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New Directions
for Public Lands
Public lands management can be transformed through the creation of land trusts.


The great Progressive experiment in federal land management, which began in the late 19th century, set aside nearly a third of the nation to be managed by federal agencies. This experiment has proven a costly failure, with most federal land management requiring large subsidies and suffering from huge controversies. Now people are looking to other models for managing or disposing of the more than 600 million acres of land managed by the Forest Service and Department of the Interior.

One place to look for other models is the states, and some policy-makers advocate transfer of federal lands to the states. While the states can teach us many things about public land management, one of the lessons they offer is that states are really no better at managing lands than the federal government, largely because most state agencies are also organized on the Progressive model.

Yet there are some state lands that are well managed, with much less controversy and much better results — both financial and environmental—than the federal lands. A close look reveals that it is not state management that makes the difference, but the way the state agencies are designed and funded. We can conclude that federal land management can be improved by reorganizing and creating a new budgeting system for the federal land agencies.

The Progressive era—roughly 1880 through 1920—brought a complete transformation of American government. The Progressives replaced the spoils system with the civil service system, paving the way for the great bureaucracies that now dominate the federal government.

In a larger sense, the Progressives transformed the way Americans think about government. Before 1880, most Americans probably agreed with Thomas Paine, who said "that government is best which governs least." But the rise of giant corporations and concentration of wealth in the hands of a few so-called Robber Barons shattered many people’s faith in laissez-faire government policies.

The Progressives reasoned that corporations could be tamed without nationalization, by various forms of government regulation. The regulators would be upstanding, well-educated people who were paid to serve the public interest. Since the regulators’ pay came from taxpayers, the Progressives thought they were sure to make decisions in the public interest and not for the benefit of some special interest.

Physicist and author Freeman Dyson once wrote that "the American constitution was written for crooks, while the British constitution was written for gentlemen. I prefer the American model, because crooks are rather more numerous than gentlemen." In this sense, the Progressive era was the American counterrevolution, since it vested government authority in gentlemen-bureaucrats.

In the conservation arena, the Progressives are notable for their reversal of a long-standing federal policy of disposing of federal lands to the states, settlers, and other private landowners. Instead, they reserved hundreds of millions of federally owned acres from sale or disposal to private properties. Today, 27 percent of the land mass of the United States is managed by four conservation agencies: the Forest Service, National Park Service, Fish and Wildlife Service, and Bureau of Land Management.

At one time, these agencies—in particular the Forest Service—were the shining examples of the Progressives’ legacy to the American people. Initially led by the charismatic and gentlemanly Gifford Pinchot, the Forest Service was for many years on everyone’s list of excellent organizations.

In 1952, for example, Newsweek wrote that "the Forest Service is one of Uncle Sam’s soundest and most businesslike investments. It is the only major government branch showing a cash profit." The magazine attributed the agency’s success to "decentralization," noting that Pinchot had told his staff to "get out into the woods or get out of the service."

The magazine also found that the foresters who ran the agency were "spoon-fed from the junior forester stage on a diet of responsibility and loyalty to the organization." This gave them a clear, unified sense of their mission, which was largely commodity oriented.

In the 1970s, however, the agency responded to public criticism over clearcutting by centralizing decisions and by hiring a variety of professionals—biologists, hydrologists, recreation specialists—instead of just foresters. The new staff members were less loyal to the agency than to their own specialties. The centralization left people in the woods feeling helpless, and ambitious staff were encouraged to get out of the field and into the higher levels of the bureaucracy. The agency’s clear mission changed to vague ideas such as "multiple use" and, later, "ecosystem management."

One result was that, far from earning a profit on the national forests, the Forest Service began to lose $1 billion per year through the 1980s and $2 billion per year in the 1990s. Just as important, the agency was under fire from all sides and its staff became increasingly demoralized.

Other federal conservation agencies are no better off. The Park Service loses well over $1 billion per year, the Bureau of Land Management close to $1 billion, and the Fish and Wildlife Service over $500 million managing their respective land bases. The Park Service and the Bureau of Land Management, in particular, are mired in controversy, and their environmental records are poor.

A close look at these agencies reveals that they were never led by the altruistic managers presumed by the Progressive model. Instead, their managers were heavily—but unconsciously—motivated by their budgets, especially by laws allowing them to keep a share of user fees from certain resources.

