The West has long considered natural resource industries - logging, mining, and ranching - as economic keystones. Westerners have relied upon the federal "landlord" for substantial economic benefits. The world's largest system of water diversions and network of forest access roads (eight times the mileage of the U.S. interstate highway system) testify to their success.

The market process would not deliver such benefits. These developments were politically driven. And when we include the environmental costs, as an honest accounting must, some were grossly irresponsible.

Political economists have explained why agencies like the Forest Service go astray. Created to curb waste of natural resources, they predictably degenerate; they operate to protect their budgets and co-dependent commodity interests.

As global forces shape a new economic landscape, market forces favor service and information-based industries. Rapid and often unsettling changes threaten many rural communities. These changes challenge the region's dependency on exploiting nature.

The West's attractive environment has tremendous economic value. Roadless lands, wilderness, free-flowing rivers, national parks and forests, and healthy wildlife habitat stimulate much of its new economic activity. These amenities attract entrepreneurs. For example Bozeman, Montana has 40 high-tech firms in a town of 30,000. Freed by FedEx and the Internet, "modem cowboys" (and cowgirls) arrive seeking high environmental quality.

Gallatin County, Montana, typifies this change.

* From 1969 to 1994 the job base more than tripled as 26,525 new jobs were added. The fastest-growing sectors were services (29 percent), retail trade (24 percent), and government (20 percent). Critics are quick to characterize workers in the service sector as "burger flippers" earning minimum wage. But the services also include doctors, lawyers, and other professionals.

* 38 percent of the growth in personal income over the last 25 years came from non labor sources (e.g., pensions, retirement, rent, royalties, and Social Security). Employment and personal income growth in the traditional extractive industries remained flat or declined slightly over the same period. Part of this income growth is attributable to environmental amenities. For example, in Montana, social security benefits amounted to $1.626 billion in 1995. Income from ranching (the largest source of industrial income in the state) was $1.038 billion. Retirees enjoy boating, camping, fishing, and other activities that depend in part on environment quality-something clearcut forests, polluted waters, and scarce wildlife greatly impoverish.

Reductions in transportation costs and advances in technology make places like Gallatin County attractive to new industries. Liberated from geographic constraints, firms whose goods have high value-to-weight ratios (unlike cars and steel) can relocate to attractive places. These new businesses are independent of the West's brittle, subsidy-dependent economy. They need not celebrate the primacy of commodity interests over the natural environment.

But many Westerners still believe that the natural resource economy trumps all, that economic and social values require unrestrained exploitation of the natural environment. This misconception fosters much mischief - and contradicts the facts. Jobs in our extractive industries remain notoriously unstable. While overall employment in the Pacific Northwest has steadily increased over the last 20 years, employment in wood products has fluctuated widely. There are many reasons for the decline in the traditional extractive sectors, such as falling commodity prices, technological improvements that reduce labor demands, and substitutes (e.g., fiber for aluminum and copper). Even if mineral consumption rises globally, and resource jobs are locally important, the extractive sector can't lift our standard of living. Moreover, Americans increasingly reject the negative consequences of resource extraction, even if environmental problems are exported beyond our borders. The West's future will respond to changing opportunities and preferences. But when politicians are wedded to special interests formed in the past, better options are delayed. Resource-dependent communities, like others, seek economic benefits. They should foster their ability to attract and retain new economic activity. And environmental quality is a key resource.