2004 Index of Leading Environmental Indicators, Ninth Edition

From the Pacific Research Institute and
the American Enterprise Institute

Full Text PDF


By Holly Lippke Fretwell

  • Four federal land management agencies oversee an estate of 614 million acres, an area more than six times the size of California with an estimated value exceeding $150 billion.
  • Despite this wealth of resources, there are serious infrastructure and environmental problems. There are billions of dollars in maintenance backlogs, sewage contamination in Yellowstone, and 90 to 200 million acres of federal land at high risk of catastrophic fire.
  • The root of the problem is not a lack of funds but an excess of political management. The solution lies in alternatives such as state trusts to manage specific land tracts and allowing the public to lease land and resources.

Pacific Research Institute and American Enterprise Institute: Four federal land management agencies (the Bureau of Land Management, Fish and Wildlife Service, Forest Service, and National Park Service) oversee an estate of 614 million acres, an area more than six times the size of California. This acreage is rich in timber, minerals, livestock forage, wildlife habitat, and recreational and scenic resources, with an estimated value exceeding $150 billion.1

Despite this wealth of natural resources, however, there is no net return to taxpayers. In fact, the government loses money on its rich resources. Meanwhile, roofs are leaking in Park Service buildings, millions of acres of overly dense forests are charred each year, rangelands are denuded by overgrazing, and many wildlife refuges stand in desperate need of repair. A review of the federal estate shows trends quite different from the usually positive outlook of the Index of Leading Environmental Indicators. Although dollars spent on public lands have gone up and land set aside for recreation or conservation has increased, the quality of the lands has, by most significant measures, deteriorated. It is difficult to discern a favorable trend in public land management.

Management of large tracts of land by the federal government goes back more than a century. At the time, timber resources were being degraded, forests were clear-cut, and mountainsides were mined. So much logging was going on that experts feared a timber famine. One reason for this seeming profligacy was the fact that in the nineteenth-century United States, these resources were abundant. Restoring a logged forest held little value. It was more profitable to move to the next hillside or valley.

The growing perception in the Eastern states and especially Washington, D.C., was that the nation's resources were endangered, and the policy decision was made to stop turning over land to private owners, as the government had been doing since it was founded. This decision in favor of land retention by the federal government makes the western part of the United States totally different from the East, where most land is privately owned. Today, many people are unhappy with the state of the public lands, with good reason.

"Wildlife species are disappearing. Important museum artifacts are not being preserved. Irreplaceable historic structures are crumbling," says the National Parks Conservation Association, an organization whose mission is to help protect national park resources.2


Indeed, the National Park Service reports a $6-$9 billion backlog of unfunded maintenance, acquisition, and resource management projects.3 For example, Yellowstone's outmoded sewer system spews raw sewage into native trout streams, and the sewage treatment plant at Old Faithful pollutes the groundwater.4 Glacier National Parkís popular Going-to-the-Sun Road is frequently closed due to safety concerns,5 and prehistoric dwellings in Mesa Verde National Park are disintegrating from a buildup of oils and airborne particles.6 In addition, more than one-quarter of the National Park Serviceís buildings are in poor or dilapidated condition.7 The Forest Service has serious infrastructure problems, too.

With a road system of 373,000 miles, eight times the interstate highway system, the Forest Service has a road maintenance backlog in excess of $8.5 billion, with funding adequate to maintain only 40 percent of the roads to planned standards.8 According to one source, the agency has a backlog of $1.7 billion in unfunded recreational maintenance.9

The condition of many natural resources on federal landsóespecially those of concern to environmentalistsóis simply unknown. Although the Park Service has as one of its core missions the protection of cultural and natural resources, there is no inventory of many of these resources. ìMost park managers lack sufficient data to determine the overall condition of their parkís natural and cultural resources,î wrote the General Accounting Office in 1995.10 And then there is fire.


It has been estimated that between 90 and 200 million acres of federal land are at high risk of catastrophic fire.11 Since 2000 more than 22.5 million acres have burned. The rising trend of acreage burned will continue unless weather patterns change or major forest restoration occurs.

