November 4, 2013

A lesson in logic; or how to honestly evaluate government policies

By Jonathan Wood Attorney

Scientific American‘s John R. Platt is at it again. In October, he had a “myth-busting” column that purported to rebut criticisms of the Endangered Species Act. But as we explained here, his arguments responded to straw men or were illogical. The reality is that the ESA is an imperfect statute that is in desperate need of reform. Its rigidity is a relic of a bygone era and woefully ill-suited to the complicated tradeoffs inherent in the process of choosing which species to protect and how.

Mr. Platt’s most recent column continues this pattern by ignoring the full costs of the ESA and making broad assertions of its merits without justification.

The U.S. federal and state governments spent just more than $1.7 billion to conserve endangered and threatened species under the Endangered Species Act (ESA) in fiscal year (FY) 2012 (from October 1, 2011, to September 30, 2012), according to an accounting recently published by the U.S. Fish and Wildlife Service (FWS). That’s up from $1.59 billion in FY 2011 and $1.45 billion in FY 2010.

There are many different ways to look at these numbers, but here’s one that may put them in some perspective: the U.S. human population stood at 314, 542,177 at the end of FY 2012, according to the U.S. Census Bureau. The ESA expenditure of $1.7 billion translates to just $5.40 per person.

Of course, that’s still only a fraction of what’s truly being spent to conserve all these species. … But all the same, with a pretty high success rate of preventing species from going extinct, the ESA works out a decent bang for your buck.

Any armchair logician would recognize that this conclusion does not follow from the premise. The analysis completely ignores all of the impacts on industry and the costs to property owners who have to forgo their right to use and develop their land because of the presence of a protected species. The amount that the federal government spends on species protection tells us nothing about these costs. But one can’t say anything about whether the ESA is a decent bang for the buck by considering only a fraction of its total costs.

Another, similarly serious error is the comparison of the total benefit of species protection to the “total” costs. You can’ t evaluate the cost effectiveness of a policy unless you consider the costs and benefits at the margin—whether the benefits of the last dollar spent justify that expenditure.  As an illustration of why this matters, consider this example:

A city’s fire department takes $4 from each resident. With the first dollar, they fight fires, a service which the public values at $5. The remaining $3 are gratuitously destroyed.

Are the fire department’s actions “a decent bang for the taxpayers’ bucks?” Of course not! They would be much better off if the fire department only took $1 and let them keep the other $3. The column makes the same error. It considers only whether the net benefits of present levels of spending are greater than if the government did nothing. No consideration is given to the many alternatives to the current regime that could be tried, which might achieve similar or even superior results at lower cost.

This is no way to evaluate public policy. But, unfortunately, these errors are all too common, particularly in the realm of environmental policy.

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