In the case of the Forest Service, this meant timber. Forest Service managers received millions of dollars from Congress to arrange timber sales, and then were allowed to keep millions more out of timber receipts. Since they weren’t required to return enough funds to the Treasury to cover the cost of arranging sales, most timber sales lost money. This led the agency to emphasize timber at the expense of other resources, such as recreation, because its managers were not allowed to charge for most of those other resources or to keep the receipts from those few for which they could charge.

Today, Congress continues to pass legislation and the president continues to set policies as if federal conservation agencies were run by altruistic managers. Yet the Progressive model is widely considered to be bankrupt. Federal conservation agencies have mutated into a pluralistic model in which a variety of special interest groups fight over budgets and resources. This system has led to virtual paralysis. Since any decision will raise the ire of some interest group, few decisions are ever made.

Collectively, the states manage something more than 175 million acres of land—an area roughly comparable to the 191-million acre National Forest system. I recently examined nearly 150 state conservation agencies to see what lessons they might teach would-be reformers of the federal system. I specifically focused on state forest, state park, and state fish and wildlife agencies.

Although there are no hard-and-fast rules, I learned that the states have traditionally treated these three types of agencies very differently. The forest agencies were considered profit centers, and their profits were often distributed to a specific beneficiary such as schools. The fish and wildlife agencies, on the other hand, were considered nonprofit organizations and allowed to keep all their revenues from hunting and fishing, although they were rarely appropriated any additional funds. The park agencies were loss-leaders that charged few if any fees and were managed as a pork-barrel gift from state legislatures to state residents.

Recent trends have disrupted these traditions. More than a third of state forest agencies now lose money managing state forest lands. A new emphasis on managing non-game wildlife such as songbirds and threatened species has inspired legislatures to dedicate special funds or to appropriate general funds to fish and wildlife agencies. And many park agencies are boosting their user fees; at least a few are funded almost entirely out of those fees.

I could not find in these traditions and trends any evidence that the states were better land managers than the federal government. Indeed, the best-run state agencies owe at least part of their success to federal mandates or inspiration. For example, the most profitable forest agencies manage lands that the federal government had given to the states to fund schools and other institutions. Courts have interpreted the federal transfers to be legal trusts that are obligated to produce a profit for the beneficiaries. In another example, the nonprofit nature of state fish and wildlife agencies was due to federal laws requiring that states let the agencies keep all hunting and fishing revenues in order to be eligible for federal grants for fish and wildlife habitat improvement. And finally, most state park agencies were directly inspired by the National Park Service, which in the 1920s promoted state parks to avoid being burdened with park lands of less than national significance. Most problems with the Park Service today are due to the failure of this effort; the agency now manages hundreds of often-expensive sites of strictly local significance.

A close look at individual agencies reveals that the best-managed state resources share one or both of two characteristics:

n They use the trust model for at least some of their lands. This model, which is very different from the Progressive model, imposes strong obligations and checks and balances on the managers.

n They also give their managers sound incentives to do a good job, including budgetary rewards for earning greater revenues or reducing costs.

Twenty-two states have trust lands that are managed for timber, minerals, domestic livestock grazing, and other uses. University of California professor Sally Fairfax and her colleagues Jon Souder and Robert Nelson have described the trust model and state trust lands in detail.1 Briefly, state trust lands are lands the federal government gave to the states at statehood to use for education.

State trust managers, or trustees, have a clear mission, which is to earn revenue for their beneficiaries. The trustees are also obliged to preserve the corpus of the trust and to be undividedly loyal to the beneficiary. They may not, for example, sell timber at a loss during a recession to keep local mills going, something that the Forest Service was famous for. Trustees must keep their books open to the beneficiaries and the beneficiaries may challenge trustees if the latter are failing to earn maximum revenues. The trustees can defend themselves against such challenges by proving that increasing revenues would deplete the trust corpus, but not by saying that higher revenues would harm other interests.

This model is clearly far different from the Progressive or more recent pluralistic models of federal land management. The most important differences are:

n The state trust mission is absolutely clear, while the mission of the federal land agencies is murky and self-contradictory.

n The state trusts are accountable to the beneficiaries, while the federal land agencies are accountable to a Congress that is more interested in pork than in sound land management.

n The mandate to preserve the corpus of the trust acts as a much stronger check against overexploitation than federal sustained-yield laws.

