The U.S. Forest Service has custody over 192 millionnacres of national forest and rangeland — an area nearlynequal to Texas and Louisiana combined. Like the NationalnPark Service, the Forest Service is commonly viewed as anstellar example of Progressive Era legislation. However, thenForest Service clearly and recurrently violates the spirit of itsnstewardship responsibilities. Its self-interest in budget expansionnconflicts with both environmental protection andneconomic efficiency, and significantly injures private forestry.nIts increasingly infamous below-cost timber sales arenbecoming the forestry equivalent of the Valdez oil spill.nMost environmentalists seek to reform rather than replacenthe system that governs the national forests. Theynadvocate political action and ever more finely calibrated andnexpensive centralized planning. The “rational calculationnunder socialism” debate of the 1920’s and 30’s is alive andnwell in the Forest Service. The current fight over the spottednowl in the old growth forests of the Pacific Northwest is onenespecially dramatic example of the conflicts, communityndisruptions, and projected multibillion-doUar losses thatnresult when management decisions are hostage to politicalnpressures.nIn forestry as in other areas, decisions depend onninformation and incentives. Our existing institutional arrangementsnfor forest management are seriously flawed. Innthe national forests, this means bad information and perversenincentives.n]ohn A. Baden is chairman of FREE, the Foundation fornResearch on Economics and the Environment, with officesnin Bozeman, Montana, and Seattle.nSylvan SocialismnThe U.S. Forest Servicenby John A. BadennFor example: America’s 156 national forests are managednby 120 forest supervisors. According to the government, 76nof these 120 supervisors reported that their units lost moneynin 1987. Yet revenues from areas that produce valuablentimber, the Pacific Northwest and the Southeast, were greatnenough to cover the losses reported for the system as anwhole. Essentially, those forests that are warm, wet, and lownsubsidized those in the Rockies that are high, dry, and cold.nClearly, the U.S. Forest Service should invest more innmanaging the productive forests of Oregon, Washington,nand the Southeast, while reducing expenditures in thenRockies. Alternatively, the Service could remove itself fromnthe timber business entirely, by applying appropriate environmentalnsafeguards and then transferring the productivenforests to the private sector. That is not what is happening.nInstead, because of certain bureaucratic realities, the ForestnService is logging environmentally fragile and economicallynunprofitable areas.nThe political logic of below-cost timber sales is straightforward.nNational forests are located in 40 states and innmany congressional districts, and there is a timber programnin nearly every national forest, regardless of how efficient itnmay be to sell the timber. In these districts, logging and roadnbuilding provide jobs and income to the local communities.nConsequently, many senators and representatives find it inntheir interest to vote for expanding Forest Service roadnbuilding, logging, and timber management. The politiciannbenefits, the constituent who has a job benefits, and somentimber companies that are able to operate where theynotherwise could not also benefit—but not the taxpayer, whonends up subsidizing the reduction in quality of an environ-nnnAUCUST 1990/23n