Subsidies Anonymous #1

August 10, 1995

Table of Contents

  1. Introduction to Subsidies Anonymous
  2. Update on Reinventing the Forest Service
  3. The Subsidies Anonymous Pledge
  4. Update on Recreation User Fees
  5. The Subsidies Anonymous Twelve-Step Program
  6. Update on Reforming the Park Service
  7. Essay on Polarization
  8. Update on Public Land Grazing
  9. Preview of Summer Different Drummer

1 -- Introduction to Subsidies Anonymous

Welcome to the first issue of Subsidies Anonymous! The goal of this e-mail newsletter is to help people find ways of resolving public land and public resource controversies that promote cooperation and reduce polarization.

Subsidies Anonymous is published by the Thoreau Institute, a non-profit organization aimed at solving natural resource problems without the subsidies, bureaucracy, and regulation of big government. Unless otherwise indicated, all articles are written by Randal O'Toole, the Institute's economist.

Many of the articles in Subsidies Anonymous will update topics featured in past issues of the Thoreau Institute's hardcopy magazine, Different Drummer. This Subsidies Anonymous, for example, has articles following up the grazing, Park Service, and Forest Service issues of Different Drummer.

Other articles in Subsidies Anonymous will provide some of the philosophical or technical background behind the Subsidies Anonymous theme: which is that public resource controversies are ultimately debates over subsidies, and that if we all give up our subsidies and run public resource agencies like businesses we--and the environment--will be much better off.

More on that later. First, let's take a look at everyone's favorite government agency: the Forest Service.

2 -- Update on Reinventing the Forest Service

Since the Republicans took over Congress, the Forestry Subcommittee of the Senate Agriculture Committee, chaired by Larry Craig and staffed by former industry lobbyist Mark Rey, has been holding a series of hearings on the Forest Service. The plan is that the hearings will conclude with a hearing on possible Congressional reforms of the agency in October.

I talked to Mark in May, and he indicated that one of the options that the subcommittee would consider would be giving states the option of managing the national forests in trust for the people of the U.S. The theory is that the states would be more effective and efficient managers, but that the title to the lands would remain in federal hands so the states couldn't sell them.

While many environmentalists may react with hostility to such a semi-transfer of lands to the states, Mark's idea isn't very far from the one I proposed in Different Drummer: Transfer each forest to a non-profit land trust that would be required to manage the land for the people of the U.S. Anyone could join any forest land trust for a nominal fee, and members would elect a board of directors. The board would hire and fire the forest supervisor and approve the annual operating plan.

A few weeks after I met with Mark, the subcommittee held another hearing at which Mitch Friedman, of the Northwest Ecosystem Alliance in Bellingham, WA, testified. Friedman urged Congress to allow the Forest Service to charge fair market value recreation fees and to fund national forests out of their net income--proposals originally made by the Thoreau Institute.

After the hearing, I pointed out to Mitch that these proposals carried with them some grave implications: Namely that an agency funded out of its net income will not support the huge bureaucracy of thousands of people in the Washington and regional offices that the Forest Service has today. I asked Mitch what kind of arrangements he would propose to provide the checks and balances needed to provide sound forest management.

Here is Mitch's response (slightly edited for context):

I have concerns with your idea about each forest being a separate land trust with voting membership. Primary is my worry that we would lose the capacity to harness the "national interest." It seems quite clear that there is a very real willingness to pay for forest protection among far flung Americans, who greatly outnumber the local folks.

[Given individual land trust boards,] Local timber interests would have a strong incentive to organize and take control of local trust boards, as they have done with various local advisory groups, reducing your envisioned "board of trustees checks against managers who might ignore public wishes." Even if recreation dollars exceeded timber dollars, the individual logger or timber company would have a stronger interest in putting time and lawyers into the process. The rest of your plan (i.e., trusts for wilderness, historic pres., etc.) I like.

So the challenge is how to capture the national interest, both as its reflected in actual use, such as the distant tourist who wants his day use recreation fee to be used in accordance with his interest, and the people would be willing to pay for forest protection but don't have a clear mechanism for doing so.

I understand this is an old and tough question, but if we don't find a way to get that national interest reflected in the market and/or in any oversight boards, I fear that recreation fees may fall short as a surrogate for conservation. It is possible that non-users would actual lay out money to be member of the "national forest system," but far less likely that they would join any or many individual forests.