(see Figure 25). FIGURE 25: WILDFIRE ACRES BURNED IN THE 11 WESTERN STATES Source: Dennis Simmerman, USDA Forest Service, RMRS FireLab, 2/13/03

Cause of the Problem

Watchdog organizations argue that more money is needed for our public lands. ìCongressional funding is key for protection of Americaís wildlands,î claims the Wilderness Society.12 Insufficient budgets are ìresulting in poor administrationî; there are ìsevere funding shortfalls for certain core responsibilitiesî; there is ìa need for more . . . new staff,î says a coalition of environmental groups.13 Yet operating budgets for the four federal land agencies have increased 270 percent faster than inflation since 1962.14 Another way to look at this increase is to consider management costs.

In 1965, management costs per acre were less than $5. By 2002, in inflation-adjusted terms, costs had more than tripled to $16 per acre (see Figure 26). Over the last four decades, federal land holdings increased six percent, and visitation about one percent. Congressional budget appropriations far exceeded this amount. The root of the problem is not a lack of funds but an excess of political management.

Generally, the budgets of the land agencies are appropriated by Congress. To maintain and expand their budgets, managers must satisfy the interests of politicians. The power of Congress is illustrated by an example in Montana. Glacier National Park desperately needed funds to maintain its spectacular but potholed Going-to-the-Sun Highway. Before that happened, the Montana congressional delegation earmarked $6 million to renovate a system of chalets in the Glacier back countryóa system used by fewer than one percent of park visitors.15

When agencies do receive money from sources other than Congress, those funds tend to tilt the incentives of managers in a particular direction. Decisions are not made on an even playing field. The Forest Service, for example, has an incentive to encourage logging because about half the proceeds from a timber sale can be used by the local Forest Service unit for reforestation and other resource improvements.

Most of the land managed by the Bureau of Land Management (BLM) is grazing land, which ranchers lease from the agency. The BLM retains a portion of the ranchersí grazing fees for rangeland improvement. This source of revenue gives grazing precedence over other uses, such as recreational land, which receives very few fees. Yet most of the money comes from Congress. And because of the agenciesí reliance on Congress, creating a crisis is the best way for a national park or other agency unit to obtain additional funds.


Don Striker, former comptroller at Yellowstone National Park and now Superintendent at Mount Rushmore National Memorial, has pointed out the value of a crisis such as a sewage spill. ìNothing gets attention quicker than two, if not three, ruptures in the antiquated sewer system. Those spills moved us up three notches in the priority system.î16 Yet this is no way to provide the consistent quality of management that our public lands deserve.

The Push for More Preservation

In spite of poor public land management, an area larger than the size of Florida has been added to the federal estate since John F. Kennedy was president. And many politicians and professional FIGURE 26: FEDERAL LAND MANAGEMENT COSTS ARE RISING Source: Office of Management and Budget (OMB) Public Budget Database. Cited February 17, 2004, http://w3.access.gpo.gov/usbudget/fy2004/db.html FIGURE 27: THE COST OF MANAGEMENT EXCEEDS THE COST OF ACQUISITION Source: Office of Management and Budget (OMB) Public Budget Database. Cited February 17, 2004, http://w3.access.gpo.gov/usbudget/fy2004/db.html environmentalists support further expansion.17 ìResponsible land management can be improved in the Forest Service by acquiring sensitive or threatened habitats,î says a report prepared by a group of environmental organizations.18 The National Parks Conservation Association pleads with Congress to increase funding for the creation of new parks and to expand existing parks.19 Yet acquiring more land means that there will be more land to manage, and management costs far exceed acquisition costs (see Figure 27). From 1965 to 2002, the Land and Water Conservation Fund, the main source of federal acquisition funds, provided nearly $12.5 billion for acquisition. Yet the cost of managing all federal lands acquired totaled $251 billionóabout $8.1 billion in 2002 alone.20


In fact, the Congressional Budget Office has suggested a freeze on federal land acquisitions. A 1999 report completed during the Clinton administration asserts that "land management agencies should improve their stewardship of the lands they already own before taking on additional management responsibilities." The report goes on to say that "environmental objectives such as habitat protection and access to recreation might be best met by improving management in currently held areas rather than providing minimal management over a larger domain."21

Recommendations for Reform

If federal land management is to be reformed, public land agencies need more independence from political forces (that is, Congress) and from narrow revenue sources that limit their flexibility. Two major approaches would move toward this objective. One is to create trusts to manage specific land tracts. The other is to allow the public, not just narrow interest groups, to lease land and resources.

