Endangered Species Act: A case study in takings & incentives

In this article, Professor Thompson uses the Endangered Species Act's regulation of habitat to examine the consequences of alternative compensation rules. Professor Thompson begins by surveying current implementation of the Act. He finds that existing takings law provides property owners with little leverage, although the Supreme Court's decisions in Nollan v. California Coastal Commission and Dolan v. City of Tigard could limit how regional Habitat Conservation Plans distribute the burden of habitat preservation among property owners. Professor Thompson then scrutinizes the arguments for and against current congressional proposals that would require compensation even where the courts do nor. Examining prior academic analyses of the compensation issue, he criticizes their assumption that increased compensation invites moral hazard, as well as their failure to consider the inefficiencies embedded in the taxes used to pay compensation. Professor Thompson suggests that legislatures should view the compensation issue as a question of optimal tar policy. He concludes that property owners should receive at least partial compensation for regulation of their land and that the compensation should be funded in significant part through corrective taxes, such as real estate development fees.