Economist Thomas Sowell, who I respect a great deal, has gotten sucked into the stampede to sell public lands in order to simultaneously reduce the debt and make housing more affordable. Advocates of this view are ignoring clear indications that selling these lands will not accomplish either goal.
BLM lands: far from food, water, and jobs.
One advocate for this point of view, William Perry Pendley, defensively argues that he is not proposing to sell wilderness areas, national parks, or even national forests, but mainly just Bureau of Land Management lands. The problem with this is that most BLM lands are lands leftover after homesteaders, ranchers, timber companies, and others picked the most valuable federal lands for themselves, thus earning BLM lands the title, “the lands no one wanted.”
Almost no BLM lands are located near Boston, Honolulu, Los Angeles, New York, Portland, San Diego, San Francisco, San Jose, Seattle, Washington, or other major urban areas that have the highest housing prices. Click image for a larger view.
These lands range from scrubby forests to deserts and are concentrated in the interior West. In most cases, they are far from the major cities that suffer from high housing prices. Indeed, other than Las Vegas, there is no major city in the United States whose housing prices are high that is near a significant amount of BLM land.
Pendley favorably mentions the Las Vegas example, which only shows how little he understands public land economics. The article says that, thanks to the Southern Nevada Public Land Management Act, land sales in the Vegas area have “generated over $4 billion in revenue for conservation.” In fact, the BLM was selling enough land to keep Las Vegas housing affordable before that 1998 law was passed, but the law dedicated 80 percent of the revenues from such sales to buying private land and “conserving” it, i.e., keeping it from being developed. Only after that law was passed did Las Vegas housing become unaffordable, and repeal of that law, which Pendley seems to endorse, is all that should be needed to make the region affordable again.
Otherwise, most BLM lands are far from water, food, and jobs. I suppose groups like Mercy Housing could use federal funds to build affordable housing complexes on the land. Then poor people could starve to death out of sight of all of the yuppies who piously fret about high housing prices but oppose any expansions of urban growth boundaries around cities on the West Coast and other unaffordable places. However, that’s not really going to solve any problems.
Other than Las Vegas, just about every expensive urban area in the country is surrounded by private land that would be suitable for housing development, but state and local land-use laws make such development impossible. There is no need to debate selling federal lands that are far from these cities when private lands, many of whose owners would be glad to develop them for housing if such developments were legal, are sufficient to make housing affordable.
Nor will selling public lands do much to reduce the national debt. The Antiplanner has looked at such claims before and found them wanting: generally, they greatly exaggerate the value of such lands, often by considering the gross value of resources and not the net value after subtracting extraction costs. This has led some to claim that federal lands are worth hundreds of trillions of dollars when the actual value as real estate is only a tiny fraction of that.
Sowell’s claims are not so extreme. In a Wall Street Journal article on Tuesday, he cites a 2015 Commerce Department study that valued federal lands at $1.8 trillion. That’s only 5 percent of the national debt. But a close look at the 2015 study reveals that its authors admit that its valuations were “positively biased,” and that the Office of Management and Budget estimates that rural public lands (as opposed to federal buildings in urban areas) are worth only about $400 billion to $500 billion, or little more than 1 percent of the national debt. Even if true, the federal government can’t dump hundreds of millions of acres into the land market overnight and expect that such the huge increase in supply won’t depress prices.
Meanwhile, federal lands in urban areas are occupied by things like post offices and agency office buildings. Some of these are salable, especially if the Postal Service were privatized, but somehow I doubt there is much of a market for the monumental office buildings in Washington DC. Thanks partly to an executive order by Bill Clinton, most federal office buildings in other cities are in downtowns, and such downtown office space lost much of its value after the pandemic.
The reason we have a $36 trillion national debt is that Congress has wildly spent more money than the federal government takes in. Selling federal lands to pay off that debt is like someone running up their credit card debt and then selling the house they inherited from their parents to pay off that debt, leaving themselves homeless.
It is a truism that smart people don’t live off their capital. Instead, they wisely manage that capital and live off the returns from it.
The public lands could be managed at a profit but instead they lose roughly $10 billion a year because Congress has given special interest groups access to resources at less than their fair market value or even for free. Instead of selling the lands, Congress and the administration should reform land management so that the lands are producing net revenues rather than net losses for the treasury. While that won’t pay off the national debt by itself, it will do more than engaging in a futile battle to sell the public lands.