Trust Management

A trust is a legal assignment of certain powers to one or more persons, called trustees, who manage assets for the benefit of another. The trustees have a legal or fiduciary obligation to manage the assets within the constraints of the trust agreement.22 Most trusts are private and many are charitable organizations. In a number of states, however, lands owned by the state government are managed as trusts, and these offer a model for federal land management. State trust lands are required to generate revenue for the benefit of the public schools and other endowed organizations such as state universities.23 These organizations carefully monitor the trust lands to ensure that they meet their mandate of providing income over the long term. Although state laws regulating land management are generally less burdensome than federal laws,24 better management tends to occur on state trust land because of the mandate to earn revenue.

Because they pursue the specified goal of making money, state managers have more freedom than federal land managers to respond to changing conditions such as the state of the forest, recreation demands, and the growing interest in conservation.25 They have the freedom to consider trade-offs between alternative resource values. This means that the trust can generate revenues from one kind of resource use and use it to improve stewardship in another.

The Paul J. Rainey preserve, a National Audubon Society sanctuary in Louisiana, is a private trust that illustrates how such trade-offs can be beneficial. The preserve is a sanctuary for migratory birds, especially the snowy egret (the symbol of the Audubon Society). Yet the Society allowed 13 natural gas wells to be drilled on-site. The Society was able to put stipulations on drilling that protected the preserve and its wildlife, but still allowed the extraction of natural gas. The first well was drilled around 1950, and production continued until 1999, when gas was no longer economically recoverable. The wells generated about $25 million for the Audubon Society, money that it used to further its conservation goals.

Because their incentives mimic such private incentives, state lands often are more efficient than federal lands. Economist Donald Leal found that Montanaís state forests earned about $2 for every dollar spent, while federal forests located in the state (and often right next to the state lands) lost $0.50 for each dollar spent.26 The state forestlands were also healthier and protected their watersheds better than the federal lands.27 The states offer a model that should be adopted by the federal government.

Resource Leases

One of the tools used by state school trusts is the non-traditional resource or land-use lease. The federal government should adopt such leases, beginning on an experimental basis.


Typically on federal land, agency resources are provided for a single purpose (such as timber, grazing, or minerals) and favor a narrow interest. In contrast, resource leases would allow a broader public to bid for the right to use the trees, grass, or other resources in a non-traditional way, and that right should be transferable. Resource leases would open up opportunities for additional uses, while giving the successful bidders the right to make trade-offs.

To issue a resource lease, land managers would specify potential uses of a tract of land, as well as any prohibited uses. For example, an area forested with young trees might be leased with a prohibition against timber harvesting, while an area with older trees might be leased for commercial timber harvest. In the first case, the lessee might be a group interested in habitat protection for wildlife; the second, a commercial logging company.

But in either case, the lessee would maintain the right to sublet for alternative uses that fit within the constraints of the lease. On the Audubonís Rainey Preserve, pumping natural gas was permitted, but not during nesting periods, for example. The lessee could make similar stipulations when subletting to other uses.

Resource leases give leaseholders an incentive to carefully weigh the benefits that could come from carefully planned and supervised commodity production, while achieving the specified objectives of the lease. This approach is working in some of the western states, which have land very similar to federally owned tracts.

In Montana, the Nature Conservancy recently obtained a conservation lease on school trust lands. Under such lease arrangements, the conservancy manages the land mostly for wildlife, recreation, and research. The Nature Conservancy is paying the state about $2,500 per year more than a general grazing lease would.

In Colorado, conservation leases earn the state school trust $340,000 per year. The state of Wyoming earned more than $1.2 million by placing a conservation easement that restricts development on state trust properties in Jackson Hole.


Public land management by the federal government is riddled with problems that stem from its political management. By reducing political pressures and providing land managers with new incentives, it is possible to reshape federal land management. Our public lands can be managed for their highest-valued uses without compromising environmental integrity.

For more information, see the website for PERC (the Property and Environment Research Center) at www.perc.org.


1. O'Toole, "Should Congress Transfer Federal Lands to the States?" Cato Policy Analysis, No. 276, July 3, 1997, p. 5.

2. National Parks Conservation Association, "Across the Nation," . Cited April 3, 2003. 3. See Denise M. Visconti, Reform in the National Park System, 23 Seton Hall Legis, J. 409, 1999, pp. 409, 412

n. 15 (citing statements found from the Congressional Record estimating the financial backlog of maintenance, repair, acquisition and resource stewardship projects).

