A Century of Forest Service Ineptitude; J. Baden and A. St. Lawrence

According to Robert Nelson, in his book Public Lands and Private Rights, "The pro gressives sought to curb the subservience to special interest that in their view had all too often corrupted the activities of the federal government." The Forest Service was sup posed to serve as an example of government promoting efficiencyand innovation. John A. Baden is chairman of the Foundation for Research on Economics and the Environment (FREE) and the Gallatin Institute, an organization for writersof the West. Andrew C. St. Lawrence, an intern at FREE and the Gallatin Institute, is a student at Montana State University studying animal and range science. Unfortunately, Progressive Era reformers' political economy was far less sophisticated than the Founding Fathers'. Lacking under standing of how the world works, they blended hopes with expectations. Ideally, their bureaucracies would foster efficiency and innovation. But did they?

"Bureaucrat" is a term of derision in almost every language. This is no accident. Bureau cracies, regardless of their mission,eventually tend to be run for the people in them, and the clientele they benefit. The Forest Serviceis no exception. The Forest Service was to use scientific information to maximize long-term produc tivity of forested lands. In the beginning, before the Forest Service focused on timber harvest, it was custodial-building trails and fighting fires. Its agents quickly gained a reputation as no-nonsense good guys operat ing in an untamed region. In Norman Maclean's acclaimed novel A River Runs Through It, the Forest Service is portrayed as a tough, down-to-business agency that suc ceeded. However, much has changed since the Forest Service exemplified efficiencyand community wellbeing. Following the Money In 1995 the U.S. Treasury spent over $499 million in taxes on national forest timber sales. The Forest Service retained more than $345 million from the sales. After deducting 607 608 THE FREEMAN • OCTOBER 1997 the cost of constructing logging roads and making payments to the counties where log ging occurred, the Treasury saw only a $44 million return from the sales. This made the logging of federal forests in 1995 a $455 million net loser for taxpayers.

What happened in 1995 is not an anomaly. In 1993 and 1994 the Forest Service claims that timber sales made roughly $600 million. But actual returns to the Treasury were $800 million less than cost of funding the sales. Since the Forest Service has gone into the business of offering timber for sale, it has routinely lost money. Overdue Exposure Although the Forest Service continuously loses taxpayers' money, mainstream journal ists have generally failed to criticize the agency.At least until recently. The cover story of the June 1997 issue of Harper's, by Seattle based writer Paul Roberts, exposes the Forest Service as an inefficient and corrupt agency. At last, influential writers are beginning to recognize what economists and policyanalysts have long realized: government bureaucracies are inefficient and insensitive managers of environmental resources. Harper's bench marks the upscale media's awakening to the malfeasance and crass incompetence of a "model" government agency.

A Growing Bureaucracy Conventional wisdom long held that the Forest Service was an institution worthy of emulation. Gifford Pinchot, the founder of the Forest Service, thought the agencywould be run by experts and not politicians. Prior to World War II, the Forest Service was highly acclaimed, according to Herbert Kaufman, author of The Forest Ranger: A Study in Administrative Behavior, as being" a model of public-spirited bureaucratic efficiency." Al though it was isolated from presidential whims, it was not immune to overzealous congressional appropriations committees. Randall O'Toole, a forest economist with the Oregon-based Thoreau Institute, states that "for the last 50 years, appropriators have funded the national forests mainly as pork." Until the post-World War II housing boom, the Forest Service acted primarily as care taker of the national forests. The housing boom of course required timber. Delighted to oblige the timber demands of a sprawling country, peddling timber became the new focus of the agency. Offering timber for sale allowedthe agencyto rapidly expand, neglect ing other management objectives. The first postwar budget (1947) saw a scant 25 percent increase in "forest protection and manage ment" while funding for roads and trails jumped 250 percent, most of which was allo cated to building timber access roads. As the agency grew, it strayed from its idealistic beginnings into a typical bureaucratic agency.

In the 1970s, a few scholarly mavericks realized that the Forest Service had grown to be a grosslyinefficientorganization. Manage ment decisions were pathologically based on increasing the agency budget. Selling timber was the means to expand budgets while ig noring taxpayers. It was apparent that the agency had shifted its focus from benefiting the American people to benefiting its own. Over the years forest managers gradually increased the amount of timber offered for sale. Higher production meant greater bud getary allotments. Typically the Forest Ser vice receives 99 percent of the requested timber funding while wildlife funding is less than 80 percent of what is requested; and recreation, watershed, or reforestation re ceives less than 70 percent of what it asks for. In a recent speech, Secretary of the Interior Bruce Babbitt stated that tying the Forest Service budget to the level of timber sale contracts is "effectively instructing foresters to work on a commissionbasis." The incentive is to focus on timber production while ne glecting other forest resources.

