Western Lands

https://www.downsizinggovernment.org/privatization

The federal government owns 640 million acres of land, which is 28 percent of the land in the United States. It owns 61 percent of the land in Alaska and 47 percent in the 11 coterminous western states, but just 4 percent of the land in the other 38 states. The federal agencies with the largest land holdings are the U.S. Forest Service (USFS) in the Department of Agriculture and the Bureau of Land Management (BLM), National Park Service (NPS), and Fish and Wildlife Service in the Department of the Interior (DOI).

Americans generally support federal ownership of the major national parks, such as Yellowstone. But many westerners have grown frustrated with the top-down controls on much of the federal land within their states. They want more local control because the economic and environmental decisions made in faraway Washington, D.C., often do not reflect their needs. Federal land and resource management has been bureaucratic, restrictive, and inefficient.

For more than a century after the nation's founding, the federal government's general policy was to sell or give away western lands to individuals, businesses, and state governments. The federal government privatized 792 million acres of land between 1781 and 1940. Some of those acres, for example, were privatized under Abraham Lincoln's Homestead Act of 1862. In addition, the federal government has transferred 471 million acres of land to state governments. The federal government, for example, transferred huge tracts of land to "western" states such as Illinois and Missouri when they gained statehood in the 19th century. The federal share of land in those middle states went from about 90 percent to less than 4 percent. Yet states farther west, such as Utah and Nevada, did not gain substantial ownership of their lands; instead, those lands remain mainly in the hands of the federal government.

By the turn of the 20th century, federal policy came under sway of progressives, who favored retention of lands and increased federal control. That approach continues today. The federal government's Land and Water Conservation Fund, for example, spends hundreds of millions of dollars a year on land purchases. In addition, the federal government has increasingly restricted the use of western lands by state residents through such actions as "national monument" designations. By 2015, President Obama had "established or expanded 19 national monuments for a total of more than 260 million acres of public lands and waters, more than any previous president."

Such designations generally reduce the use of lands for activities such as cattle grazing, logging, hunting, fishing, and off-road recreational vehicles. A slew of federal environmental laws passed since the 1960s adds another layer of restrictions on land use. The overall effect is that westerners have less control over their lands, resources, tax base, and economic development than do easterners. 

Federal agencies are increasingly putting up roadblocks to longstanding uses of federal lands. Since the 1950s, for example, the amount of grazing on BLM's 155 million acres of grazing lands has been cut roughly in half.

Some recent land-related protests against the federal government in the western states have attracted criticism because of the tactics that protestors used. But recent news articles have also captured the frustration of westerners about federal power grabs. The Wall Street Journal, for example, profiled a north Texas rancher whose family had been grazing cattle on 900 acres of its own land for more than 70 years; then, to their shock, the BLM swooped in and grabbed 650 of those acres, claiming that the land was actually federal.

When the government does allow the use of its lands and resources, it often does not price them in a sound manner. It generally sets fees for grazing, water, recreational activities, mineral extraction, and other resources at below market levels, which encourages overconsumption. As a result, federal lands cost taxpayers billions of dollars a year for administration costs, rather than producing a net return. Economists Terry Anderson, Vernon Smith, and Emily Simmons noted, "It is remarkable that the federal government actually loses money in the course of managing federal land assets estimated to be worth billions. Moreover, the federal government has a poor record of ecological stewardship."

A 2015 study by the Property and Environment Research Center compared western land management by the BLM and the USFS with land management by four western state governments. It found that federal agencies generally lose money managing their lands and resources, while state governments earn a positive return. For example, the USFS generates just 32 cents for each dollar it spends on timber management, whereas state agencies earn an average $2.51 for each dollar they spend. On rangeland management, the BLM earns just 14 cents for each dollar it spends, whereas state agencies earn an average of $4.89 for each dollar they spend. The federal grazing fee in 2014 was just $1.35 per "animal unit month," but the fees charged by the four state governments ranged from $2.78 to $11.41 per animal unit month.

In 2005 the GAO reported, "The grazing fees BLM and the Forest Service charge are generally much lower than the fees charged by the other federal agencies, states, and private ranchers." The auditors found that grazing fees collected by the BLM are only about one-fifth the level needed for the agency to break even. The Congressional Budget Office came to similar conclusions: "The current formula appears to result in fees that are well below-market rates and below the costs of administering the grazing program."

