Labor Market Impacts of Land Protection: The Northern Spotted Owl

Ann E. Ferris, Eyal G. Frank; Journal of Environmental Economics and Management

Key Takeaways:

1. The Endangered Species Act often places restrictions on land use in order to protect wildlife. This was the case in 1990 when the northern spotted owl became a threatened species after decades of logging in Washington, Oregon and northern California destroyed much of its habitat. Soon after, 6.9 million acres of forest land was designated as critical habitat, prohibiting logging.
2. This study examines the impacts of the Endangered Species Act 1990 listing of the northern spotted owl on the timber sector, specifically changes in industry employment levels, and the number of logging establishments not due to cyclical economic conditions and ongoing sector-specific trends.
3. The study finds that compared to regional employment in the sector, timber employment declined by 14 percent, but that compared to the industry at the national level, it declined by 28 percent in the impacted counties. These reductions reflect a decline of about 32,000 jobs in the Lumber and Wood Products sector when compared nationally, or 16,000 jobs when compared within the region. These estimates are significantly lower than the projections made by the industry around the time of the listing (up to 130,000 jobs) and align with federal projections (13,000 near-term jobs and 28,000 jobs in the long run).
4. To account for possible changes in global timber markets, the study compares timber employment in the impacted counties to the Canadian sector and finds no similar decline in Canada. In other words, the declines in the Pacific Northwest and northern California were not due to larger industry trends.
5. The researchers find that timber sales in the northern spotted owl-states’ forests declined by 45 percent relative to other commodities, and the projected future price of lumber doubled. Meanwhile, the unemployed workers didn’t flock to similarly land-intensive and physically exertive industries such as agriculture, mining and construction in the region. Only a small percentage of working-age men left the region.
6. This analysis demonstrates that environmental conservation that aims to protect species’ habitats can impact related employment. While it is not straightforward to generalize from the case of the northern spotted owl to other Endangered Species Act listings and other industries, several other forest areas are subject to Endangered Species Act regulations that restrict the harvesting of timber.
7. The study adds to our knowledge regarding the impacts of environmental regulation on labor markets outcomes. Previous studies have either evaluated how specific sectors respond to changes in air quality regulations, or how total employment levels across all sectors respond to land-use and conservation regulation. This study joins the two by comparing the Lumber and Wood Products sector, and the impacts caused by the 1990 listing of the northern spotted owl under the Endangered Species Act.
8. While it is not straightforward to generalize from the case of the northern spotted owl to other Endangered Species Act listings and other industries, this analysis does demonstrate that environmental conservation that aims to protect species’ habitats can impact related industries and employment in those industries. However, extractive industries such as logging might represent the upper-bound of the negative effect on employment due to conservation policy. For that reason, using the 1990 listing of the northern spotted owl as a cautionary tale might overestimate the average effect the listing under the Endangered Species Act has on job growth in the United States.