Discussion Paper Series in Economics, Department of Economics, Norwegian School of Economics (NHH)
The Cost of Endangered Species Protection: Evidence from Auctions for Natural Resources.
() and Linda Nøstbakken
Abstract: This paper examines the effect that endangered species
regulation has on natural resource development. Specifically, we use data
from competitive auctions to estimate the effect that land-use regulation
protecting endangered caribou in the Canadian province of Alberta has on
the price producers pay for the right to extract oil. We exploit a
regression discontinuity design to evaluate how prices differ along
regulation boundaries that constrain resource development. The auction
format and the regulation discontinuity allow use to measure the total cost
of the regulation. We find that producers pay 24% less on average for oil
leases that are regulated and that the total net present value cost of the
regulation exceeds $1.15 billion for leases sold between 2003-2012, all of
which is borne by the government. In spite of these costs, the populations
of endangered caribou remain in widespread decline.
Keywords: Endangered species regulation; auctions; natural resources; oil.; (follow links to similar papers)
JEL-Codes: D44; L71; Q52; Q58; (follow links to similar papers)
48 pages, April 19, 2016
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