Some economists and analysts predict that the price of Southern California's real estate and homes will eventually rise because of the new federal decision to add the California gnatcatcher to the nation's list of protected species.
The magnitude of the economic impact is anyone's guess. Although everybody acknowledges that saving the gnatcatcher will be expensive, some experts believe that the overall effect on home buyers will be minimal.
The U.S. Fish and Wildlife Service last week declared the tiny songbird a threatened species, a decision that immediately protects its nesting grounds. To soften the economic impact, Interior Secretary Bruce Babbitt is trying an experimental approach that would clear the way for building on some of the bird's nesting grounds.
However, some prime Southern California land will be off limits to development to save the bird, and landowners also face the costly task of restoring and managing sensitive bird habitat.
It will take months to answer the most compelling questions, namely how much land will be prohibited from development and where the property is located.
"Quantifying it is tough. But the theory is pretty clear. To the extent that fewer houses are built, it will have to increase home prices," said Michael Carney, a professor of finance and real estate who directs the independent Real Estate Research Council of Southern California at Cal Poly University in Pomona.
Gnatcatcher protection "will either reduce the number of houses that can be built in the area--which will raise prices--or it will make the same number of houses more costly to build, which also raises prices," he said.
From 297,000 to 314,000 acres of developable land in Southern California, including 48,000 acres in Orange County, contain the blend of sage and other native plants used by the gnatcatcher, according to an estimate by the national wildlife agency.
Of that, about 12,000 acres of privately owned scrub in Orange County are at the low elevation the bird prefers, so they are likely to be top candidates for preservation.
Generally, an acre of land can support six new single-family houses in Orange County, but it is impossible to gauge the number of homes and other projects that might be prevented or abandoned because of the gnatcatcher listing.
Babbitt's novel plan allows landowners to build on most of their land without delay if they set aside preserves of sage scrub for the bird and other species under a conservation program created by Gov. Pete Wilson.
The size and location of the preserves will be determined using guidelines set by a panel of scientists that will be revealed this week. The details will be negotiated by an alliance of developers, environmentalists, biologists, local government planners and state and federal wildlife officials. The process of choosing sites, expected to be highly contentious, is likely to take at least six months.
Babbitt's attempt at compromise could avert the long and rigorous federal reviews that cause uncertainty, delay and added costs for developers.
"There will be some economic costs of doing it this way, but not nearly as much as if the gnatcatcher was declared endangered and the full weight of the Endangered Species Act was put into effect," said David Sloane, a professor of environmental ethics at USC's School of Urban and Regional Planning.
Home building in Southern California has slowed so much and prices have dropped so low that gnatcatcher protection will probably have minimal impact at first.
But when--some say if--the real estate market recovers, it could slow development and drive prices in those areas higher.
Esmael Adibi, director of Chapman University's Center for Economic Research, said higher real estate prices would harm all aspects of the area's economy because the cost of living is often cited as a major factor in why businesses move.
Others, however, believe that the impact will be undetectable.
"It won't have any effect on home and land prices. That is a spurious argument as far as I'm concerned," said Peter Navarro, a UC Irvine associate professor of business and economics who is a strong advocate of controlling growth. "Any impact from the gnatcatcher will be what economists call 'second-order small' compared to the massive devaluation of land values we've experienced."
Navarro added that "some landowners will lose a lot of money. There's no question about that (but) you're hearing a lot of gloom and doom from a narrow set of vested interests."
Navarro, who last year ran unsuccessfully for mayor of San Diego, said that reining in suburban sprawl will help Southern California's economy.
The gnatcatcher decision is "an incredible blessing in surprise to the California economy," he said. "I think the taxpayers of California will breathe a huge sigh of relief. The building that occurs in gnatcatcher habitat is primarily suburban sprawl, which does not pay its fair share. These subdivisions create enormous budgetary needs for capital facilities like schools and libraries and cops, and they don't pay for themselves."