The Open Lands Paradox

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The Open Lands Paradox

By: Ray Rasker
Posted on October 27, 2014 Headwaters Economics Topics:

Introduction by John A. Baden

This week’s FREE Insight features an essay by economist, Ray Rasker a principal in the Bozeman-based organization Headwaters Economics. Ray is an expert on the economy of the emerging West. His essay celebrates the 50th anniversary of the passing of the Wilderness Act of 1964. I wrote my comments to place his essay in historical context.

For a century the leaders of America's West had a coherent politics, economy, and culture.  It lasted from the Civil War until the Wilderness Act passed in 1964. A strong commitment to developing the region's natural resources provided the glue holding it together. Agriculture, forestry, grazing, and mining denominated the West.  Yellowstone and Yosemite parks were prescient aberrations. 

Rivers were for irrigation and energy.  Folk singer Woody Guthrie celebrated federal agencies damming western rivers. Fish were damned. 

“And up on the river is Grand Coulee Dam,

The mightiest thing ever built by a man,

To run these great factories and water the land,

It’s roll on, Columbia, roll on….

Yakima, Snake and the Klickitat, too,

Sandy, Willamette and Hood River, too;”

The Yellowstone was the only major western river escaping this socialist fate. 

The first Earth Day, April 22, 1970 was one of the largest celebrations in our history.  It marked the end of a century of easy dominance by commodity interests.  And this was a natural cultural evolution: As people become well off and educated, they become Green.  (But when economies turn downward, many of these people turn brown. Alas, that too is in the nature of things.)

Aside from a national environment marked by political and cultural decline, many of us live in the best of times.  And a lucky few live in special parts of last best places.  Towns in the Rockies boasting good universities and airports are natural magnets for people with high human capital. Places proximate to parks, skiing, open lands, and wildlife luxuriate in the economic sweet spot.  Ironically, wilderness classification and prohibitions on land development help fuel economic prosperity. 

There are good reasons why trust in federal agencies sags ever downward.  Respect for the VA, IRS, and even the CDC has declined as citizens learn more about their operations.   Likewise for federal land and water management bureaucracies.  Few alert and well-informed people favor agencies' management of Western federal lands and waters.  Still, the great majority of westerners want these lands to remain in federal hands.  Why?

This seems the best way to protect the land from development and the damage associated with resource development.  There are many sensitive veto points when development is proposed.  Logging, mining, and energy proposals can be blocked. 

Some of the environmental interest groups specialize in this blocking.  They are paid for bringing suit.  That's their niche in our political economy.  As a result of their success much timber is left to burn and rot while valuable minerals and energy are left in place.  

These foregone opportunities hurt few people with high wealth or human capital.  Most of them gain when lands are locked up.  It is usually the blue-collar people (and not those wearing Brooks Brothers blue ox button downs) who lose when land becomes Wilderness or otherwise made ineligible for commodity production. 

This week's FREE Insights by Ray Rasker is pegged to the 50th anniversary of the Wilderness Act.  The Act defines wilderness as: “A wilderness, in contrast with those areas where man and his own works dominate the landscape, is hereby recognized as an area where the earth and its community of life are untrammeled by man, where man himself is a visitor who does not remain.” Ray is a natural resource economist who quite naturally elects to live in Bozeman. His Insight suggests why such places are becoming so attractive. 

It seems ironic that wilderness land can actually be an economic stimulant.  In this short essay Ray explains what other attributes contribute to this economic success.  In brief, wilderness designation is not alchemy.  It doesn't create gold from dross materials.

Other attributes must be present for our open, romantic lands to increase opportunities and income.  Essentially, they must also have qualities that attract high human capital.  America's romantic lands including parks, wilderness, and open spaces are large attractors to many talented people. 

I hope federal ownership and political management are temporary arrangements for resource stewardship.  Fiduciary trusts could produce far better information and incentives for protecting amenities and producing commodities.   We've had centuries of experience with such trusts.  They are not perfect but usually highly preferable to political management by federal agencies.  

We will not see a repeat of Newsweek’s June 2, 1952, issue featuring Smokey the Bear on the cover and a five-page story about the USFS.  “No one can deny that the Forest Service is one of Uncle Sam's soundest and most businesslike investments,” proclaimed Newsweek. “It is the only major government branch showing a cash profit and a growing inventory. This year, through timber sales, grazing permits, and other fees, the foresters will turn back to the U.S. Treasury a net surplus of $10 million.”

