The epicenter of Ecotopia lies somewhere in the area encircled by Bellingham, Eugene, and Bozeman. Four colleges of forestry, dozens of environmental groups, and busloads of environmental writers are based there. Hence, the federal land management agencies are under intense scrutiny. But even here, the institutional arrangements are so perverse that often management is grossly pathological, ecologically insensitive and economically wasteful. Many analysts now question the justification for federal management of commercial timber land.

The woeful performance of agencies like the Forest Service is not due to incompetent or evil people within those bureaucracies. Rather, bad institutions generate incentives and information which lead smart, well-intentioned people to do harmful things. The real need is for better economic and legal arrangements, not better people.

The Forest Service came from progressive era fantasies a century ago. In Public Lands and Private Rights, Robert Nelson of the University of Maryland describes the progressive's religion. Their philosophy requires centralized management by scientifically trained professionals. They believed that good management can only come from the government, from trained professionals in the Forest Service. In their view the private sector was incapable of responsible forest management. Increasingly, evidence mounts that the progressives had it exactly backwards.

Professor Nelson points out that, despite this conviction, "the history of the public lands is filled with laws that had lofty purposes and achieve dismal results". Bureaucratic politics trumps ecology, economics, and ethics. Recent events in our Ecotopia illustrate the general problem.

275 acres of scorched or burned trees were sold in a remote pocket of the Thunder Mountains in the Okanogan National Forest, Washington. The salvage logging rider to the 1995 Recissions Bill keeps the public from appeal the timber sale. Politics exempted salvage sales from environmental regulations. Logging this area imperils rare lynx habitat and salmon runs.

The Forest Service spent over $200,000 to plan the Thunder Mountain timber sale. Its first offering in October yielded no bids from industry. The Forest Service re-offered that sale two months later, after lowering environmental standards. This time Omak Wood Products, Vaagen Brothers, and Acord placed bids. However, they were outbid by the Northwest Ecosystem Alliance (NWEA), an environmental group. Their $29,000 bid marks the first time an environmental group has outbid timber companies for logging rights. This is a milestone in the co-evolution of environmentalism and economics.

The USFS is likely to reject NWEA's high bid because they vow to let the trees stand.ÊÊAccording to Mitch Friedman, NWEA's Executive Director, "The best result for all concerned would be for the Forest Service to take our money.... and allow us to protect the trees for the length of a rotation - maybe 100 years." Unfortunately, federal regulations mandate that purchasers be "responsible for" cutting the trees. The Forest Service says it will disqualify purchasers who lack such "integrity" and "ethics".

Throughout time and across cultures, wealth, education, and environmental concerns are positively correlated. As education and prosperity levels rise, so do environmental sensitivities and interests. But environmental amenities have long been thought of as luxury goods. Gifford Pinchot, the first Forest Service chief, argued with John Muir that material considerations must trump all others. The national forests were to be federally run as an efficient and responsible business.

While resource extraction drove the American West's economy in 1897, diverse environmental values are helping drive the "new" West's emerging economy in 1997. Recreation, biodiversity and scenic vistas, along with traditional commodities, represent vital economic resources. Wildlands surrounding cities contribute to the high quality of life and attract businesses to Pacific Northwest and Northern Rockies communities. And, contrary to expectations of progressive era zealots, private timberland owners have proven far more efficient, innovative, and progressive than federal agencies.

Here's how the amenity economy evolves. Public, non-governmental entrepreneurs identify the interests of those valuing the non-commodity features of forests. But when environmental entrepreneurs aggregate these interests, they are often stymied by the bureaucratic politics of federal caretakers. NWEA's high bid on Forest Service lands exemplifies this. Professor Nelson, a U.S. Department of Interior economist for over 20 years, finds that, "it is most of all the old scientific management theories of the progressive era that stand as a barrier to the development of new institutions for the public lands".

The Forest Service effectively blocks the evolutionary path of the forest economy. The centralized planning imposed last century has failed to keep pace with the success of private forestry and with the complex and changing values of our modern economy. Politics and the budgetary process systematically reward federal 'scientific managers' for losing money on environmentally destructive activities. The Thunder Mountain salvage sale will cost the U.S. Treasury at least $171,000. The costs of environmental amelioration will follow. And the non-financial costs to lynx, salmon, lovers of these natural systems, and fiscal conservatives will be even higher.

As we approach the centennial of the national forest system, it's time to ask if the federal government should even be involved in managing commercial timber. Central planning fails in the Forest Service as it did in the Soviet Union. It's time for second thoughts about sylvan socialism.

Both, John Baden and Douglas Noonan, thank Jeff Olson, a forester formerly with Boise Cascade and the Wilderness Society for his comments.