Balancing Business Interests and Endangered Species Protection

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If you ask most Americans what they know about the Endangered Species Act (ESA), they will likely respond, “the spotted owl.” This Pacific Northwest controversy epitomizes the conflict between jobs and the environment that the ESA has come to symbolize. To protect the spotted owl, large tracts of federal lands were withheld from logging, the supply of raw timber decreased, mill capacity was eliminated, logging jobs were lost, and prices increased. As this example illustrates, endangered species protection can alter local, regional, and national economies. It also shows the kind of win-lose negotiations that typify ESA debates. Each side in the debate sees beating the other as the way to achieve its goals. Environmentalists want a better environment and are willing to sacrifice economic development toward that end. Development interests want economic growth and consider it unacceptable to forfeit jobs or economic prosperity for species protection.

As species protection is weakened, we move toward satisfying development interests at the expense of environmental interests. As species protection is strengthened, we move toward satisfying environmental interests at the expense of development interests. Undoubtedly, such a tug-of-war debate will always persist, but we argue that there are opportunities to expand the scope of debate, finding solutions that will improve the potential outcome simultaneously for both environmental and development interests.

In the managerial negotiations literature, scholars used to argue over whether to follow a win-lose philosophy or a win-win philosophy.1 But more recent formulations argue that either is costly. Rather, rational negotiators now think about how to first create a larger pie and then claim a significant portion of that pie, subject to concerns for fairness and the ongoing negotiation relationship.2 But environmentalists and developers are still trapped in win-lose debates. While political debates have fueled the dichotomy between environmentalists and development interests, we see the need for a balanced perspective to manage the two sets of concerns simultaneously.

In this article, we begin with an overview of the ESA and its surrounding controversies. We then argue that, when viewed from a broad economic perspective, the benefits derived from nature can, under certain circumstances, create mutual gain solutions for both economic and environmental interests. It becomes clear that it is not the objectives of the Endangered Species Act that cause economic dilemmas but its implementation. To that end, we offer practical ways to improve ESA implementation.

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The authors would like to gratefully acknowledge the financial support of the Henry and Munson Foundations and the National Fish and Wildlife Foundation. Special thanks also go to Francisco Benzoni, Grant Gund, Don Moore, and Jon Wilk for providing research support and to Amos Eno, Barbara Cairns, and the anonymous reviewers from the U.S. Fish and Wildlife Service and Sloan Management Review who provided valuable feedback and comments.

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