This digital document is a journal article from Journal of Environmental Economics and Management, published by Elsevier in . The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.Description: Fishery managers in the US are required to identify and limit adverse consequences of fishing on essential fish habitat. We propose an individual habitat quota (IHQ) system for habitat conservation that would utilize economic incentives to achieve habitat conservation goals cost-effectively. Individual quotas of habitat impact units (HIU) would be distributed to fishers with an aggregate quota set to maintain a target habitat ''stock''. HIU use would be based on a proxy for marginal habitat damage. We use a dynamic, explicitly spatial fishery and habitat simulation model to explore the cost-effectiveness of achieving specified habitat conservation targets with our IHQ system versus fixed or rotating marine protected areas (MPAs). We find that the IHQ system can be considerably more cost-effective than MPAs, but that the relative advantage decreases as fish diffusion rates and uncertainty about fish distribution increases.