The water quality impacts of critical habitat designation for endangered species

Abstract

The Endangered Species Act of 1973 [ESA] is well-known by environmental economists for its extensive provisions that create a variety of impacts on housing, land development, timber harvesting, etc. However, the ESA's impact on water quality has not been formally studied despite being discussed extensively by federal agencies that administer the Act. I estimate the causal effect of critical habitat designation, an ESA provision that regulates land use, on a range of water quality outcomes. Using administrative data on water quality from 1970-2018, I employ event study and difference-in-differences [DiD] empirical models to evaluate temporal and spatial changes in water quality resulting from plausibly exogenous variation in critical habitat designations. I find null results for most water quality outcomes and mixed evidence of a decrease in pH after designations occur. However, pooled DiD results find no evidence of average declines in pH in the years following designation. Slight declines in pH from the event-study results are concentrated partially in urban areas and primarily around critical habitat designations involving fish species. Results provide some evidence that fish designations may result in more significant water quality impacts after designation across pH and additional outcomes than all designations on average. These results add to a body of research that questions if other species conservation provisions may lead to more efficient outcomes than critical habitat designation.