Wednesday, April 16, 2014

The Puzzle of Federal Land in the West: Cui Bono?

The recent standoff between the scofflaw deadbeat rancher Cliven Bundy and the Bureau of Land Management over the question of whether he should graze his cattle on Federal land for free because, well because, highlights an interesting question: why does the Federal Government own so much land in the west?

The obvious simple answer is that the Federal Government is grinding the states beneath its iron heel. But obvious answers are often wrong. Congress gets to decide what happens to Federal land, and the states most affected are relatively low population states with disproportionate power in the Senate. We need a better answer.

We need to step back and look at ranchers like Bundy. Before 1936, they could graze on what became BLM land for free. The more public land, the better, for them.

By 1936, the ranchers had noticed that with everyone using the free Federal rangeland on a first-come-first-served basis, the land was overgrazed, so the best solution for the ranchers was to negotiate finite grazing rights, with grazing fees set at the lowest possible level. This was adopted.

From 1916 to 1976, it was possible to homestead 640 acres of grazing land if the homesteader made modest improvements of $1.25 an acre. Demand for these homesteads was depressed by free Federal forage before 1936 and below-market federal grazing fees after.

There have been repeated attempts to bring Federal grazing fees closer to market rates for similar private land, without success.  Rates are a bit closer to market than ludicrously low fees of the 1930s, but far below what they would bring on a competitive market. Grazing lease prices set by other Federal and state agencies by competitive bidding or other market based methods were almost always higher, and often by quite a lot.

So. Who benefits from the current status quo of the Federal Government owning so much western land and leasing at current rates? Western ranchers.

John Hinderaker gives the game away a bit:
Over the last two or three decades, the Bureau has squeezed the ranchers in southern Nevada by limiting the acres on which their cattle can graze, reducing the number of cattle that can be on federal land, and charging grazing fees for the ever-diminishing privilege.
But charging grazing fees is nothing new, and in fact the current, per-head fees for BLM land are lower than in 1981.

The rancher complaint then seems to be that that the Federal government is offering fewer leases at the subsidized rates that ranchers understandably prefer. The western ranchers, while flying the banner of rugged individualism, are addicted to the implicit subsidy of underpriced Federal leases.

But they feel squeezed because fewer of the underpriced and implicitly subsidized leases are available.

It's a variation on the complaint that the food is terrible and also the portions are too small.

I feel some sympathy for ranchers who bought private land in the last few decades, since by then the ability to exploit nearby underpriced Federal grazing leases was built into the price demanded by previous owners. Who then walked away with their gains.

Families that got in cheap in 1871 and have been milking the system ever since? Not so much.

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