Estimating the impact of Critical Habitat designation on the values of developed and undeveloped parcels (2nd version, current as of 7/29/2022)

We use differences-in-differences (DD) estimators to measure the impact that Endangered Species Act (ESA)’s Critical Habitat (CH) rule had on developed and undeveloped parcel prices throughout the US between 2000 and 2019. In a national-level analysis we found that, on average, the price of parcels “treated” with CH were not statistically different than the prices of nearby parcels in listed species range space but not “treated” by CH. CH’s null impact on developed parcel prices is surprising given homeowner’s documented willingness to pay for property surrounded by protected open space. CH’s null impact on undeveloped parcel prices is surprising as previous research had indicated that the impact of CH on undeveloped parcel prices was negative due to the additional regulatory costs and development uncertainty the CH regulation imposes on land developers. When we used relevant subsets of CH areas to measure CH’s impact on parcel prices, we did occasionally find results that were consistent with expectations. We reach two conclusions. First, the impact of the economic impact of the CH rule, holding the impact of other ESA sections constant, cannot be reduced to a simple, consistent narrative. Second, CH’s relatively minor impact on parcel prices suggests that the rule does not have much regulatory “bite.”