Subsidies for Mining, Cattle-Ranching, and Timber Destroying Land
12/13/97
*******************************
RELAYED TEXT STARTS HERE:
Headline: Subsidies for Mining, Cattle-Ranching, and Timber Destroying Land
Source: The Economist
Date: 12/13/97
As the global-warming summiteers wend wearily home from Kyoto, Bill
Clinton has been taking a pounding for being insufficiently eager to
reduce greenhouse-gas emissions. A better test of whether his
administration is serious about environmental reform, or just willing to
let Al Gore bore for America on the subject, is what it has done to
phase out federal subsidies that actually encourage dead fish, foul air
and denuded landscapes. On this, the record is patchy indeed.
Begin with mining subsidies, basically unchanged since 1872, when
Congress wanted to encourage settlement of the West. Anyone who can
identify a piece of federal land with hardrock minerals in it - such as
gold, silver, platinum and copper - can apply to "patent" a claim - that
is, demonstrate the presence of minerals. When the patent is approved,
the prospector can buy the land for $2.5 - $5 an acre. The benefits can
be staggering. In 1994, a mining company paid $9,765 for an area in
northern Nevada with a gross mineral value of $10 billion. Between May
1994 and September 1996, land containing almost $16 billion-worth of
minerals was sold for $19,190. The government does not get a penny in
royalties.
Besides being a bad deal for the federal taxman, the mining law has also
had undesirable effects on the landscape. First, because the original
law imposed no environmental requirements, for many years mining
companies could and did sink mines and then abandon them. Miners are now
bound by environmental laws, and so behave better. But history matters:
the Western Governors' Association estimates that more than 3,000 miles
of streams have been polluted by hard-rock mining wastes. Second,
because mining companies do not have to pay royalties on public land,
and pay only derisory sums for the land itself, they have every
incentive to operate marginal or degraded mines. There has been a
moratorium on new patents since 1995, but many mines are still being
worked, and every effort at reforming the law has failed.
There is nothing wrong in principle with mining on public land. The
federal government owns half of mineral-rich California and 80% of
Nevada; to leave these resources untouched makes no sense. But neither
does it make sense to allow all the wealth on public lands to accrue to
private companies.
>From open-cast to open range: in the West, miners are closely matched by
ranchers in their uninhibited enjoyment of federal subsidies. Ranchers
graze their livestock on both public and private lands. The difference
is that private landowners make money from the practice; the government
does not. The 1997 Economic Report to the President quoted estimates
that grazing fees for federal land averaged $1.20 per cow (or per five
sheep) per month between 1965 and 1992, compared with $11.20 for private
grazing in 11 western states. In 1996, according to Green Scissors, a
coalition of environmentalists and free-market economists, grazing fees
recovered only $25m of the $77m it cost to manage the programme.
Subsidised grazing occurs on 270m acres of American land, an area the
size of California and Texas combined.
When the price of grazing is too low, the result is over-use - or, more
broadly, inappropriate use. There can be grave effects on habitat and
wildlife. A study of the Bureau of Land Management range programme
estimates that 60% of its rangelands have lost half their native plants
and grasses.
If ranching is a bad case of a agricultural welfare-dependency, sugar is
worse. The sugar industry swears it is not subsidised; but it rests on a
system of daunting price supports and import restrictions. Each year,
the Department of Agriculture decides how much sugar can be imported at
low tariffs; anything above that level is charged prohibitive rates of
duty. About three-quarters of domestic consumption is from American
producers.
Protecting sugar has two sour results: Americans pay more for sugar than
they need to, and the environment is damaged more than it should be. In
California, it takes 3,400 gallons of (heavily subsidised) water to grow
a dollar's-worth of sugar beet. The more contentious area, however, is
Florida, which accounts for about a quarter of domestic production.
Thanks to the federal government, much of the Everglades was drained in
the name of flood control from the 1920s to the 1970s. This was a
colossal mistake that destroyed a unique ecosystem. Planting sugar on
700,000 acres of it was the next mistake.
Soil in the converted wetlands is fibrous, made chiefly of rotted-down
vegetable matter, and therefore degrades easily. So fertilisers are used
to enrich the soil; but the phosphate runoff changes the composition of
the vegetation from sawgrass (sedge) to cattails (reed mace). Cattails
do not provide suitable habitat or forage for wildlife native to the
Everglades, so those species disappear.
The sugar industry says that phosphate runoff has gone down, that water
discharge is cleaner, and that they are kinder to the Everglades. All
this is true. But the fact remains that growing sugar has been a
disaster for the Everglades. Sugar operations are actually expanding
there, despite a $1.5 billion federal programme to buy back Everglades
land being used for sugar production. Without the web of sugar supports,
none of this would have happened.
Last in this litany of damaging policies comes timber. The national
forests have 380,000 miles of roads, eight times more than America's
interstate highway system. These are the most visible symbol of the
dated, destructive and downright silly system of selling timber on
federal lands.
The problem is simple. Timber from federal lands is sold for less than
the cost of preparing that timber for sale - a net difference of $195m
in 1995. And timber companies pay less for building roads to get to
timber stands than the cost of building them. As with all kinds of
under-pricing, the result is over-use: trees get felled that would not
be worth cutting anywhere else, in areas that are often pristine and
better off without roads or logging.
The system of timber sales dates from 1897, when land was set aside by
law for national forests; managers were authorised to sell timber from
the land as a way of covering the cost of maintaining it. They are
losing money instead. It is hard not to. Congress, which is not brimming
with forestry specialists, specifies each year how many board-feet of
timber must be sold. If the requirement cannot be met any other way,
then new roads are built to get to new stands. Although the timber
requirement is now falling, every bill to introduce a moratorium on new
roads has failed. There is nothing intrinsically wrong with felling
timber or building roads on federal land, but why do it at a loss?
Under the Clinton administration, some cheeky efforts to expand subsidy
programmes have been fought off; but the president has resisted cutting
back subsidies that have strong Democratic support. And he has never
suggested the sensible alternative approach to managing federal lands,
which is to charge those who use them - whether they be campers,
souvenir-sellers or miners - the full cost of their activities.
The politics of subsidy reform is always contentious. The beneficiaries
are well organised, and many of the subsidies go to western states,
where there is bipartisan agreement to defend them to the death - in the
name, ironically, of the rugged independence said to be typical of the
western way of life. As the West becomes more suburbanised, the
political balance could shift from protecting ranchers and loggers to
protecting nature itself But nothing remotely close to that has happened
yet.