Builders’ Study Warns of Gnatcatcher Havoc : Economy: But prediction of ‘massive unemployment’ comes under fire.

A developer-funded research group Wednesday afternoon released a study which suggests that listing of the California gnatcatcher as an endangered species would be “economically devastating and create massive unemployment.”

The report was released just two days before a state commission is to decide whether the tiny bird should be made a candidate for protection by the state as an endangered species.

If the bird becomes a candidate for the list, several thousand acres of coastal sage scrub in southern Orange, Riverside and San Diego counties--the sort of vegetation in which the bird lives--would be off-limits to builders for up to a year while the state studies whether to actually declare the gnatcatcher endangered.

Under state law, however, the economic impact--if any--of designating a species as endangered is not supposed to be considered by the state Fish and Game Commission, which is scheduled to make its decision on the gnatcatcher Friday.

While the building industry has long opposed such a designation, this study contains the first specific figures that the industry has provided to support its charges that designating the gnatcatcher would injure the local economy.

But the assumptions of the study, conducted by the Construction Industry Research Board, were immediately questioned by environmentalists and several economists.

The study assumes that nominating the bird for the endangered list, thereby creating a building moratorium, would cause a drop of between 25% and 50% in construction in the three counties. If construction were to drop by half between now and the end of next year, the board said, 212,000 jobs would be lost and a $16-billion drop in business activity would result. The harm to the construction industry would spread to other businesses, such as suppliers, repairmen and appliance retailers, in a multiplier effect, the study contends. Tax revenue would fall by $674 million.

A 25% drop would cause 106,000 jobs to be lost, local businesses would face $8 billion less in revenue and government would lose $337 million in taxes.

But Dr. Jonathan Atwood, the ornithologist who is seeking the listing of the gnatcatcher as endangered, said the study sounds “like a last-ditch-effort mentality.”

“I am dubious simply because the developers’ estimates are a worst-case scenario,” he said. “Their estimates are based on what is the outside, most liberal estimate of how much habitat is actually occupied by gnatcatchers.”

Two local economists, who were read portions of the study over the telephone Wednesday, were generally unimpressed with the report, saying it seemed to overstate the case for economic disaster if the bird is listed.

Chapman College President James Doti, an economist who is generally supportive of the building industry, said the study doesn’t seem to be set in a realistic time frame. It apparently doesn’t make clear, Doti said, that it would take a very long time for much of the damage that the study predicts to occur and it presumes that no other building would occur to make up for the loss.

UC Irvine economist David Brownstone criticized the study’s assumption that up to 25% of all construction in the area would be eliminated if the bird is listed.

“That, to be charitable, is a mistake on their part,” he said. “My first guess is that their numbers are way off. Lots of the gnatcatcher habitat isn’t developable, and in the long-term, if they cannot develop certain lands because of the gnatcatcher, they will just move development to other areas.”

Brownstone, however, said the report is probably correct in predicting at least short-term harm to the local economy.

Times staff writer Marla Cone contributed to this report.

Gnatcatcher Controversy The tiny gnatcatcher could have a tremendous impact on the Southland economy if it is listed as an endangered species by state officials this week, a construction industry report claims.Below are the report’s employment figures based on assumed declines in construction activity of 25% and 50% through December, 1992. Forecast includes Orange, Riverside and San Diego counties

Construction Employment 18-month forecast Dollar Volume Construction Other Jobs Current estimate $13.48 billion 161,800 262,800 25% reduction -$3.37 billion -40,450 -65,700 50% reduction -$6.74 billion -80,900 -131,400

Source: Construction Industry Research Board, August, 1991