Measuring the economic impact of federally owned land can be done in a variety of ways, but any analysis will likely end up being reductive. The primary reason is because such an analysis can only measure what is known about past allocation of resources and compare them to present allocations. This typically involves enthusiasts for oil, gas, and mineral extraction bemoaning lost production pitted against conservationists who tout the economic benefits of recreation and tourism. However, aside from the fact that federal holdings in the West are so expansive that there is enough for all who would seek their fortune through the utilization of these resources, the greatest cost of federally managed land is primarily an opportunity cost. Oil and gas revenues, recreation and tourism, mining, ranching, and timber harvesting generate a relative pittance compared to what is lost from not having a free market oriented, fully-efficient allocation of resources. To illustrate this point, I will compare two cities: Boise and Boston
To begin the comparison of these two capitals, I would like to start with a few economic metrics from their states:
Idaho – $54,800,000
Massachusetts – $377,700,00
GDP per capita
Idaho – $34,250
Massachusetts – $58,108
GDP per capita ranking relative to other states
Idaho – 50th
Massachusetts – 6th
Idaho – 83,574
Massachusetts – 8,262
GDP per square mile
Idaho – $655.71
Massachusetts – $45,715.32
Percentage of public land
Idaho – 70.4%
Massachusetts – 6.3%
Property tax collections per capita and ranking
Idaho – $837 – Ranked 11th lowest
Massachusetts – $1,986 – Ranked 8th highest
Idaho has 10 times more land than Massachusetts, but yet Massachusetts has 7 times more wealth when measured by GDP. Idaho is second to last when it comes to GDP per capita, and Massachusetts ranks near the top at sixth. Household income in Massachusetts is almost double the household income in Idaho. Now these stats are disturbing, but the public land related states are simply jaw-dropping.
GDP per square mile is a simple metric that is determined by dividing the state’s GDP by the number of square miles. While I admit that this is a somewhat simplistic way of looking at this issue, it does provide a rough measurement of how well a state is efficiently allocating its natural resources to increase the wealth of its citizens. Massachusetts generates and astounding 69 times more wealth per square mile than Idaho. Sure, Massachusetts is a smaller state with far higher population density, but it is also telling that only 6.3% of the land in the state is publicly-owned.
Idaho on the other hand is a vast state with abundant natural resources a small population and a dynamically managed business environment that should attract growth-generating capital. However, Idaho appears to be subject to structural poverty relative to a state like Massachusetts. How is this so?
While percentage of public land ownership can’t be the only source of this wealth inequality, it has to be playing a major role. This becomes more clear when you consider Idaho’s company when it comes to measuring GDP per square mile in other states.
Here are the 10 poorest states when you measure GDP per square mile:
1. Alaska – $77.57 per square mile with 95.8% public land
2. Montana – $252.98 per square mile with 37.5% public land
3. Wyoming – $390.52 per square mile with 55.9% public land
4. North Dakota – $472.39 per square mile with 9.1% public land
5. South Dakota – $517.36 per square mile with 8.9 % public land
6. New Mexico – $620.89 per square mile with 47.4% public land
7. Idaho – $655.71 per square mile with 70.4% public land
8. Nevada – $1,153.15 per square mile with 87.8% public land
9. Nebraska – $1,158.24 per square mile with 2.8% public land
10. Utah – $1,376.83 per square mile with 75.2% public land
The average public land ownership percentage of the 10 poorest state when measured by GDP per square mile is 49.8%. Of course this number is lowered by the three states with low public land ownership: North Dakota, South Dakota, and Nebraska. The inclusion of these states on this list suggests that public land isn’t the only factor that determines the relative poverty of a state, but considering that 7 out of 10 states on this list have significant percentages of public land ownership we have to recognize that a high percentage of public land is likely to impoverish a state more than to enrich it.
This becomes even more apparent when you compare the bottom 10 with the top 10 states for GDP per square mile:
1. District of Columbia – $1,539,705.88 per square mile with no data on % of public land (obviously the inclusion of DC is an anomaly given that DC basically siphons its GDP off of the GDP of the rest of the country as the seat of a $3.5 trillion dollar enterprise called the federal government).
