PEOPLE who believe in the power of government to do good probably found it outrageous that the U.S. Senate squandered weeks debating higher grazing fees, a financially trivial issue. The Western Senators' filibuster diverted the Senate from critically important issues like NAFTA and health care. But this posturing is a predictable consequence of political management of the Western range.

Current policies encourage overgrazing, discourage range improvements, inhibit innovation and sharply restrict allowable uses on the 315 million acres of public land administered by the Bureau of Land Management (BLM) and Forest Service. But below-cost grazing fees are not the primary source of ecological problems. The sources are rigid bureaucracies and insecure property rights.

When looking at grazing fee "subsidies," most commentators ignore an important fact: Aside from unanticipated inflation, the value of the "subsidy" has largely been incorporated into the sales price of private ranches with grazing privileges on public range. The BLM and Forest Service permits are attached to a "base unit" property (i.e., a private ranch). The ranch's sales price captures the value of cheap public grazing that comes with it.

It is as if a car came with a sticker entitling the owner to 20 cent a gallon gas. The car with the sticker would sell for more than one without because it includes a valuable subsidy. Similarly, subsidies increase the value of a ranch possessing federal grazing permits.

Ranchers who received the original fee subsidy in 1934 died with a one-time windfall gain. But many present owners have already paid for the subsidy through higher prices when they bought ranches with public grazing permits. Most present owners can afford higher fees, but ethically, this is irrelevant. While we should adjust fees for inflation, it seems unfair to impose a penalty on present owners just because the original owners received an unjust, unearned financial gain.

Dr. Karl Hess Jr., a range ecologist, expert on Western lands and author of "Visions Upon the Land," notes that higher fees are unlikely to improve ecological conditions and reduce overgrazing on the public range. If we want improvement, we need to change existing institutional arrangements, not simply fiddle with prices.

Ecological and social problems are caused by regulations that encourage poor management practices - grazing too many cows and sheep, underinvesting in range improvements and maintenance and failing to replace domestic stock with more valuable wildlife. As noted above, poor management persists for two reasons: bureaucracy and imperfectly transferable property rights. Better management will follow secure, well-defined, and transferable property rights for those who use the public range, be they a private ranch or the Nature Conservancy Trust.

I suggest a modest reform. Give those with privileges to graze on public land the opportunity to buy a grazing right at a price incorporating the future value of the "subsidized" fee. Economists call this price the capitalized value of the fee. Logically, it would be similar to converting an apartment to a condominium. Future rents of the apartment are capitalized into the sale price of the condominium.

With this reform, ranchers would have legal property rights to the public forage. They could exchange those rights among themselves or sell them to those with other interests, e.g., ecological diversity, wildlife habitat for hunters, or stream-side preservation. These interests are growing and new ones will surely develop.

Incorporating the subsidy into the permit's price avoids penalizing owners who "purchased" a subsidy when they bought their private land and should reduce their opposition to reform. Everyone is better off because current owners retain access to the public range and taxpayers no longer subsidize management. There are also new incentives for innovation.

At present, the permit is only for grazing domestic livestock, even if the land has greater value for wildlife or recreation. BLM policy dictates that grazing privileges must be used. If not used, they are sold to others. Thus, when organizations acquire public range privileges and try to retire them from grazing, the privileges are stripped away. Last April, this happened to the Nature Conservancy in Mercer vs. BLM. If grazing rights were freely transferable, diverse uses would flourish, reflecting emerging environmental values.

A legal property right to forage on public lands would also discourage overgrazing and encourage range improvements. Ranchers could rest overused lands without fear of regulatory reprisal. Moreover, if ranchers knew they would benefit from range improvements, they are more likely to replant native grasses and forbs that have been destroyed by a century of overgrazing. Cooperating with others, some would also manage for wildlife.

Environmentalists and those seeking efficient government can join to promote institutional reforms that recognize new ecological understandings and changing tastes. When we allocate via politics, special interests and financial waste will prevail. Property rights and voluntary arrangements are far more responsive - and often more responsible.