Data: Pruning Profits


If a tree falls in a forest, it may or may not make a sound. But this much is certain: If it falls in a forest managed by the federal government, it will generate significantly less revenue than if it falls in one managed by a state government. Between the Forest Service and the Bureau of Land Management, the feds oversee about 20 percent of the nation's land mass, including massive timber resources they sell to private interests. Between 1994 and 1996, however, Forest Service- and BLM-administered land annually lost about $290 million on such ventures. The agencies also rang up annual deficits of $66 million on grazing fees and $355 million on recreational activities.

A new study from PERC, a market-oriented environmental think tank based in Montana, finds that such losses run counter to the experience of state land management agencies. Researcher Holly Lippke Fretwell compared the federal agencies' performance to that of 10 Western state "trusts" that operate similar public lands and sell similar rights to help fund public education. In the period between 1994 and 1996, the states earned an average $5.56 for every dollar spent managing public lands.

Fretwell says the trusts are more efficient because they must pay operating expenses out of their own revenue and because they have specific beneficiaries who, "similar to stockholders…have a claim on 'profits.'" The federal agencies, in contrast, rely on Congress for annual budgets and turn over all revenue to the general treasury. There is virtually "no connection between money spent and money earned," Fretwell notes. The predictable result: red ink.