Still, the trust model is not perfect. It works best when the beneficiary actively monitors the trustees. In some states, the schools earn so little of their revenues from state trust lands that they have given up on monitoring, and the state land managers have stopped producing net revenues. One solution to this problem is to give state managers positive incentives to do a good job.

Proponents of devolution like to call the states "laboratories of innovation." In fact, my review of nearly 150 state resource agencies found that those agencies were nearly as tradition bound as the federal agencies. State legislatures, like Congress, tend to treat public resources as pork, giving away recreation in state parks, keeping hunting fees below market rates, and subsidizing timber and other resources.

Still, given the sheer number of state resource agencies, it is not surprising that a few examples of incentive-based management exist. These examples show that incentives can heavily influence land managers and that a conscious shaping of sound incentives can lead to better results.

Perhaps the earliest example of incentives comes from the state wildlife agencies. At the turn of the 20th century, numerous species of game wildlife were on the verge of extinction. The wildlife agencies that were created to regulate and charge fees for hunting invested the fees they collected into wildlife habitat.

Today, the most successful endangered-species recovery stories date not from the Endangered Species Act (which has recovered few species) but from those state agencies. Big-horn sheep, elk, and several other mammals and birds owe their survival and current healthy populations to agencies that were monetarily rewarded for sustaining these populations.

Unfortunately, the state legislatures that set up the wildlife agencies didn’t apply that lesson when they set up state park agencies. Instead of funding the parks out of user fees, the legislatures regulated park user fees at well below cost. What fees were collected were usually put into the state general funds rather than dedicated to the parks. As a result, state park agencies continually suffer from budget crises.

Exceptions can be found in Vermont, New Hampshire, and Texas, where state budget crises led the legislatures to completely defund the park agencies. Instead, the parks had to learn to survive from their own user fees. The Texas park agency decided to make park managers entrepreneurial. Parks that boosted their revenues or reduced their costs were rewarded with specified shares of the revenues or costs. This allowed the agency to keep all parks open despite the sudden termination of the state general funds that had previously accounted for 60 percent of park budgets.

Incentives count in the state forests as well. Some states pour money into their forests to provide "community stability," with the result that only about two-thirds of the forests are profitable. The most profitable state forests are the ones that are funded exclusively out of a fixed share of the receipts they earn. The Washington Department of Natural Resources, for example, manages its 2 million acres with 25 percent of its revenues, and it earns more profits than all the other state forests put together. The second most profitable state forest system is Oregon’s, where 36 percent of state forest revenues funds the forest system.

Trusts without incentives can work if the trust beneficiaries actively monitor the trustees, but there is no guarantee that the trusts are truly as efficient as they can be. Incentives without trusts can work efficiently but are dependent on fickle legislatures. The best state systems combine the trusts with incentives.

Handing federal lands over to the states will not guarantee improved management unless the transfer is tied to a trust or some other improved institution. But Congress can more easily learn from state experiences by turning federal lands into trusts.

Each national forest, park, fish and wildlife refuge, and Bureau of Land Management district could become an individual land trust. The trusts would be managed by individual trustees or by boards appointed or possibly elected by "friends of the park" groups. Trust beneficiaries would include local schools and counties that already earn a share of Forest Service and Bureau of Land Management receipts.

Trust managers would be encouraged to charge market value for recreation, wildlife, timber, and all other resources. Funding managers out of a share of their net income would give them an incentive to manage for the combination of uses that has the highest value. A share of the receipts could also be dedicated to nonmarket stewardship values, such as forest health and biodiversity, that might not be funded out of user fees.

The trust model could greatly improve land stewardship, restore public faith in federal land managers, and reduce the burden on taxpayers. While such a change might be too traumatic to implement nationwide, Congress could test it on individual forests or other administrative units. The results of such tests could lead the way to a major transformation of federal land management.n

Randal O’Toole is executive director of the Thoreau Institute in Concord, Massachusetts, and an adjunct scholar at the Cato Institute in Washington, DC.

1. Jon Souder, Robert Nelson, and Sally Fairfax, State Trust Lands: History, Management, and Sustainable Use (Lawrence, KS: University of Kansas Press, 1996).

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