Conserving Endangered Species through Regulation of Urban Development: The Case of California Vernal Pools

The paper concerns the cost of federal policies to protect endangered species in a legal system that gives primary authority over land use decisions to state and local governments. A conceptual model captures the essential features of federal interventions to conserve habitat for listed species, a combination of mitigation and avoidance requirements for greenfield land developments, and considers the effect of preexisting land use regulations. The analysis also demonstrates that the costs of habitat conservation could be reduced if local governments allowed for greater densification of new development in response to federal habitat conservation efforts. (JEL Q24, Q58)