The Effect of Land Use Restrictions Protecting Endangered Species on Agricultural Land Values

This article examines the effect of U.S. Endangered Species Act (ESA) regulations on agricultural values. Agricultural development is an important contributor to habitat and biodiversity loss in the United States. The ESA attempts to limit this loss by prohibiting habitat destruction on private lands, but this practice is controversial because it places much of the burden for conservation on farmers. I measure the effect of these restrictions on agriculture using a hedonic analysis of county‐level agricultural land values, profits, and revenues reported in the last four rounds of the agricultural census. Results provide strong evidence that ESA regulations depress these three economic measures in dryland areas, which includes counties with less than 1% of agricultural land in irrigation. Specifically, I find that farmland value and profit decline 4% after listing on average at the county level in dryland areas with protected habitat. There is no evidence that values are affected in irrigated counties.