Congress allowed the Forest Service, Park Service, and other federal land agencies to each begin one hundred "fee demonstration projects" on their lands. More importantly, Congress let the agencies keep 100 percent of the fees they collected.
In the past, agencies had to turn most of the fees they collected over to the U.S. Treasury. As a result, they didn't put much effort into fee collection. The Park Service collected only about 20 percent of the fees it was allowed to charge. Most Forest Service national recreation areas didn't bother to collect fees at all even though they were legally allowed to do so.
Allowing federal land managers to collect and keep fees could dramatically transform the way they manage our public lands. Just as dairies use the prices people pay for milk products to decide how much milk to make into ice cream and how much to make into yogurt, so recreation fees can help managers decide how to manage public lands.
Recreation fees could convince national forest managers, for example, to modify timber sales so that they will not be so offensive to sight-seers and wildlife lovers. They could also help managers decide whether a particular area should be opened to off-road vehicles or should be left to non-motorized recreation.
At the same time, the fee demonstration program contains a dangerous flaw that is certain to lead to major conflicts in the future. That flaw is in allowing managers to keep all of the fees they collect. While at first glance this seems reasonable, careful reflection shows that it will cause serious problems.
All bureaucrats know that if they do not spend all the funds they are given each year, they will lose unspent funds and probably not get as much money the next year. Managers who get to keep user fees have a similar problem. Some of the activities they collect fees for will be so popular that they will earn a profit. The managers will have to spend those profits on unprofitable activities or risk having Congress reduce their budgets.
This is clearly demonstrated by Forest Service's timber sale program. Under the Knutson-Vandenberg Act of 1930, national forest managers are allowed to spend timber sale receipts on capital improvements in the timber sale area. Any funds left over after making these improvements go to the U.S. Treasury.
Forest Service managers sometimes speak of funds they return to the Treasury as "losses" because they lose control over them. To minimize such losses, the agency often cross-subsidizes the logging of worthless timber by including in the same sale valuable trees that it sells for less than they are really worth. The result is a bigger budget for forest managers but smaller returns to the Treasury.
The Knutson-Vandenberg Act effectively gives the Forest Service an incentive to lose money on timber sales. This incentive is responsible for many, if not most, of the controversies and conflicts over national forest timber cutting. In allowing federal land managers to keep all recreation user fees, Congress has set the stage for similar conflicts over recreation in the future.
The solution is to give managers a share of user fees that is based on the net income they earn. Giving managers an incentive to earn a profit will encourage them to emphasize those recreation activities that the public wants the most.
Some people fear that giving public land managers an incentive to make money will encourage them to overdevelop federal lands. In fact, this incentive is the best guarantee we have against overdevelopment. Overdevelopment is much more likely to happen when managers have an incentive to fritter away profits on unprofitable projects that no one really wants.
Congress did the right thing when it allowed federal land managers to test recreation fees on public lands. When it expands this test to even more areas, it should do the right thing by adjusting the fee formula to give managers an incentive to earn profits, not losses, for federal taxpayers. This policy will be good for the environment and good for the economy.
Randal O'Toole is an economist with Oregon's Thoreau Institute. More information about public lands is available on the Thoreau Institute's World Wide Web site at http://www.ti.org/~rot.