Voluntary conservation of endangered species: when does no regulatory assurance mean no conservation?

Voluntary conservation agreements are becoming increasingly important in implementing the Endangered Species Act on private land. We analyze when such agreements arise and what level of conservation they generate in the presence of uncertainty about future conservation benefits and irreversibility of habitat loss and species extinction. Our results suggest that the likelihood of an agreement and the resulting conservation levels depend on the background threat of regulation, the cost advantage offered by voluntary agreements, and the availability of assurances regarding future regulation. Under conditions likely to hold in practice, conservation agreements that offer assurances may generate higher levels of conservation and higher net social benefits than agreements that do not offer assurances. However, the resulting level of conservation will not be optimal, and may be lower than that attainable under regulation.