Federal grazing fees have remained at low levels in recent decades even though grazing fees on private lands have risen substantially in response to changing market supply and demand conditions. Another interesting factor is that, whereas the BLM sets its grazing fee annually for the entire western United States, private fees vary substantially in different locations, as one might expect in the marketplace.

Government pricing often causes distortions, and federal grazing fees are no exception. Artificially low federal grazing fees may encourage harmful overgrazing. However, the situation is complicated. Federal grazing permits are generally attached to particular parcels of private ranch lands, or base property. As such, low grazing fees are partly or fully capitalized in the value of those private lands. Therefore, current ranchers may not receive the benefits of the low federal grazing fees because they would have paid a premium when they purchased their private land.

This economic feature of western lands is the source of a lot of tension. The long-running battle between the BLM and Nevada rancher Cliven Bundy apparently stemmed from a 1993 BLM decision to cut back on his grazing on federal lands because of concerns about desert tortoises. Bundy and his family had long grazed the lands and had a valid permit to do so attached to his base private property. The tortoise decision imposed a large capital loss on Bundy's base property because its value is directly related to the amount of grazing it can support.

In a recent study, Shawn Regan of the Property and Environment Research Center noted that similar battles are going on all over the western United States because the current grazing system "encourages conflict, not negotiation." 

The BLM and USFS, under pressure from environmentalists, are imposing increasing restrictions on grazing lands, which is disrupting longstanding ranching activities and imposing capital losses on ranchers' private property. Part of the solution, according to Regan, is to allow ranchers more secure and tradable property rights in their use of grazing lands and allow them to transfer those rights directly to environmental groups that want to protect sensitive areas. Under that system, rather than lobbying politicians and officials and filling the courts with litigation, the energy of environmentalists would be channeled into voluntary conservation efforts in the marketplace.

A more thorough reform would be to begin privatizing BLM and USFS grazing lands. Economist Steve Hanke pursued BLM land privatization as a member of President Reagan's Council of Economic Advisers. He proposed that ranchers be offered the option to buy the grazing land that they currently rent from the government. The price would be set so that the ranchers were charged for only that portion of the BLM land value that has not already been paid for through private ranch land premiums.

Privatization would create the benefit of secure property rights. The fact that grazing lands are currently government-owned makes ranchers insecure about their tenure, so they have an incentive to overstock grazing lands and a disincentive to make long-term investments to improve the lands. Such counterproductive incentives have increased as the government has made grazing tenures more precarious in recent decades. Thus, an advantage of privatization would be to provide ranchers more incentives to plan their rangeland management for the long term.

It is true that the BLM, USFS, and other federal agencies have difficult tasks. They are supposed to optimally manage the use of vast rangelands, timberlands, minerals, wildlife, water, and other resources. But rather than trying to price the use of those resources to ensure efficient use, federal agencies — under sway of politicians — generally misprice and misallocate resources.

Now let us consider the National Park System. The NPS operates more than 400 parks, monuments, historic sites, and other areas. The total acreage of NPS holdings has quadrupled from 20 million in 1940 to 85 million today. That is far too large an inventory to manage efficiently, and many NPS sites suffer from deterioration. Visitor centers are aging, artifacts are being vandalized, and historic structures are getting damaged. About 60 percent of the 27,000 NPS historic structures need repairs. The NPS and other DOI agencies have accumulated somewhere between $14 billion and $20 billion in deferred maintenance.

The primary blame lies with Congress because it keeps adding to NPS holdings without paying for the upkeep. In a report on the NPS, former U.S. Sen. Tom Coburn (R-OK) said, "Politicians would rather take credit for creating a new park in their community than caring for the parks that already exist." As a result, we end up with NPS sites such as the Eugene O'Neill facility in California, which receives only eight visitors a day but has nine full-time staff. Most of the least-visited parks and sites were established in recent decades, and these facilities steer NPS resources away from the older "national jewels" such as Yellowstone.

Another problem is that NPS does not charge visitors in an efficient manner. Some NPS parks and sites charge users, but others do not. Great Smoky Mountains National Park is the most visited national park, yet it does not charge an entrance fee at all, even though a modest fee of just $2 would cover its operating costs. The overall average charge for almost 300 million annual NPS visitors in 2012 was just 63 cents. The study by the Property and Environment Research Center found a similar pattern of low fees that do not cover expenses for USFS and BLM recreation areas.

