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Rot from the Top

The Rot Starts at the Top

What people have to realize about our federal and state forestry agencies is that, for the most part, they have become huge, de facto rackets.  The US Forest Service gets 75% its money from taxpayers through appropriations from Congress.  The other 25% mostly comes from cutting and mining our national forests, much of it from clearcutting.  It keeps nearly all of this money for itself and the state forestry agencies, returning only a pittance to the US Treasury.

While some state forestry agencies are quite efficient in their management of state forests, many of these holdings are actually public forest trusts managed for the benefit of certain beneficiaries, usually the public schools in those states.  Other state forestry agencies generally follow the USFS pattern of funding by their state legislatures, augmented by income from timber sales.

Our federal and (many) state forestry agencies are horrible role models for private forest landowners.  Although they may give lip service to efficient forest management, the practical examples they set convey an entirely different message: forestry is extremely unprofitable and should only be undertaken by government agencies with access to unlimited public funds.  Their poor examples are a primary direct cause of the poor management of private forest lands

Funding of the US Forest Service

The US Forest Service is a vast and powerful bureaucracy.  The agency is responsible for management of the country's nearly 200 million acres of national forests.  This land is conservatively valued at $300 billion (extrapolated from Congresssional Research Service and USFS data).  In recent years, the annual cost of "managing" these 200 million acres has been over $2.6 billion in Congressional (read taxpayer) appropriations (see also Forestry Source , April 1999).

In addition to its taxpayer funding, the USFS annually appropriates nearly $1 billion worth of timber, minerals, fuels, forage and recreational fees off our national forests.  It keeps over 90% of the money, and gives only about $80 million back to the US Treasury.

Therefore the total net annual costs for the USFS are roughly $3.5 billion . (See also Forestry Source, April 1999 and Thoreau Institute's "Review of the Proposed 1999 Forest Service Budget" and "Run Them Like a Business").  That comes to a cost of roughly $35 per taxpayer on assets worth roughly $3,000 per taxpayer.  Instead of yielding annual dividends to offset our taxes, our national forests are increasing our taxes.  Total USFS costs are roughly 4300% of returns to the Treasury.

Spending by the US Forest Service

Part of the $3.5 billion cost ends up in the budgets of state forestry agencies through nearly $400 million in USFS "grants" for a variety of programs including forest health management, fire protection, and "cooperative forestry" (forest stewardship, stewardship incentives, forest legacy, water quality, urban & community forestry, economic action programs, PNW assistance, inventory).

Another nearly $200 million plus gets spent on research, most of which is quite well done, and some of which indirectly benefits small private landowners.  However, the primary beneficiaries are the government forestry agencies and timber companies that employ foresters who are capable of interpreting the research.  Small private landowners may benefit if their consulting and state "service" foresters read and interpret this research for them.

Of the roughly $600 million spent annually on "grants" and research, a large part is unnecessary and should be eliminated or paid for by the states and/or private industry.  According to Randal O'Toole, "the main reason for these programs is so that the agency [the USFS] can build new constituencies that will support future budget increases."

The remaining roughly $2.9 billion gets distributed among administrative personnel (over 30% of all costs for unnecessary levels of bureaucracy), field personnel, and various USFS accounts and funds (including road construction--a subsidy to the timber industry, reforestation--an incentive to clearcut, and preparation of "salvage" sales).  It takes approximately five USFS employees to do the work of one state forest trust employee.  

As Thoreau Institute's Randal O'Toole notes, "in effect, a [timber] sale that makes money for the Treasury is a loss for managers; a sale that loses money for the Treasury is a gain for managers. The bigger the losses for the Treasury, the bigger the gains for the managers."

However, in fairness it should be noted that some recreational users benefit greatly from the largesse of the USFS.  The American Recreation Coalition estimates that 9% of the US population uses our national forests for recreational purposes annually.  It's likely that most of that use is by a relatively small percentage of that 9% who are frequent users of our national forests

Reform of the US Forest Service and State Forestry Agencies

O'Toole and others have proposed alternative structures and incentive systems to reform the USFS.  See the Thoreau Institute's excellent Second Century Report.  Layers of bureaucracy would be eliminated and/or replaced with decentralized new management teams.  Revenues from recreational uses would be increased.  Incentives for good stewardship would be implemented. 

Many of our state forestry agencies desperately need similar proposals for reforms.  As it is now, their incentives for good management are similar to those of the USFS: totally counterproductive.  State and federal forest lands should all be models of good stewardship, high fiduciary responsibility and full public accountability.

State forest trusts and a few other state forestry agencies are capable of managing state forests for a broad range of products and benefits, and at costs of under 30% of returns.  These state agencies are excellent managers, and demonstrate good stewardship to all the private forest landowners in their states.  Their examples should be studied and emulated.