Is there a way that each forest could be funded and managed separately, while still having some sort of national fund? Perhaps the membership fund could be national (perhaps a land trust as you've envisioned), and make grants to the individual forests for projects that reflect the interest of the national fund (as decided by its elected board members)?

This still leaves the question of who controls each forest if they don't have members and boards. Would it work to have a national forest land trust, with elected trustees that hires and fires the Chief, who makes all other hiring decisions even though the forests are each funded separately out of their own net receipts?

The Chief's role and staff might not need to be too large or bureaucratic. Obviously this model would run counter to Mark Rey's idea of giving states control, but I don't see how the states could manage forest in trust for the people of the US when the interests of the people are not being measured and no national direction is set.

Back to Randal O'Toole:

I think Mitch has a valid point and his alternative of a single large land trust is worth looking at. On the plus side, such a large land trust--with presumably hundreds of thousands of members voting on the board--would be virtually immune to a takeover by a single industry.

On the minus side, it would also be relatively immune to influence by anyone else. With many decisions made by the chief (who could impose his will on dissenting forest supervisors by firing them), the system could stifle innovation and diversity. If the board was slightly dominated by timber interests, the chief could turn all the national forests into clearcuts with little check.

So I still favor the individual forest board approach. Perhaps something in-between, such as regional or state boards, would satisfy both views. Responses and ideas from readers are invited and will be distributed in future issues of Subsidies Anonymous.

3 -- The Subsidies Anonymous Pledge

Recent controversies over national forests, national parks, and other federal lands have reached the point of violence. To a large degree, these controversies are over subsidies. No one likes to admit it, but everyone using federal lands is subsidized.

On the national forests alone, subsidized timber sales cost taxpayers hundreds of millions of dollars each year. Subsidized grazing costs tens of millions per year. But the biggest subsidies are to recreation (including fish and wildlife recreation), totaling $300 million per year.

Yet the term "subsidies" must be qualified here. Just because the taxpayers lose money doesn't mean that timber companies, ranchers, or recreationists are getting any handouts. The bulk of the taxpayer-paid subsidies go instead to the bureaucracy. The people who try to manage the national forests and other public lands on the ground are doing the best they can, but the bureaucracy absorbs well over half the funds before they reach the ground.

I am convinced that we would all be better off without these subsidies. If recreationists paid their own way, the fees they paid would give public land managers incentives to protect scenic beauty and the other resources recreationists want. If funding for public land management came from the ground instead of from tax dollars, managers could do a good job without political interference and with instant feedback from users in the form of the fees people paid.

Therefore, I am inviting all sorts of public land users to make the following Subsidies Anonymous Pledge

"My name is Randal and I am a subsidized public land user. I agree to give up public land subsidies provided other public land users give up their subsidies as well."

In a later essay in this issue of Subsidies Anonymous I will explain why I think that this pledge should appeal to a broad cross-section of public land users.

4 -- Update on Recreation User Fees

The National Parks, Forests, and Public Lands Subcommittee of the House Resources Committee, chaired by Representative James Hansen, held hearings on recreation user fees in May. All of the witnesses urged more fees and most supported systems that would turn the fees into good incentives for public land managers.

After the hearings, Hansen drafted legislation that he plans to introduce soon if he hasn't already. The legislation would:

It is good that people in Congress are thinking about recreation fees, and this plan has a few good points. Overall, however, its defects outweigh its positive features. These defects include: Future issues of Subsidies Anonymous will follow the progress of this legislation.

5 -- The Subsidies Anonymous Twelve-Step Program

Alcoholics Anonymous is famous for developing its "twelve-step program," which has been imitated by numerous other -anonymous groups. I don't want to stretch the analogy to the breaking point, but I thought it would be worth look at the AlAnon twelve-step program to see if it could be adapted by Subsidies Anonymous.