This discussion only scratches the surface of the complex issues surrounding federal land holdings. There are contentious issues regarding wildlife management, endangered species, wildfires, energy and mining activities, and allowable recreational activities. Many industries and jobs depend on the use of federal lands and resources, so legislative and regulatory restrictions on access affect state economies and many state residents.

As noted, there is great frustration about the heavy-handed way that federal officials impose rigid regulations on western lands and resources. The core problem is that federal politicians and agency leaders are far removed from the costs and benefits of their decisions. They cannot fairly balance all the economic and environmental concerns within each state.

What the federal government essentially tries to do is centrally plan the interactions of millions of citizens with 640 million acres of land and resources. A recent example showing the difficulty of central planning is the government-created overpopulation of wild horses on BLM lands. A 1971 statutory change sought to protect the horses; but the change eliminated all the population-balancing mechanisms, so now there are far too many horses in some western states, and BLM has failed to find an administrative solution. A similar overpopulation problem with federally protected burros on BLM lands is playing out in Arizona.

A final problem with federal land management is that federal land agencies are subject to all the usual bureaucratic failings. For example, DOI's inspector general testified before Congress in 2006, "Simply stated, short of a crime, anything goes at the highest levels of the Department of the Interior." He lambasted the ethics failures of DOI leaders and their "bureaucratic bungling" of oil and gas leases that cost billions of dollars in lost revenues. That case was typical of a "culture of managerial irresponsibility and lack of accountability" at DOI, he noted. Another example of DOI mismanagement was the negligent way that it mishandled billions of dollars of royalties that were supposed to be accumulating in Indian trust funds during the 20th-century.

The best reform for federal lands is the original one — transferring them to state governments and private owners. Many parks, grazing lands, historical sites, and other assets should be either privatized or transferred to state and local governments. Residents of the western states can better balance the competing needs of agriculture, ranching, industry, recreation, wildlife, and environmental stewardship than policymakers in Washington, D.C.

For many NPS parks and sites, most of the visitors live in state; thus, state ownership makes more sense than federal ownership. Alternatively, individual parks and sites could be transferred to private nonprofit organizations. Yet another option would be for state governments to retain ownership of lands but devolve operation and maintenance of parks to private concessionaires. For some parks, the USFS and numerous state governments currently use that sort of partial privatization.

For environmentally sensitive lands, an important development is the growth of conservation land trusts. These organizations "have emerged in recent years as central actors in land conservation," noted Resources for the Future in 2009. The number of land trusts in the nation soared from 400 in 1980 to more than 1,700 today. These organizations include well-known groups such as the Nature Conservancy and Ducks Unlimited. Currently, 50 million acres are being conserved by land trusts through ownership, easements, or other means.

Nonprofit groups offer a more efficient way to manage environmental resources than governments. One reason is that nonprofits usually benefit from extensive volunteer efforts. The Land Trust Alliance estimates that almost 350,000 volunteers nationwide take part in managing land trusts. The private, charitable sector is unique in the way it taps this vast workforce of low-cost, flexible, and dedicated individuals.

New York City has numerous examples of volunteer park efforts. The Central Park Conservancy has managed Central Park since the 1990s. The group raises the bulk of funding for the park's maintenance from donations, and it relies extensively on volunteers in its operations. Bryant Park, which was restored from dereliction in the 1980s by private efforts, is now managed and funded by a nonprofit corporation. And the very successful High Line Park was conceived by a private group and partly funded by $44 million in private donations.

Privatizing federal parks would increase transparency. As already noted, Coburn's study found that the NPS provides almost no detail to the public about how individual parks spend their money. By contrast, the private, nonprofit association that runs Mount Vernon, home of George Washington, publishes audited financial statements. Mount Vernon relies on private support and does not receive government funding.

In recent years, numerous western states have passed legislation calling for the transfer of federal lands to the states. At the federal level, the next administration should create a detailed inventory of land and resource holdings and identify those assets that can be moved to state and private ownership. Congress and the administration should then work with the states and begin paring back the vast federal estate.

https://www.downsizinggovernment.org/privatization

Norb Leahy, Dunwoody GA Tea Party Leader