4. See Holly Lippke Fretwell, Paying to Play: The Fee Demonstration Program, PERC Policy Series, December 1999, p. 3.

5. Ibid.


7. Ibid.

8. Forest Service, ìInterim Rule Background of Forest Roads,î July 19, 1999, available at http://www.fs.fed.us/news/roads/ 19.

9. Gordon Gregory, ìProtesters: Fees Devalue Wilderness Experience; Coordinated Rallies in Nine States Decry a User-Pay Test Program, which U.S. Agencies Say Aids Upkeep and Plugs Budget Gaps,î Oregonian, August 15, 1999, p. D1.

10. General Accounting Office (GAO), National Parks: Difficult Choices Need to be Made about the Future of the Parks, GAO/RCED-95-238, August 1995.

11. General Accounting Office, Wildland Fire Management, GAO-03-805, August 2003, p. 14. There is some dispute over these figures, however.

12. The Wilderness Society, Congressional Funding Key for Protection of America's Wildlands, April 3, 2003

13. Wilderness Society, Fiscal Year 2003 Recommendations for Funding Americaís Public Lands, American Society of Landscape Architects, Defenders of Wildlife, Endangered Species Coalition, Friends of the Earth, League of Conservation Voters, National Audubon Society, Mineral Policy Center, National Parks Conservation Association, National Wildlife Federation, Natural Resources Defense Council, Scenic America, Sierra Club, U.S. Public Interest Research Group, The Wilderness Society, and the World Wildlife Fund. Available online. Cited April 3, 2003, p. 13.

14. See Holly Lippke Fretwell, Whither the Federal Estate?, PERC Monograph, forthcoming, 2004.

15. See Terry L. Anderson and Holly Lippke Fretwell, A Trust for Grand Staircase-Escalante, PERC Policy Series, September 1999, p. 4.

16. Jane S. Shaw, ìPerfect Spills,î The American Spectator, 32, Sept./Oct. 2001.

17. The Conservation and Reinvestment Act in 1999, introduced by representative Don Young (R-AK) and Senator Frank Murkowski, and Resources 2000, proposed by Senator Barbara Boxer (D-CA) and Representative George Miller (D-CA), would both have fully funded federal land acquisitions under the LWCF in the amount of $450 million annually.

18. Fiscal Year 2003 Recommendations for Funding Americaís Public Lands, American Society of Landscape Architects, Defenders of Wildlife, Endangered Species Coalition, Friends of the Earth, League of Conservation Voters, National Audubon Society, Mineral Policy Center, National Parks Conservation Association, National Wildlife Federation, Natural Resources Defense Council, Scenic America, Sierra Club, U.S. Public Interest Research Group, The Wilderness Society, and the World Wildlife Fund. Available online. Cited April 3, 2003, p. 6.

19. National Parks Conservation Association, ìWildlife Protection,î http://www.npca.org/wildlife_protection/biodiversity/ report, cited April 3, 2003.

20. Office of Management and Budget (OMB), 2003a. Budget of the United States Government, FY 2003, Public Budget Database, available www.whitehouse.gov/omb/budget/fy2003/db.html, cited May 20, 2002.

21. Congressional Budget Office, Maintaining Budgetary Discipline: Spending and Revenue Options, April 1999, p. 68.

22. See Terry L. Anderson and Holly Lippke Fretwell, A Trust for Grand Staircase-Escalante, PERC Policy Series, September 1999, p. 5.

23. See Holly Lippke Fretwell, The Price We Pay, PERC Public Land Reports, August 1998.

24. Many western states have adopted state environmental policy acts similar to NEPA. California, Montana, Oregon, and Washington have timber harvest restrictions comparable to national requirements. See also Fretwell (1998).

25. Most western states were provided grants of land upon their creation for the benefit of the public schools and other state institutions. States receiving school trust grant lands are Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Louisiana, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah Washington, Wisconsin, and Wyoming.

26. See Donald R. Leal, Turning a Profit on Public Forests, PERC Policy Series, September 1995, p. 5.

27. See Bill Shultz, Forestry Best Management Practices Implementation Monitoring, Department of State Lands, 1992.

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Holly Fretwell is a Research Fellow at PERC and an adjunct instructor at Montana State University where she has taught  introductory economics, macroeconomics, natural resources and environmental economics. She works with the Foundation for Teaching Economics, giving workshops for  high school teachers to improve their skills in teaching and...
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