This sentence has a bit of an odd structure because the object is before the verb. The subject is “development”; the verb is “is having”; the object is “effect”; “on birds” is a prepositional phrase describing “effect” {although looking at it again, maybe it describes the verb}. Remember, effect is almost always a noun, while affect is almost always a verb. {I wish we could say “always” more often in English grammar rules - there almost always is an exception.}
This refers to land development having an effect on birds. ‘What effect’ means the sort of effect’
‘Effect’ is used as a noun un this sentence. In can also be used s a verb indicating ‘put into practice’ as in: The Government has said it is going to effect new regulations on the use of water.