Uncertainty and species recovery program design

This paper explores economic aspects of reintroducing large, wide-ranging mammalian carnivores, such as wolves and grizzly bears, to their native habitats. The key tension is that such species can inflict transboundary damages for which managers are not liable with certainty. We show that this tension can be offset by the managerʹs judicious choice of habitat, as habitat contributes both directly to the likelihood of the species’ survival (from a biological point of view) and indirectly as precautionary capital that partially mitigates damages. We show how uncertainty over liability for damages affects the likelihood of the species’ survival, and we conclude with a discussion of optimal compensation mechanisms.