Here is what I came up with:

  1. Admit that polarization and subsidies make our lives unmanageable.
  2. Believe that we can work together to restore sanity
  3. Decide to work with people in other interest groups
  4. Question our tradition of animosity towards others
  5. Admit the exact nature of our wrongs
  6. Ready to remove defects
  7. Start to remove defects
  8. List people we've harmed
  9. Make amends to the people on our list
  10. Continue personal inventory and admit if we are wrong
  11. Seek to improve our contacts with others
  12. Carry the message to other polarized and subsidized people
The focus is on polarization as much as subsidies. My thesis is that, in our fight over subsidies, we've generated all sorts of hostility toward other interest groups. We need to reduce that hostility to solve public resource problems.

The above is a relatively faithful adaptation of the AlAnon twelve-step program, but it kind of bogs down around steps 5 through 10. I'd be interested in hearing any other ideas for a twelve-step program.

6 -- Update on Reforming the Park Service

In January, 1995, the Winter issue of Different Drummer proposed to allow the Park Service to charge fair market value for national park recreation. We projected that, if fees averaged $6 per visitor day, most national parks would be able to fund themselves if funded out of their net income.

The National Parks and Conservation Association supports the idea of more park recreation fees, but it would like to see the parks keep all of the fees, not just the net (which would be about half of the fees). In addition, NPCA would rather that Congress continue to give the parks about $1.5 billion in appropriated funds each year.

In May, 1995, NPCA published the results of a poll it commissioned on public attitudes towards parks. Two questions were pertinent to the fee idea:

  1. Would people be willing to pay $6 per person per day if they knew that the park got to keep all of the fees?
  2. Would people be willing to pay $6 per person per day if they knew that the park got to keep only half the fees?
An amazing 80 percent of the people polled answered "yes" to the first question. But when the parks got only half the fees, the positive responses fell to just 20 percent.

Given this huge gap in support, wouldn't it be easier to simply advocate that park and other public resource managers be allowed to keep all of the fees they collect? Politically, the answer is obviously "yes." Interest groups like NPCA are more likely to support reform proposals if the proposals are likely to fully fund the resources they care about.

But I continue to urge that net fees be used for an important environmental reason: Funding out of gross fees is certain to lead to overdevelopment of parks and other public lands.

A manager funded out of net will avoid any developmental activities that are likely to lose money. But a manager funded out of gross will find that some activities are profitable. What will the manager do with those profits?

Given that the manager can keep all of the gross, the manager will have a choice of banking them or of using them to subsidize some unprofitable activity. If the manager builds up a huge reserve, Congress could decide to take it away. So the manager at some point will start using profits to fund unprofitable programs--programs that are likely to be environmentally destructive.

Given this fact, people might respond to the survey differently. "Would you pay $6 per day if you knew that some of the money would promote overdevelopment of the national parks?"

By the way, there is no magic to the $6 figure. The Forest Service estimates that the market value of national forest recreation is about $18 per day. To be cautious, I divided by three. The Park Service has made no similar estimates, but I assume that park recreation is worth at least as much as forest recreation. In both cases, some recreation will be worth much more, and other will be worth less.

7 -- Essay on Polarization

As previously noted, Subsidies Anonymous is as much about polarization as it is about subsidies. Since the Republicans took over Congress, I have been disappointed, but not surprised, at the vitriolic response of many environmentalists to the Republicans, Newt Gingrich, and the Contract with America. Many people simply assume, at least in public, that Newt is simply a tool of industrial interests and/or the Wise Use Movement.

In reality, the Contract with America said nothing about the environment. Newt himself is an environmentalist who was endorsed by major environmental groups in the 1970s. His views on the environment haven't changed; what has changed is the views of some environmental leaders on what it takes to be "one of the good guys."

Republicans aren't anti-environment; they are anti-government. Some environmentalists view this as a threat because the programs they advocate require big government. Yet those programs haven't ever worked. It is time to look at programs that work, not programs that are environmentally correct.

But if the environment isn't polarized along Republican-Democrat lines, how is it polarized? In recent months I have been struck by how much the environment is a rural-urban split, rather than left-right, etc. People with the urban view tend to be preservationists; people with the rural view tend to be "wise users" (once called conservationists).

The urban view is biocentric; the rural view is anthropocentric. The urban view wants to lock things up in wilderness. The rural view wants to make things available for wise use.

Doug MacLeery, the Forest Service's timber sale director, recently pointed out to me how much Earth Day 1970 changed the culture of the Forest Service. "Before 1974, most forestry school graduates were from rural areas; afterwards, because of Earth Day, most were from urban areas."

