Blog Post

The Economics of Public Lands

By: Jennifer Robinson

A new article in Land Economics examines the fiscal implications of transferring public lands from the federal government to the states.  This article notes that federal land management has always been contentious – just think of the Sagebrush Rebellion in the 1970s.  In recent years, there has been an increase in demands from policy makers to transfer federal lands to state control. Legislatures in the states of Arizona, Colorado, Idaho, Montana, Nevada, Utah, and Wyoming have passed or debated bills aimed at transferring lands to the states over the past few years.  Advocates of state control advance three economic arguments for such a change.  First, federal land management policies give too much weight to nonmarket services and too little weight to market commodities. The argument is that states can better manage public land to produce market commodities, which in turn would generating more jobs and income in rural regions. Second, states can manage the lands at a lower cost.  The reasoning is that bureaucratic and regulatory inefficiencies make federal land management agencies less cost-effective than state agencies. Third, the enhanced revenues and cost efficiencies mean that states can assume management responsibilities with no need for additional revenues through increased taxes, land sales, or other measures.

This new article asks the question: Can states afford to assume land management without increasing taxes or taking other actions to increase revenue?

The authors, which include three researchers from the Kem C. Gardner Policy Institute, found that (1) on average, federal lands are not likely to be as economically productive as private lands, (2) states are likely to have management costs equivalent to federal agencies, and (3) states can cover land management costs with land-based revenues if they have access to fossil fuels and timber resources, and prices for these commodities are relatively high.

We thank Michael Hogue, John Do