Salvage Sales Savage Forests But growing environmental concern pro duced environmental rules and regulations that threaten timber sales, the core of the Forest Service. With increasing environmen tal constraints, the Forest Service sought new A CENTURY OF FOREST SERVICE INEPTITUDE 609 ways to justify ecologicallydestructive timber sales. The 1976National Forest Management Act allowed the Forest Service to sell burned or diseased trees under the title of "salvage sales." The "Salvage Act" gave the Forest Service license both to sell timber, which secures the Forest Service budget, and to appease the public by claiming the sales as "sound ecosystem management." The Forest Service budget benefits in sev eral waysfrom salvagesales. All receipts from salvage sales are kept in a fund to be used for future salvage operations. This effectively makes salvage sale funding immune to reduc tions in the federal budget. In addition, be cause salvage sales are exempt from irksome environmental restrictions, the timber harvest can be increased.

And, since salvage sales qualify as "emer gencies" they can exceed the 40-acre, clear cut limit. Although clear-cuts can quickly denude a forest, they greatly increase the amount of timber available for sale in an area. In addition to increased clear-cutting, logging is allowed on previously off-limit, environ mentally or geologicallyfragile forests. These salvage sales are a temporary salvation for a timber-hungry Forest Service. As a 1992For est Service memo stated, "Even if a sale is totally green, as long as one board comes off that would qualify as salvage on the Salvage Sale Fund Plan, it should be called salvage." For a generation, Forest Service ineffi ciency and corruption have been recognized by economists and policyanalystsstudyingthe agency. The Harper's introduction of Forest Service deficiencies into mainstream publica tion is timely indeed. The centennial of this failed experiment in centralized planning is hardly a time for celebration.

What to Do The time has come to turn management of national forest over to more responsible and responsive organizations. While the Progres sives' belief in expert management made sense, its fatal flaw was the assumption that federal experts would be insulated from pork barrel politics. But this is not how it works. Private tree farms are forced to optimize production since they are responsive to mar ket forces and do not receive financialbacking from the government. Port Blakely Tree Farms, established in 1864, is a glowing ex ample of durability in the timber industry. Port Blakelycan attribute much of its longev ity to properly managing its resources. But optimizing natural resources means far more than just focusing on timber production. It includes management practices that allowfor additional land uses that respond to the demands of recreationists and wildlife enthu siasts. Better ecosystem management fosters profits and a diverse collection of marketable items.

Private tree farms do not hold all the answers to reform. Often, the highest eco nomic use of national forests lies in recre ation, watershed, and habitat protection rather than commodity production. Obvi ously, when a company can only capture revenue from timber, it will slight other values. Existing commercial forest lands should be auctioned off, with environmental constraints (such as riparian area protection), to the highest bidder. The bidding would be open to timber companies and environmental groups alike. Market forces would ensure that the land would go to the highest valued use and, together with environmental constraints on harvest, assure responsible stewardship. A public, nongovernment trust could over see the management of noncommercial areas. Endowment boards, like those running mu seums, hospitals, and private schools, would operate under a legal charter to steward individual forests. After the transition from federal ownership, each forest's individual trust would be "on its own." The board, established by local environmental groups, business leaders, and citizens, would be charged with promoting ecologicallysensitive economic activities as part of their trustee responsibility.

A new era is upon us. The Harper's article marks a milestone in the way the public views inefficientbureaucracies. It will require imag ination and entrepreneurship to devise insti tutions that willeliminate activitiesharmful to both taxpayers and ecosystems. D THEFREEMAN IDEAS ON LIBERTY Casta GiantBallot by Clifford F. Thies T he late Roger MacBride is perhaps best remembered as the person who brought Little House on the Prairie to television. For some readers of this magazine, he was the person who,through the castingof a singlevote, transformed the fledglingLibertarian Party into the most important third party in America. These two feats were not independent. In 1971, the Libertarian Party was orga nized because of the argument that neither of the major parties was committed to liberty, and the naIve idea that a few people-none of whom commanded any significantresources could do something about it. A philosophy professor (John Hospers) was nominated for president, and a cub reporter (Toni Nathan) covering the party's first convention for vice president. These candidates were placed on the ballots of only two of the nation's 50 states.