PERC Report: State Lands Far Better Managed than Fed Lands


As Montana grapples with issues surrounding federal land management, a new report from the Property and Environment Research Center (PERC), has found that state trust lands are far more effectively managed than multiple-use lands owned by the federal government.

“Federal land agencies lose billions of dollars each year managing valuable resources on federal lands,” states the report. “The current federal land system fails to foster fiscal responsibility and, in some cases, also fails to produce environmental stewardship.”

PERC is a Bozeman-based thinktank that focuses on improving environmental quality through property rights and markets rather than government regulation. The land management study, called “Divided Lands,” was authored by Holly Fretwell and Shawn Regan.

The PERC study compared state trust lands to federal multiple-use lands in Arizona, Idaho, Montana, and New Mexico and found that state trust lands generated an average of $14.51 in revenue (on activities such as timber management, mineral leasing, grazing, and recreation) for every dollar in cost to taxpayers from 2009-2013. Federal land managed by the Bureau of Land Management (BLM) and the U.S. Forest Service (USFS) generated just 73 cents in revenue, per dollar of cost. In other words, the federal government lost 33 cents on every acre of USFS and BLM land, per year on average from 2009-2013.

Specific to Montana, the study stated that Montana’s 5.1 million acres of state trust land generated $107,062,945 in annual distributions to state trust beneficiaries from 2009-2013, or just under $21 per acre of state trust land. Overall, management of Montana’s school trust lands costs the state about $12.4 million a year. According to this measure, Montana receives $8.65 in revenue for every dollar it spends on school trust lands.

Montana’s 26.9 million acres of federal lands, on the other hand, generated $109,627,941, in direct federal land payments to the state through “Payment-in-lieu of taxes” (PILT) programs from 2009-2013, or just over $4 an acre.

Overall, the federal multiple use lands generated a yearly average of $5.26 billion in revenue from 2009-2013, while costing taxpayers $7.22 billion per year. State trust lands in the four states studied generated an average of $239.2 million in revenue per year and cost taxpayers just $16.5 million.

According to the study, the discrepancy in effective management comes from the differences in the legal mandates for state and federal land management. While there is a fiduciary requirement for state trust lands to be managed for the long term benefit of the state, federal land management is based on Congressional rules, funding, and a public input process. There is no requirement to generate revenues to cover costs.

“Instead, Congress appropriates the bulk of federal land budgets. Federal land managers often have little or no incentive to generate more revenues or control their costs because the proceeds generally cannot be retained by the agency,” states the study. “As a result, the connection between revenues, beneficiaries, and long-term stewardship is unclear or missing on federal lands.”

The difference between state and federal management is particularly striking in timber management. The study states that Montana trust lands earned an average of $60.80 per thousand feet of board timber sold per year from 2009-2013. The BLM and USFS, on the other hand, lost $148.90 and $197.71 a year per thousand board feet of timber sold respectively.

“The Forest Service is so busy meeting procedural requirements, such as preparing voluminous plans, studies, and associated documentation, that it has trouble fulfilling its historic mission: to sustain the health, diversity, and productivity of the nation’s forests and grasslands to meet the needs of present and future generations,” the study states quoting a 2002 Forest Service Report.

The study also acknowledges ongoing policy battles in western states — including Montana — over proposals supported by many conservatives and Republicans to transfer ownership and control of federal multiple-use lands to the states due to the poor land management practices of federal agencies. Democrats and many on the left oppose this idea, because they claim that the states can’t afford to manage the land and that the land will be “sold off.”

While the study shows that the state’s abilities to manage land for revenue could offset the cost concerns of land transfer opponents, the PERC authors caution that federal multiple use lands would have to be managed as state trust lands, which could have “significant effects on land management and current public land users.”

Even if states do not pursue land transfers, however,  the study still states that the federal government should look at state trust lands as a model for possible reform of federal land management practices.

“Setting aside the proposals to transfer federal lands, public land advocates should carefully examine trust land management and consider how trust land principles might improve federal land management,” the authors conclude.

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