This hit home for me because I was in the first (1974) post-Earth Day graduating class. I helped organize Earth Day activities at my high school and then went to forestry school.

Jeff DeBonis, another urbanite-turned forester, called his first group "the Association of Forest Service Employees for Environmental Ethics," implying that the ruralites practiced unethical forestry. But they weren't unethical; their ethics were just different.

Today, many Republicans have adopted the ruralite view not because most of their constituents are rural (mostly they aren't) but because there is nothing in it for them to be preservationists. "No matter what my boss did for the environment," one congressional staffer told me, "the environmentalists always supported the Democrat. So naturally my boss started working for the people who would support him."

How can Subsidies Anonymous overcome the rural-urban split and the resulting Republican-Democrat split? By taking advantage of another split that runs across, rather than parallel to, the rural-urban split: a big government-small government split.

Some people believe that the best approach to solve a problem is from the top down: Let elected officials and bureaucrats figure out the best solution and then impose it on everyone. Other people believe that the best approach is from the bottom up: Let elected officials create the basic rules, then let the people who are on the ground make the day-to-day decisions.

In recent years, environmentalists have supported the top-down view. But more and more environmentalists recognize that this isn't working. We've saved some wilderness, prevented a few dams, and passed a lot of laws with nice goals but such poor implementation that they are often counter productive. And when it comes to funding, the environment is always shorted compared to commodities that make better pork.

When I say "big government," I mean this sort of top-down planning: government by bureaucracy, regulation, and subsidies. The alternative is "small government": Setting a few rules and then letting individuals make their own decisions in accordance with those rules. The key is in setting the rules.

The most important "rules" are rules of exchange: Who gets to buy and sell and for how much. As they exist today, the rules favor commodities. In fact, by definition, a "commodity" is something that people can buy and sell, while an "amenity" is something that isn't bought and sold.

So the first rule to change is to turn as many amenities as possible into commodities. The second rule to change is that anything that can be bought can also be left unused (no more "use it or lose it"). The third rule to change is how agencies are funded--out of their receipts (preferably net receipts), not tax dollars. Finally, we need a rule to deal with truly nonmarket resources such as biodiversity.

Republicans, wise-users, and ruralites tend to strongly favor the small-government approach. As more environmentalists come around to this approach, we can form alliances with many different interests. This new alliance should reduce polarization, leaving out only that diminishing group of people who still think big government can work.

8 -- Update on Public Land Grazing

Karl Hess contributed greatly to Different Drummer's issue on public land grazing. Last month, the Cato Institute published a new paper by Hess and New Mexico State University range professor Jerry Holechek that elaborates on one of the themes of our Different Drummer issue.

The political obsession with grazing fees, say Hess and Holechek, is counterproductive. Increasing fees will neither improve public range management nor significantly reduce subsidies to ranchers.

This is because grazing fees are such a tiny part of the total federal subsidies to ranchers. Much larger are the subsidies for emergency feeding, rangeland reclamation, and animal damage control, not to mention environmentally destructive rules for public range stocking. Ending these subsidies, argue Hess and Holechek, may be politically easier and environmentally far more significant.

For a copy of the policy paper, contact Robin Hulsey, Cato Institute, 202-789-5293, and ask for "Beyond the Grazing Fee."

9 -- Summer, 1995, Different Drummer

Republican members of Congress point to the states as repositories of efficiency and innovation. Environmentalists fear that the majority in Congress wants to transfer millions of acres of federal lands to those states. Yet few people really know about state lands and state resource agencies.

The summer issue of Different Drummer provides an intimate look at state resource management--specifically, state park, forest, and fish & wildlife agencies, and most particularly the fiscal aspects of those agencies. The information in this issue should help answer questions such as:

After reviewing financial data on nearly every state park, forest, and fish & wildlife agency as well as annual reports and other documents from nearly 100 of these agencies, we reached the following general conclusions: Based on this and other information, we make the following recommendations to agency officials, legislators, and Congress: Several chapters of this issue have been posted on the World Wide Web.

If you are not a subscriber to Different Drummer, you can subscribe ($19.95 for individuals/non-profits; $27.50 government/commercial) or order a copy of this issue ($5.95) using the order form.

Electronic Drummer | Subsidies Anonymous