Tuesday, December 24, 2013

ICL study: Federal land transfer would be costly

Economist contends net loss of $2 billion after 20 years

Express Staff Writer

The sun shines on the White Cloud Mountains. The Idaho Legislature is pursuing a plan for the state to take over millions of acres of public land from the federal government.
Express file photo

    Contradicting an earlier report done by the Idaho Department of Lands, a recent study commissioned by the Idaho Conservation League contends that the Legislature’s demand to take ownership of federal lands in Idaho would cost more than $100 million annually in infrastructure maintenance and fire-fighting expenses, as well as in lost federal payments to counties.
    House Concurrent Resolution 22, passed by the Legislature in April, calls for the transfer to state ownership of all federal land in Idaho, amounting to almost 34 million acres. However, the resolution states that all designated wilderness, national park land and national monuments would be ceded back to federal ownership, resulting in a 17 percent reduction in the transfer, to about 28 million acres.
    The recent economic analysis of costs and revenues associated with the transfer was conducted by Evan Hjerpe, a Wilderness Society economist with a Ph.D. from Northern Arizona University’s School of Forestry. The ICL released the study Friday, Dec. 20.
    “This is the first cold, hard calculation on what the costs would be if Idaho were to take over public lands now managed by the federal government, and those costs are staggering,” said Mike Ferguson, former state economist and director of the Idaho Center for Fiscal Policy. “Idaho legislators would be wise to ask themselves how Idahoans could afford to take on that additional burden.”
    The study determined that the transfer would produce a net loss to the state of about $252 million during the first year. As revenue from a presumed increase in timber harvest increased, that figure would drop to $144 million annually. The cumulative cost after 20 years would be about $2 billion.
    “With even a cursory look at the economics, it is clear that this resolution is bad business for Idaho communities and residents,” the study’s introduction states.
    The study evaluated the federal government’s current costs related to wildfire in Idaho. That included spending for fire suppression, fire-fighting preparedness, wildfire fuel treatments and post-fire rehabilitation. Based on an average 788,400 acres of federal land burned each year over the past 10 years, the study came up with an annual suppression cost of $134 million, and cited an additional $54 million each year spent on fire-fighting preparedness.
    The study also determined that the Forest Service and BLM spend $22 million in annual recreation, road and facility-management costs on the land that would be transferred.
    It noted that the primary revenue source cited by advocates of a takeover of Idaho public lands is increased timber harvesting.

It is clear that this resolution is bad business for Idaho communities and residents.”
ICL study

    “With limited sawmills, reduced logging workforces and volatile timber markets, a return to previous high logging levels on national forests in Idaho would require substantial time and resources, if it is  possible at all,” the study states. “Despite these barriers, we conservatively estimate revenue to the state based on historic high levels of harvest on national forest lands. We assume $200 per thousand board feet of stumpage to the state and a 10-year ramp-up period to 1 billion board feet of annual harvest.”
    Those assumptions result in annual gross revenue of $20 million the first year and $200 million after 10 years. However, the study determined that 40 percent of the gross needs to be deducted to pay for timber management, based on current Department of Lands costs.
    The study also looked at federal payments made to the state and counties through the Secure Rural Schools and the Payment in Lieu of Taxes Program. Combined, annual SRS and PILT payments have averaged $65 million over the last five years. Applying a 17 percent reduction factor for the wilderness and national monument lands yields an annual loss of $54 million.
    Last winter before the Legislature passed HR 22, it requested a study from the Department of Lands of the economic impacts of a transfer of federal land. The report concluded that transfer would result in a net profit to the state of between $51 million and $75 million.
    However, the Legislature at the time was assuming that it would pass a bill similar to one passed in Utah, which excluded several categories of federal land, most notably national forest roadless areas, from its demand for a transfer. Idaho contains about 8.5 million acres of roadless areas in national forests. The Department of Lands study, therefore, assumed a transfer of only 16.4 million acres.
    The recent ICL study contends that the Department of Lands’ study “heavily underestimated” the costs of fire suppression and preparedness.
    “The Idaho Department of Lands estimated suppression and pre-suppression costs by extrapolating its current costs for protecting 6 million acres of state and  timber association lands to only half of the potentially transferred federal lands,” the study states. “The 6 million acres for which the department has fire responsibility are very different from the federal lands pursued in HR 22. Idaho Department of Lands-managed acres are typically wetter, have more roads and access, and have less topographical variation than Idaho’s public lands. A simple extrapolation of fire management costs on lands managed by the department to federal lands in Idaho results in a poor estimate of overall costs.”
    The ICL study also criticizes the state’s study for ignoring the costs and limited revenues associated with a gradual ramp-up of timber harvests over a decade or more.
    “Failure to conduct a net present valuation and to account for the most costly years of … management completely undermines the presented economic estimates,” the ICL study states.
    The study also notes that the Department of Lands’ conclusions did not take into account the loss of federal PILT and SRS payments.
    Emily Callihan, public information officer with the Department of Lands, said the department had not yet had enough time to analyze the ICL study to have any comments about it. However, she said the department stands by the conclusions of its own study, given the assumptions that it was based on. Those conclusions, she said, “are consistent with experiences of actual land management.”
Greg Moore: gmoore@mtexpress.com

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