Saving Eagles...with Markets
by molly espey
molly espey is a professor of economics at Clemson University. This article was adapted from an article written with Eamon Espey for the Property and Environmental Research Center in Montana.
Published January 24, 2023
The transition to renewable energy is well underway – but not without growing pains. As you’ve probably heard a former president complain, one of those unfortunate consequences is the death each year of hundreds of thousands of birds that collide with wind turbines, among them thousands of eagles, hawks, owls and other magnificent raptors. These large birds are, in fact, more susceptible to collision with the rotating blades than smaller ones simply because of their size. And with a later age of maturity and smaller broods than diminutive birds, eagles are also particularly vulnerable to population decline from increased mortality.
Wind turbine size makes for greater efficiency. Hence, turbine towers are commonly over 200 feet high with blades as long as 148 feet sweeping an area up to one and a half acres, which creates a major challenge for large birds to navigate. The most straightforward way to reduce the collisions would be to slow or stop turbine construction. But that’s not a plausible alternative if we’re going to phase out carbon emissions anytime soon. Nor need it happen in order to spare the eagles: the carnage could be sharply reduced without heavy-handed regulation or substantial sacrifice in wind energy generation capacity.
Read on to see how markets could work their capitalist magic in (yet another) environmental context with a little help from changes in the law.
Electricity generation from wind turbines in the United States has increased 56-fold over the past two decades (admittedly from a modest base) and now accounts for just under 10 percent of the country’s total utilityscale power generation. The threat to bird populations from these wind farms is substantial and likely to increase, as the Department of Energy aspires to have wind energy meet 20 percent of electricity demand by 2030 and 35 percent of demand by 2050.
Actually, the threat is even greater than you might expect because, as recent research suggests, the United States will also need to increase electricity transmission capacity by 60 percent by 2030 and nearly triple it by 2050 to meet these ambitious wind generation goals. Though less noted in the media, electrocution from transmission lines was the cause of 50 percent of golden eagle deaths and more than 10 percent of bald eagle fatalities between 2006 and 2011. And the body count is about to be magnified by the fact that, unlike traditional power plants that are built as close as practical to the source of demand, wind farms must be located where the wind blows and open land is abundant. This tends to be in rural areas in the middle of the country, typically far from urban centers and away from the existing transmission infrastructure. Distributing the wind power where it’s needed will thus pose a disproportionately greater threat to eagles as wind farms proliferate.
The menace to these revered predators should not be ignored — and as a matter of law (The Bald and Golden Eagle Act of 1940) cannot be ignored. The law prohibits the “taking” of eagles or interfering with their natural behavior. But it does allow for “incidental” harm: wind developers can apply for permits that allow them to kill up to a specified number of eagles in the process of power generation.
Here’s how permitting works. First, the U.S. Fish and Wildlife Service estimates the rate of take that’s sustainable for each regional eagle population — regional scarcity varies widely — in granting permits. Permits require payment of a one-time fee as well as additional fees for five-year reviews of |com-pliance and renewals. This process was changed a bit in 2016 to provide more certainty to investors making long-term investments in wind farms.
The time span of eagle-take permits for wind projects was increased from five to 30 years, and the incidental take allowed without compensatory mitigation — ancillary measures to sustain the population — was increased from 1,000 to 4,200 bald eagles over the life of each permit. Any incidental take of golden eagles, however, does require compensatory mitigation.
Now, the law does not require project owners to buy permits. But it’s difficult to “eagle- proof” a turbine, and eagles can be found just about everywhere in the country. So owners lacking permits are taking a big chance, facing heavy fines and possible criminal charges if they are caught taking an eagle. Just last spring, one of the largest renewable energy companies in America was fined $8 million after at least 150 bald and golden eagles were killed at its wind farms across eight states. Almost all these eagles were struck by the blades of wind turbines. If the company had held an incidental take permit, it would not have been fined.
Consider the built-in perverse incentives here. The current voluntary nature of the permit system allows wind energy companies that are willing to risk operations without an incidental take permit to gain a cost advantage over competitors. Moreover, it adds to the federal cost of monitoring wind farms for eagle kills and shifts costs from companies in the form of permit fees and mitigation to both companies and the government in the form of litigation.
Another flaw in current regulation is that it uses an inefficient, one-size-fits-all approach. Permits have a fixed cost, allow for a maximum number of incidental deaths and cannot be sold. Companies thus have no incentive beyond requirements specified in the permitting process to decrease the risk of killing eagles. Consider, too, that once permits have been issued for the maximum sustainable take as determined by the Fish and Wildlife Service, wind farm expansion will be impossible without an increase in eagle populations.
Econ 101 Refresher
Back to school for a moment. When a factory dumps chemicals into a river and others bear the consequences, the obvious fix is to internalize the “externality” by charging the factory the full cost of the damage and giving the owners an incentive to consider all costs in making production decisions. But the devil is in the design of those incentives.
