impacts. The case studies incorporate the results from applied general equilibrium analyses to provide insights into the direct and indirect economic consequences of critical habitat designation. The case studies provide an avenue for investigating a potential definition of what might constitute intolerable economic impacts. Furthermore, they demonstrate that implementation of U.S. Fish and Wildlife Service (USFWS) rules following the ESA is consistent with the SMS approach.

II. THE SMS APPROACH

Welfare maximization remains the dominant economic perspective for approaching questions of biodiversity and species preservation. Cost-benefit analysis (CBA) provides the decision criteria for determining the optimal level of preservation for environmental public goods.(4) In present value terms, if aggregated individual benefits of a preservation action outweigh the aggregated individual costs, social welfare is increased. In the case of negative net benefits, society gains from forgoing the preservation action (Brown and Szweirbinski 1988).

The use of CBA decision rules has been criticized extensively in the context of preserving biodiversity and at-risk species (e.g., Norton 1987). Criticisms include the problem of determining the social discount rate, capturing ecosystem complexity, accurate valuation of nonmarket benefits including existence values and complete identification of all consequences, as well as philosophical criticisms of the utilitarian/welfarist framework (e.g., Hanley 1992; Hubin 1994; Sagoff 1988).(5)