In marked, drastic contrast consider a contemporary critique from Stanford’s Francis Fukuyama in Foreign Affairs, September/October 2014 issue titled America in Decay:  “Today, however, many regard the Forest Service as a highly dysfunctional bureaucracy performing an outmoded mission with the wrong tools. It is still staffed by professional foresters, many highly dedicated to the agency’s mission, but it has lost a great deal of the autonomy it won under Pinchot. It operates under multiple and often contradictory mandates from Congress and the courts and costs taxpayers a substantial amount of money while achieving questionable aims. The service’s internal decision-making system is often gridlocked, and the high degree of staff morale and cohesion that Pinchot worked so hard to foster has been lost. These days, books are written arguing that the Forest Service ought to be abolished altogether.”  

People a generation or two from now may look back in amazement at America's earlier trust in sylvan socialism*.  I'll bet however that most will be grateful indeed for our parks, wilderness and open spaces: These are our lands of romance.  I sincerely hope they will be well protected and insulated from both politics and avarice.  Fiduciary trusts are one promising means to this end.

Here is Ray Rasker’s recent essay celebrating the 50th anniversary of the Wilderness Act.

At the 50th anniversary of the Wilderness Act, it is encouraging to learn that lands set aside for conservation can also have tremendous economic value. Wild places are key to attracting entrepreneurs, as well as a tidal wave of retiring Baby Boomers. And, more obviously, wild places create jobs in outdoor recreation, now a $646 billion industry.

Simply put, people care about quality landscapes and it influences where they live, play, and do business.

A number of studies bear this out. For example, non-metro western counties have, on average, a per capita income $4,360 higher for every 100,000 acres of protected public lands.

But a question for today’s policy makers remains: Will the protection of wild places on public lands – in the form of wilderness, national parks, wildlife refuges, and national monuments – automatically lead to economic well-being?

The answer depends largely on location. In big cities, the effect of protected lands is difficult to measure because these economies are too complex to measure the effect of one variable. In remote rural counties there is a positive association, yet there is little job growth because beautiful landscapes by themselves are not enough; good schools, medical facilities, and access to markets also are needed.

The sweet spot are counties with a rural, scenic setting and with a nearby airport with daily service to major cities. In these “connected” counties there is a measurable positive association between wilderness, national parks and other protected lands and economic well-being.

These places include Santa Fe, N.M.; Bend, Ore.; Bozeman; Durango, Colo.; Flagstaff, Ariz. and others like them – places that in the last few decades have been discovered and redeveloped because they are wonderful places to live and do business.

Since 1970 the vast majority of new jobs have been created in service industries, and the race is on to capture the high-wage component of this growth. Communities with protected public lands have a competitive advantage in attracting the engineers, architects, software developers, doctors, lawyers, researchers, and others.

More than 100 economists, including three Noble laureates, sent a letter to President Obama to ask for increased protection of public lands. They stated the situation like this: “Increasingly, entrepreneurs are basing their business location decisions on the quality of life in an area. Businesses are recruiting talented employees by promoting access to beautiful, nearby public lands. This is happening in western cities and rural areas alike.”

In addition, the big trend to watch is the retiring Baby Boomers. Their investment, retirement and other age-related payments now account for 41 percent of personal income among counties in the West, and 60 percent of net new personal income in the last decade. This money in turn stimulates health care, construction, and other sectors. According to USDA’s Economic Research Service, members of this so-called Baby Boomer tsunami consistently migrate to counties with high natural amenities.

Americans clearly care about quality landscapes. A survey from earlier this year found that “69 percent of Westerners are more likely to vote for a candidate who supports protections for some public lands.”

While the economic role of protected lands is not the same in all places, 50 years after the first federal wilderness, protected lands still matter and play an important economic role.

Ray Rasker, Ph.D. is the executive director of Headwaters Economics in Bozeman.

 

* The Progressive Era reformers identified many quite real problems in post Civil War America.  Their goals included eliminating corruption in government, controlling monopolies, and protecting consumers from dangerous products.  Their great faith in "scientific management" was central to creating the U.S.F.S. to manage the national forests.  These are timber and range lands owned by the federal government, some 192,000,000 acres.  This was by definition a socialist enterprise, government ownership and management of potentially productive resources.  The outcome is consistent with other socialist experiments.

There is a darker side to the Progressive's vision, government control and management of private forest lands.  Government control and management of privately owned resources is a defining feature of fascism.

“Scientific management was essentially a centralizing vision. Once scientific management of the forests became the goal, it was logical that authority should be placed at the federal level. Only the federal government would have the scope of responsibility to plan and coordinate comprehensively for forests all across the United States. It would be the federal government that would have the resources to bring together the best technical experts to find the correct scientific answers.”

“The Failure of Scientific Management”

Testimony of Robert Nelson before the Forests and Public Lands Management Subcommittee of the Senate Energy and Natural Resources Committee, November 2, 1995

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