The Forest Service: Spending More to Produce Less

July 1, 2002

Last year, Congress gave the Forest Service a whopping 38 percent increase in its budget, the largest increase the agency has had in at least fifty years. Three-quarters of this increase was for fire, and most of that was for fire "preparedness" and suppression.

This increase was Congress' response to the severe fires of 2000, which burned the most acres in four decades and set an all-time record in suppression costs. Part of the increase was supposed to be one-time only, so the agency's budget declined by 7 percent to 4.9 billion this year--still a third more than 2000. But 2002 is so far proving to be an even worse fire year than 2000, so the Forest Service may get another boost to its budget next year.

The Thoreau Institute's detailed report on fire budgets, Reforming the Fire Service, is available elsewhere. This report will look at a few other parts of the agency's budget.

The Bottom Line

In the 1980s, the Forest Service budget averaged about $2.3 billion a year. National forest revenues were around 1.1 billion a year, for a net loss of $1.2 billion a year.

Despite the loss, the Forest Service looked practically solvent compared with today's numbers. In 2001, the Forest Service spent nearly $5.3 billion and collected just $600 million in revenues, for a net less of more than $4.6 billion.

Congress gave the Forest Service $4.9 billion for 2002, but if the fire season continues as it has so far, it will spend more than the budgeted amount on fire suppression and get reimbursed for it later. Bush is proposing another slight decrease for 2003, but no one seriously expects revenues to increase.

In little more than a decade, the Forest Service has gone from costing taxpayers around $1 billion a year to costing close to $5 billion a year. Roughly a billion of this is due to the increased fire budgets and roughly half a billion is due to declining timber sales. The rest is just due to Congress' willingness to throw money at every single problem that comes along.


The Forest Service sold 1.5 billion board feet of timber in 2001, down from 11 billion board feet in 1988. This dramatic reduction in timber sales, most of which took place between 1990 and 1994, has so decimated the timber industry that once depended on national forest timber that 25 percent of the timber the Forest Service offered for sale received no bids.

Although forest managers claim that the reduction of timber sales has led to major financial hardships for the national forests, the strange thing is that the timber sale budget does not reflect the decline. During the 1980s, when an average of 10.7 billion board feet of timber were sold per year, Congress gave the Forest Service $175 million a year for timber sales. After adjusting for inflation to 2002 dollars, this averages $282 million a year.

Timber sale budgets today have hardly declined at all from this level. Congress gave the Forest Service $266 million for 2002, and the administration is asking for $279 million for 2003.

These numbers are not exactly comparable. In 2000, the Forest Service budget was revised to incorporate "general administration" into each line item instead of counting it as a separate line item. About 12 percent of the timber budget, or about $32 million, now covers general administration.

On the other hand, in 1995 the budget was revised to separate planning and inventory from timber and other resources into new line items for those activities. The timber budget declined $32 million that year to account for this transfer. These two factors--general administration and planning & inventory--roughly cancel each other out.

In the 1980s, taxpayers paid about $25 per thousand board feet to arrange and administer timber sales, plus more for roads and other timber-related activities. Today, taxpayers pay around $175 per thousand board feet for sale preparation and administration.

Meanwhile, returns to the Treasury from the timber program have declined from an average of $55 per thousand board feet cut in the 1980s to $37 in 2001. This isn't because timber values have declined; the amount purchasers paid for timber increased from an average of $92 per thousand in the 1980s to $129 per thousand in 2001. But national forest managers responded to declining sales by keeping a greater share of receipts in the Knutson-Vandenberg (K-V) and other funds (i.e., brush disposal, salvage sale, and road maintenance funds).

The Knutson-Vandenberg Act allows forest managers to keep a share of timber receipts to pay for the actual costs of reforestation and other post-sale activities. In the 1980s, managers kept an average of 25 percent of sale receipts. By 2001, this had increased to 69 percent, and the Forest Service expects to keep 85 percent of 2002 receipts.

Despite hardship pleas, the Forest Service was not exactly suffering in the 1990s. Not only did Congress continue funding timber sales as if the agency were still selling 11 billion board feet a year, the agency actually increased its K-V and other collections out of timber receipts by more than 50 percent, from an average of $260 million a year in the 1980s to $398 million a year in the 1990s.

Those gravy days are over, as forest managers retained only about $190 million a year for the first three years of the 2000s.

Why are taxpayers still spending so much on timber sales when the Forest Service isn't selling much timber? In the early 1990s, the answer seemed to be that Congress fully funded the timber program in the hope that it could quickly recover to its pre-1990 levels.