2. New Jersey – $63,799.74 per square mile with 18.3% public land
3. Connecticut – $46,624.05 per square mile with 6.2% public land
4. Massachusetts – $45,715.32 per square mile with 6.3% public land
5. Rhode Island – $40,807.91 per square mile with 1.5% public land
6. Delaware – $30,947.68 per square mile with 7.4% public land
7. Maryland – $28,694.40 per square mile with 7.6% public land
8. New York – $23,548.22 per square mile with 37.1% public land
9. Florida – $12,849.13 per square mile with 29.2% public land
10. Pennsylvania – $12,703.60 per square mile with 16.1% public land
With DC excluded, the average public land ownership for the 10 riches states is 14.41%. Ultimately these are all just points of data, and many stories can be told with these numbers. However, the numbers at least legitimize the assumption that extensive public land ownership impoverishes a state whereas higher levels of private ownership vastly enriches a state.
In light of this information, we are now poised to compare Boise to Boston.
What does a state’s capital city look like when it commands a hefty $45,715 in GDP per square mile as opposed to $655 in GDP per square mile?
I mentioned earlier that the biggest cost to federally managed land is the opportunity cost of choosing not to efficiently allocate resources. Boston is home to eight major research universities: Boston College, Boston University, Brandeis University, Harvard University, the Massachusetts Institute of Technology, Northeastern University, Tufts University and the University of Massachusetts Boston. Boise, on the other hand, is home to Boise State.
I don’t need to commission an academic study to conclude that a state that has $45,715 in GDP per square mile as its property tax base has an easier time supporting 8 world-class research universities than a state with $655 in GDP per square mile.
According to a recent study on the economic impact of Boston’s eight research universities, the universities are “among the region’s leading employers, and one of its most reliable sources of job growth. Each year they turn out more than 30,000 graduates, providing to the region’s leading industries a steady stream of highly-talented, well-educated workers. Their research programs are creating the new knowledge that will help ensure the Boston area’s continued leadership in emerging areas such as genomics, proteomics and nanotechnology. And they are a seedbed for creation and growth of the dynamic young companies that over the next decade will drive the growth of the region’s economy.”
I couldn’t find a similar study to measure the economic impact that Boise State has on Idaho, and I am sure that it is a fine institution that is making significant contributions to its community. However, when those who advocate relinquishment of federal land to the states and to private owners claim that this will help these states fund education, they aren’t talking about hiring more kindergarten teachers. They aren’t talking exclusively about drilling more oil or fattening more cattle. The desire to more efficiently allocate federal land isn’t just a handout to mining, timber, and recreation industries. Instead, the efficient allocation of these resources is demanded to fuel industries such as “genomics, proteomics, and nanotechnology,” or whatever other industry that will drive our future economy you want to add to this list. Generating the capital necessary to fund the research that will create these industries of the future and others requires a local economy that generates a GDP per square mile that is closer to $45,000 as opposed to $655.
Of course this isn’t a zero sum game either. Boise doesn’t have to become more like Boston at Boston’s expense. This is ultimately an effort to unlock and allocate abundance as opposed to conserving and allocating scarcity. Fortunately for Idah0, its legislature recently passed legislation that demands the federal government give its publicly-held land back to Idaho. While the future of this legislation is uncertain, the future that is the vision of this legislation is vitally important.
Unfortunately, the narrative that this is just the latest battle between the “evil” cattle ranchers vs. the “pure” environmentalists is already starting to play out. For example, consider this passage from Rocky Barker’s article, “Can Idaho manage public lands better than the feds?”:
Chris Haunold shakes his head as he watches the Legislature push for a bill demanding that the U.S. government transfer ownership of the land it controls to the state.
The owner of Idaho Mountain Touring in Boise is a member of the Idaho Outdoor Business Council. He said “it’s crazy” hearing lawmakers talk about how they think the state will manage the land better.
“They don’t see the big picture,” Haunold said.
The big picture, from his standpoint, is not that logging and grazing are bad, but that Idaho’s recreation industry, now a potent economic force, is tied directly to the state’s bounty of public lands.
This fine piece of unbiased reporting demonstrates the entrenched myopia surrounding this issue. I am sure Chris Haunold runs a fine little recreation business. Without a doubt he is contributing a small fraction to Idaho’s pathetic GDP per square mile of $655. Without a doubt, the loggers and ranchers that are maligned in this article are also working hard to secure Idaho’s second-to-last, 50th-out-of-51 GDP per capita ranking. After all, someone has to accommodate the wealthy visitors from cities like Boston when they decide to go on vacation. Someone has to log the timber that will be used in the luxury cabins being built as second or third homes for those Bostonians who need a secluded retreat in the foothills of the Tetons. Someone has to provide the nice steak that will be eaten as the latest graduate from MIT pitches his or her research to get venture capital funding for an industry that has yet to be conceived.
So, in a sense, Haunold is right that this is problem of not seeing the big picture. Motes and beams come to mind.