The DNR's Latest Land Grab

By  Ms. Diane Katz

Government already owns a great deal of Michigan land and it wants more. This chart breaks out ownership of Michigan timberland, which includes land owned by federal and state governments. How much land must be owned and managed by government before public officials are satisfied?

The Michigan Department of Natural Resources is seeking control of some 390,000 acres of prime Upper Peninsula (UP) property to preserve as forestland and for recreational access. The land grab would be equal to 690 square miles, or more than half the size of Rhode Island. Well-intended though the proposal may be, the state should be privatizing resource management rather than increasing its already vast holdings.

A Hawaiian trust plans to offer the property for sale sometime this fall. The coveted tracts traverse 10 UP counties and encompass two-and-a-half miles of Lake Superior shoreline and 130 inland lakes.

Officials of the DNR hope to secure $20 million from the state's Natural Resources Trust Fund to purchase a "forest conservation easement" that would prohibit any development on the property. An "easement" would not confer outright ownership of the property to the state, but the DNR would manage the land. Any buyer of the property would effectively cede to the agency their right to build or otherwise develop it.

At a Sept. 12 press conference, Gov. John Engler announced a partnership in the land deal with the Michigan chapter of The Nature Conservancy. The state is also hoping to engage a timber company to underwrite the land purchase in concert with the DNR's purchase of development rights.

No sooner had news of the impending sale hit the headlines than some environmental activists began urging the state to acquire the property for safekeeping.

"The UP is being looted," Doug Cornett, of Northwoods Wilderness Recovery, lamented to The Detroit Free Press, which reported the pending sale in July.

"If it all goes private, it's gone, "predicted Ray Fenner, executive director of Superior Wilderness Action Network.

The fact that the Hawaiian trust - a private entity - has for years preserved the property as forestland, while also providing hunting and fishing access, evidently was lost on Messrs. Cornett and Fenner. But that's hardly surprising. The notion that government alone can be relied upon to preserve natural resources is widespread, notwithstanding the superior stewardship demonstrated daily by private conservators.

Entrepreneurs, in particular, are deemed untrustworthy stewards despite having driven the gains in agriculture and technology that have greatly improved environmental quality, notes Michael De Alessi, director of the Competitive Enterprise Institute's Center for Private Conservation.

"This despite the generally dismal track record of (government) conservation programs, "he says. "[But] widespread fisheries depletion, overgrazed and overcrowded national parks, the forest fires that ravaged the Southwest last year, and the failure to recover endangered species are all potent reasons to search for more viable alternatives."

The DNR already controls 4.5 million acres of Michigan land, including 142 miles of Great Lakes shoreline and 3.9 million acres of forest - 12 percent of all land statewide. Moreover, the Michigan Department of Agriculture has spent $24 million to retire development rights on some 13,000 acres of farmland. In total, more than 20 percent of all Michigan property is held by federal, state and local units of government.

The state also enjoys a veritable monopoly on outdoor recreation, including 96 state parks and 14,000 campsites, 92 miles of trails, marinas, bridle paths, shooting and archery ranges, luge and snowmobile runs, ski slopes and bike paths.

This dominant state system has inhibited the private recreation industry, which finds it difficult to compete against the state's tax and regulatory advantages. And to the extent that the state continues, in effect, to subsidize vacations for affluent families, private property owners will shy away from preserving their property for recreation. The irony here is that stiff competition from the state makes it far more likely property owners will earn a return on their investment through development.

The DNR's easement proposal is but the latest example of a troubling expansion of what's known as the "Public Trust Doctrine." The root of the doctrine, dating to Roman times, holds that some resources, by the laws of nature, are provided in common to all - the air and the seas, for example. The idea was later adapted to constrain imperial abuse of resource ownership, according to James Huffman, professor of law at Lewis and Clark Law School in Portland, Ore. The doctrine subsequently evolved into a common right to access navigable waters, principally for commercial purposes.

Throughout the 20th century, however, the Public Trust Doctrine has mutated into a ready excuse to subsume private property under government control.

In this instance, state officials justify the easement bid as necessary for environmental aesthetics as well as to preserve recreational opportunities. But as Richard Epstein, Professor of Law at the University of Chicago Law School has pointed out, a doctrine designed to constrain the "crown" has become an excuse to constrain personal liberty (in the form of property rights).

On a practical level, government is not the most efficient or effective steward of natural resources. Distant bureaucracies hold no direct stake in land management decisions, whereas individual property owners who bear economic consequences for their actions are far more likely to protect and preserve what is their own. Moreover, government operates under a set of incentives that rewards adherence to the bureaucratic process, not results. Private individuals, on the other hand, derive reward only from outcomes.