Today, even the chief of the Forest Service admits there is no hope of that, so it now appears to be just a force of habit. Congress has gotten used to giving the Forest Service four or five times as much for timber sales as it gets back in timber receipts. If everything else loses money, why not timber?

Aside from this, the Bush administration has two new proposals for timber. First, it wants to sell all timber sales through sealed bids. That's an idea that Congress endorsed in 1976, but which Congress quickly repealed when timber companies protested that it was costing them too much money.

Second, the administration wants to allow conservation groups to buy timber cutting rights. In other words, anyone would be able to bid on a timber sale, whether they plan to cut it or not. While some sales, such as salvage sales, would be exempt from this, it could open the door to a new way of resolving forest controversies.

Recreation, Wildlife, and Water

If the timber budget is coasting despite an 82 percent decline in outputs, the recreation, wildlife & fish, and soils & watershed budgets have enjoyed significant increases. After adjusting for inflation, recreation budgets were about 44 percent greater in the 1990s than in the 1980s, wildlife budgets were 79 percent greater, and watershed budgets about 22 percent greater. When you consider that 15 to 20 percent of these budgets were transferred to planning & inventory in the late 1990s, the increases are even more impressive.

These increases are partly due to the "enviropork" campaign by a number of interest groups in the 1990s. These groups reasoned that, with timber on the decline, Congress would want some other source of pork barrel from the national forests. So they lobbied for increased funds for ecosystem restoration, much of which fell under the wildlife and watershed budgets. Forest Service officials in charge of those fields were only too happy to take the money.

The Bush administration is continuing this trend, boosting wildlife and watershed budgets but maintaining recreation appropriations at recent levels.

The lack of an increase in recreation funding out of tax dollars probably reflects the success of the recreation fee demonstration project, which has collected more money than anticipated. The administration wants to make this program permanent; although a few people have loudly protested against such fees, most willingly pay the rather nominal fees that the Forest Service charges for forest recreation.

The flaw in the recreation fee demo program is that the Forest Service is allowed to keep all recreation fees on top of the $240 million a year that Congress gives it for recreation operations and $100 million a year for recreation capital improvements. Under this formula, fees will never cover costs because no fees are ever returned to the Treasury. Congress should have allowed the Forest Service to keep only half or some other fixed percentage of fees so that the other half could cover part (and eventually maybe all) of the costs of the recreation program.

The real problem with all of these programs--recreation, wildlife, and watershed--is that the Forest Service refuses to provide any way of measuring whether they are worthwhile. The Forest Service used to report to Congress the number of recreation visitor days on the national forests. But these numbers were little better than guesses and now it no longer reports them.

Instead, the closest it comes to an actual output is "visits," as in "The national forests hosted 209 million visits in 2001." But what is a visit? Spending seven days hiking in a wilderness area is one visit. Stopping at a Forest Service scenic overlook while driving a U.S. highway through a national forest is another visit. Yet the former visit is worth hundreds of dollars; the latter just pennies.

The situation is even worse for wildlife and watershed. For wildlife, the main "output" reported by the Forest Service is "acres of habitat improvement." Since a "habitat improvement" could be anything from dropping a log in a stream to spending thousands of dollars an acre to recover an endangered species, that doesn't mean much. Even if it did, habitat improvements are inputs, not outputs.

The same can be said for watershed, for which the "outputs" are such things as "acres treated" and "acres improved." To make matters worse, starting in 1999 the watershed budget was lumped together with the "vegetation management" (reforestation) budget, so we can no longer tell how much is being spent on watershed alone.


At first glance, the range budget appears to have declined from an average of $45 million a year in the 1980s (after adjusting for inflation) to about $35 million a year today. But this is deceptive, because 65 percent of the pre-1995 range budget was for planning & inventories, which has been transferred to other line items.

That left a budget of about $17 million. Adding 12 percent for general administration brings this up to $20 million. Thus, a $35 million budget today represents a 75 percent increase in funding.

Meanwhile, outputs in the form of livestock grazing have declined by about 22 percent. In exchange for the $35 million grazing budget, the Treasury collects about $6 million a year from livestock producers.

Planning and Inventories

When the planning and inventories line items were first created in 1995, they totalled to about $150 million a year ($170 million after adjusting for inflation). By 2001 they had grown by more than 50 percent to $258 million.

