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Swiss Christmas gift comes with a price tag

  • Terry Anderson
  • It would appear that Santa arrived early this year in the form of a Swiss billionaire who donated $35 million to the Nature Conservancy and the Trust for Public Land. The donation was used to help the organizations purchase 310,000 acres in Montana from Plum Creek Timber.

    The kicker is that the land will be turned over to the federal government. This may seem like a gift from Santa, but beware of the warning label: this gift requires significant maintenance costs.

    Unlike most assets, which are expected to earn returns over the long run, turning this land over to the federal government will generate costs, not revenues. The Forest Service – the agency poised to receive the lands – loses an average of 77 cents for every dollar it spends on land management. And based on the average amount it costs the Forest Service to administer an acre of land, the Plum Creek parcels will cost the government approximately $6 million per year. That means that in six years, taxpayers will have spent more on management than the Swiss Santa donated in the first place!

    This is hardly the kind of gift that a government so far in debt needs. One solution would be to require that the Swiss Santa and the organizations giving the land to the federal government also provide a management fund to cover the costs.

    Indeed, the Nature Conservancy and other land trusts set a precedent for this by requiring people who donate conservation easements to provide funds to monitor the easements. This ensures that the land is managed to preserve its conservation values.

    In addition to the management costs footed by taxpayers, there is the potential for foregone tax revenue to local governments. The federal government is supposed to make “payments in lieu of taxes,” but appropriations are seldom fully funded. Moreover, earlier this year the Department of Interior delayed payment to some Montana counties. County governments should be concerned about the transfer from private to federal ownership will do to tax revenues.

    Like a fragile China doll, the gift of land requires careful stewardship. But with a backlog of deferred maintenance projects totaling $5 billion, the Forest Service is hardly the best steward. Neglected forests, failing roads, and ruined cultural artifacts are all too common in today’s national forests.

    As economist Holly Fretwell notes in her recent book, “Who is Minding the Federal Estate?” this mismanagement stems from “the political nature of public management.” Decisions are made by Washington politicians and bureaucrats, and projects are judged by their political, rather than conservation, merits.

    The Nature Conservancy has 15 million acres of land in the United States under its stewardship and has a good reputation for land management. The conservancy purchases or accepts donations of land that is considered critical for conservation purposes. Its management balances conservation with production. For example, the Pine Butte Preserve here in Montana is critical habitat for grizzly bears in the spring.

    But when the bears aren’t there, the conservancy earns revenue by leasing the land for cattle grazing. If the Nature Conservancy would retain ownership, we could expect more stewardship and less drain on the U.S. Treasury.

    If the Nature Conservancy does not want to retain ownership, it should have considered the alternative of giving the land to the Salish-Kootenai Confederated Tribes on the Flathead Reservation. Recent research by forestry expert Alison Berry shows that the tribes’ land in Montana is much better managed than adjacent Forest Service lands in terms of both timber production and ecological values. The tribes earn an average of $2.04 in timber sale revenue for every dollar spent, compared with $1.11 on the neighboring Lolo National Forest.

    Tribal lands are also at less risk of catastrophic wildfires and insect infestation than the adjoining national forest, which is hamstrung by environmental litigation. Giving the land to the tribes rather than the federal government would mean earning higher economic and environmental returns from the asset.

    The Swiss Santa and his conservation elves are to be commended for getting into the holiday spirit of giving. Before sending out a thank you letter, however, we should ask whether this is a gift that will keep on giving or one that will keep on costing taxpayers.

    Originally appeared in the Missoulian.

    Written By
    • Terry Anderson

      Terry L. Anderson is the former president and executive director of PERC, and the John and Jean De Nault Senior Fellow at the Hoover Institution, Stanford University.

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