Private conservation alternatives abound, and the sale of the Kamehameha lands offers a stunning opportunity for even more - particularly so if the Legislature were to loosen the government's domination of resource management.

The state of Michigan does offer limited incentives for private conservation. The Commercial Forest Act, for example, allows tax breaks to property owners who grant snowmobile and hunting access to the public. State grants also are available to assist private landowners in developing timberland management plans.

But private conservation efforts are hampered by the considerable tax and regulatory advantages enjoyed by government. To underwrite its easement proposal, for example, the DNR has simply submitted an application for $20 million to the state's Natural Resources Trust Fund (NRTF), which finances government land acquisition with revenues from state mineral leases. Needless to say, most private investors do not enjoy such easy access to free money. 

Last year, the trust fund board granted $30.1 million to government entities for 10 major land acquisitions. An additional $7.4 million was distributed for 31 recreation development projects. And this pot of cash just keeps on growing. Since its establishment in 1984, the cap on the NTRF trust fund cap has been increased from $200 million to $500 million. 

Among the more promising developments, however, is the prospect of a statewide "Water Quality Trading Program" that inches the state toward a more market-oriented approach to resource management. As currently drafted, the proposed rules would allow industrial facilities to earn credits for voluntary reductions in discharges of nutrients such as phosphorous and nitrogen, and to trade the credits with willing buyers whose effluents would otherwise exceed regulatory caps. A pilot project conducted two years ago within the Kalamazoo River Watershed demonstrated that credit trading improved water quality. Facilities were allowed to capitalize - literally - on innovative and cost-effective discharge reductions rather than be constrained by costly regulatory dictates.

Unfortunately, the proposed trading program, which was initiated in 1995, has not yet been approved by the Department of Environmental Quality. That bureaucratic processes have delayed water quality improvements for seven years is yet further evidence of how government inefficiency thwarts environmental progress. 

Just as the profit motive was the force driving the Kalamazoo demonstration project, that same motive has prompted corporations to preserve property for recreational use. The International Paper Co. for example, collects 25 percent of its total profits from hunting, hiking, fishing and camping on a 1.2 million-acre spread across parts of Texas, Louisiana and Arkansas.

Environmental groups, too, are marrying economics with conservation. The Audubon Society, for example, collects sizable royalties from tapping the petroleum reserves underlying its wildlife sanctuary in Louisiana. 

Individual property owners, meanwhile, are joining forces in private land management. North Maine Woods Inc, a nonprofit association founded by 20 private landowners, now oversees 3.5 million acres of Maine forest in which thousands of visitors annually camp, hunt, canoe and fish.

Enormous environmental benefits could likewise be had if Michigan were to leverage the power of incentives more broadly. For example, Michigan has nearly 28,000 miles of rivers that are periodically assessed for water quality by the state. Of the 21,890 miles assessed since 1997, some 777 are rated by the state as not supporting aquatic life and 1,542 miles of river are rated as not sustaining fish for human consumption. There are also 588 miles that fail to meet the standard for recreational swimming. Another 2,620 river miles have undergone channel and habitat modification. Clearly, there is room for improvement in state water quality, room that private ownership could transform into an effective incentive for improving Michigan rivers and streams. One option would be to assign management rights to private individuals. 

Experience elsewhere demonstrates that the quality of Michigan rivers could be improved were the state to privatize river management. In Scotland, for example, the sections of most every major river, and most minor ones, that flow through private property are either privately owned or leased. New Zealand fisheries have likewise improved since tradable fishing rights were instituted.

Some U.S. states are moving forward with private solutions to water quality issues. Since 1990, according to Clay J. Landry of the Bozeman, Montana-based Political Economy Research Center, an estimated $61 million in public and private funding has been spent on leases and purchases of water rights - primarily to improve habitat for endangered fish species. The amount of rights purchased translated into more than 2.3 million acre-feet of water that were not diverted to some other use. By creating a market for water, people have an economic incentive to protect and improve fish habitat.

There currently is no legal impediment preventing a private individual or group from acquiring the development rights or title to the 390,000 acres of UP property in question. But the state already controls more land than it can adequately care for, and no adequate reason to relentlessly acquire more.

There's no evidence that DNR officials are acting with nefarious purpose in seeking to prevent UP development. Government agencies, by their very nature, seek to expand their reach. But state environmental policy should not be rooted in the assumption that only government can be trusted to safeguard natural resources. Both the environment and citizens would derive much greater benefit if the state controlled less, not more property. 

Diane Katz is director of science, environment, and technology policy for the Mackinac Center for Public Policy.