Planning accounts for only about a third of this amount. But since planning is universally agreed to be a failure, and the cause of what Chief Dale Bosworth calls "analysis paralysis," it is amazing that Congress would continue to spend $80 million a year on such hogwash.

Research and State & Private Forestry

Research and state & private forestry (S&PF) are both enjoying significant budget increases. Research grew from under $190 million in 1998 to $263 million in 2002 and Bush is proposing to increase it still further to $276 million in 2003.

But the real action is with S&PF, which increased by 150 percent from $161 million in 1998 to $403 million in 2002. Bush is proposing only $358 million for 2003, mainly by not continuing some one-time only programs such as emergency pest management and ice storm assistance. No doubt some emergency will come up somewhere to push the S&PF budget back up.

Much of the increase for both research and S&PF is due to fire. The Forest Service spent $15 million on fire research and $134 million on state and local fire assistance in 2001 and is supposed to spend even more in 2002.


The Forest Service admits that 20 percent of its spending is on "indirect costs," meaning various forms of overhead. The agency has promised to try to reduce this to 10 percent, which is about as likely as the chance that it will again sell 11 billion board feet of timber a year.

The agency also says it will allow 2,500 jobs in the Washington and regional offices to disappear through natural attrition. Half of those jobs will be permanently gone and half will be reprogrammed to the national forest and ranger district levels. I am skeptical of this as well; the agency made a similar promise and failed to keep it during the Clinton administration.

New Programs

In addition to charter forests, a proposal described in another issue of Subsidies Anonymous, the administration has several new proposals for the Forest Service.

First, the administration wants to experiment with a program of "fireplain easements." It is asking for about $20 million to buy, from willing sellers, "perpetual easements to permit the implementation of fire suppression strategies, including the option of allowing fires to burn without suppression activities." The goal is to see if this could reduce overall fire protection costs.

I can imagine cases where this would be an efficient solution to a problem of mixed ownerships. Say that someone owns 40 acres that are completely surrounded by federal lands. Rather than spend large amounts of money putting out fires on the federal lands to protect the 40 acres, an easement would allow manages to let the fires burn.

On the other hand, say someone owns 40 acres bordered by national forests on one side and by private land on the other. Then buying an easement from them does nothing to solve the problem since letting a fire burn onto the first 40 acres would simply endanger the next private land.

The Forest Service allows fires to burn only in very limited circumstances, and these are almost exclusively in wilderness areas. Thus, it doesn't seem efficient to purchase fire plain easements anywhere but on private lands that are completely surrounded wilderness areas.

Second, the Forest Service wants to increase the fees charged to ski areas and use the revenues to reimburse the K-V fund of money borrowed from it for fire suppression. While it might be a good idea to increase ski area fees, which have historically been well below market value, it is not a good idea to dedicate them to another Forest Service slush fund.


As an environmentalist, I applaud the reduction of timber sales on the national forests. The Forest Service was cutting too much timber and doing it in a way that was harmful to most other national forest resources.

Yet timber had the virtue of being easily measurable, both in terms of volume of output and of the value of that output. Most of the Forest Service's budget today is oriented to things whose outputs and values are not measured. While many of them, including recreation, wildlife, and watershed, could be both quantified and valued, Congress seems satisfied to let the Forest Service spend more and more money without figuring out whether that money is producing anything other than enviropork.

Of the things we can measure, it is clear that taxpayers are paying more and more and getting less and less each year. Timber outputs are down but not timber budgets. Livestock grazing is down but budgets are up. Planning budgets are up, yet planning is still a complete waste. Recreation, wildlife, and watershed budgets are up, yet outputs are not even measured.

It is likely that one of the reasons Congress has increased funding for just about everything is the perceived budget surplus of the last few years. With extra money to spend, Congress figures it can deal with national forest controversies by throwing money at each of the resources defended by various interest groups--and every line item in the budget has an interest group watching it.

The means have become more important than the ends. Are we getting more and better recreation? Do we have more wildlife and fish? Are watersheds healthier? Are ecosystems strong and resilient? Can we relieve future fire and forest health problems? The answer to all of these questions is a firm, "I don't know, but we are spending more money on them."

Without much trouble at all, I could trim away at least half of the Forest Service budget and no one on the ground would notice much difference. But until we have a more serious recession or budget crisis, there is little pressure on Congress or the administration to try to save money.

Perhaps the charter forests proposal will show the way. If they are not carefully designed, however, charter forests will only reveal a different way to lose $4.6 billion than the way we have today. That will be the subject of another Subsidies Anonymous.

Thoreau Institute | Subsidies Anonymous