Rob Godby provides a wonderful synthesis of the economic issues surrounding compensation for endangered species protections on private land. In this reply, I will comment on some of the conceptual issues left outstanding in this synthesis and, in doing so, describe a relevant extension. My focus here (in contrast to that in my chapter) will be on the single-parcel model of governmental takings that has pervaded the literature.

In standard single-parcel models of takings (starting first with Blume, Rubinfeld, and Shapiro 1984), there is an essential separation between the timing of private land-use decisions and governmental “takings” decisions – decisions that may (or may not) divert private property to a public use. In particular, a landowner makes private investment (or conservation) decisions in some initial period, and at a later time, the government discovers something about the prospective value of the property in a public use that may motivate a “taking” (such as designation of land for endangered species habitat). This sort of specification is clearly an abstraction, though I believe a very useful one. Most important perhaps, it abstracts from concerns about the optimal timing of government regulation in order to focus, in the simplest way possible, on a pervasive and very practical concern in the design of any takings doctrine: the incentives afforded to private landowners to use their land efficiently.