Setting standards for allowable levels of pollution — as in, “you may not dump more than X grams of mercury an hour” — internalizes the cost of going over the limit but does not provide the polluter with any incentive to change its behavior beyond compliance with the standard. Furthermore, emissions standards are usually the same across polluting firms, ignoring differences in pollution impacts in different places as well as differences in the costs of abating pollution. Forcing polluters with high abatement costs to meet the same maximum emissions standard as those with low abatement costs results in higher overall cost of achieving pollution abatement than incentive-based alternatives.
Killing Eagles as a Form of Pollution
The current permitting system for the incidental take of eagles is akin to a maximum emissions scheme. Wind projects are permitted to kill a specified maximum number of eagles over 30 years, subject to five-year reviews. All projects choosing to acquire a permit pay the same price for the same type of permit, regardless of how likely this particular wind farm is to kill eagles or how much it would cost to reduce eagle deaths with mitigation efforts. Thus, wind projects likely to kill five birds a year pay the same as projects where 50 birds will likely die.
The obvious fix is to impose a tax/fine per eagle killed that would internalize the cost of incidental eagle take. But this arrow misses the bullseye. In addition to the political challenges of imposing such a tax and the practical challenges of enforcement, a tax does not offer any degree of certainty about how many eagles will be killed in a region. If the tax were set too low, there would not be sufficient incentive for wind projects to avoid kills, resulting in an unsustainable impact on eagle populations. On the other hand, if a tax is set too high, wind energy companies would choose between spending a ton of money to avoid accidental kills or simply not investing as much in wind energy production.
Consider again the aforementioned factory spewing mercury. A transferable mercury emission permit system in which the permits could be bought or sold from other polluters would set a cap on the overall level of allowable mercury pollution while providing an incentive for firms that can abate at a lower cost to do more. After all, if they clean up more than needed, they can sell the surplus permits to firms with higher abatement costs. This way, the overall level of pollution remains below the cap, but the goal is achieved at a lower overall cost.
A parallel outcome would be possible with a transferable eagle-take permit system. Remember that permits have already been issued in which the total allowable kill has been set to maintain sustainable eagle populations. This is significant because under the current system, the only circumstance in which more wind farm permits can be issued is if the eagle population grows.
But if current permits were converted to tradable permits, existing wind farms would have a stronger incentive to avoid incidental eagle kills. To the extent that they avoided take, they could sell their surplus permits to other wind projects, including new ones being built. This would likely reduce the need for litigation against kills not covered by permits, as the cost of purchasing permits on the market would likely be lower than the costs of getting caught without them. It would also allow turbine capacity to grow at the lowest possible mitigation cost compatible without additional harm to eagle populations.
How could wind farms reduce the casualty rate once they have the financial incentive to reduce kills below a mandated ceiling? There are a number of ways, some of them not very expensive.
One is to locate wind farms in relatively low risk areas. Another is to alter turbine design — or even just to paint one blade black, which makes it easier for birds to recognize the danger of collision. Yet another is to install camera-based systems that detect the presence of eagles, then use computer algorithms to estimate the risk of collisions and shut down the turbines for brief periods when the birds are in greatest danger. Which approach to use would be up to the people with the most information — the operators of existing and planned wind farms. And the market value of permits would reflect the cost at the margin of avoiding incidental take.
Don’t forget the role of transmission lines in the wind energy system. Line owners should also be held liable for incidental take and be allowed to buy and sell in the eagletake permit market. That way, the owners would have incentives to make their transmission lines safer by putting protective insulation on wires and conductors, spreading wires farther apart, adjusting pole placement, installing barriers or extensions on poles to make eagle perches safer, and marking power lines with reflectors or ultraviolet materials that make them more visible to eagles. As a bonus, these measures would decrease deaths of other raptors not protected by law.
Establishing the trading system, monitoring trades and maintaining effective thirdparty monitoring of take would be essential to making a market-based system work properly. But none of these are major barriers. The costs of monitoring eagle take are likely to be similar under a tradable permit system as under the current system. Third-party monitoring is already in place and could be required for all wind farms under a new system. Monitoring of trading in an established market could be done electronically, and at low cost. There would be no need to reinvent the metaphoric wheel: sulfur dioxide emissions from industry — sulfur from smokestacks creates acid rain, which damages forests and lakes — are successfully limited by permit trading in which users make trades online.
No Time to Waste
The stakes here are high. To spare us the worst consequences of climate change, the Biden administration has set a goal of 100 percent carbon-free energy in the electricity sector by 2035, with most of the heavy lifting coming from wind and solar energy. And even moderate progress toward that goal will necessitate significant expansion of wind energy. If the targets are to be met under the current regulatory regime without legally prohibited harm to eagle populations, it will only be achieved at the great (perhaps prohibitive) cost of micromanaging eagle avoidance and mitigation measures at each project site.
So a tradeable take-permit system for eagles seems a necessary reform if wind energy is to play a major part in phasing out coal and gas in power production. The alternative is abandoning the legal protection of these magnificent birds — but that’s a sacrifice we should not — and need not — make.