Will the petroleum industry participate in habitat conservation for imperiled species?

This paper examines the petroleum industry's willingness to engage in habitat conservation to protect the lesser prairie chicken (LPC), an imperiled species in the south central United States. Failing to provide a suitable... [ view full abstract ]

This paper examines the petroleum industry's willingness to engage in habitat conservation to protect the lesser prairie chicken (LPC), an imperiled species in the south central United States. Failing to provide a suitable level of conservation for the LPC could lead to development restrictions that raise the costs of drilling, as the species is a candidate for Endangered Species Act (ESA) protection. Companies can conserve habitat either by locating wells away from habitat or by paying for habitat mitigation that, in exchange, provides regulatory assurances in the event the species is protected by the ESA--a type of voluntary conservation agreement with assurances. Using individual data on oil and natural gas wells, I develop an econometric model of companies' drilling locations to examine preferences for locating wells and participating in conservation in the habitat region. Results suggest that firms are reluctant to pay for habitat mitigation, even when the costs are minimal, and that regulations have deterred only a small share of development in the habitat region.