Land Swaps: The Latest in Speculation

Candidate Bill Clinton appeared at Yellowstone National Park during the '96 campaign, touting a "land swap" with gold mining concerns as an innovative win/win situation for business and the environment alike. He did not mention that this program of land swaps with developers has been going on, in a quiet way, since the Reagan administration. Typically, in such a deal, a timber or mining company (or other developer) trades an ecologically sensitive habitat area for an "equal value" of other federally- owned land, the development of which will (presumably) be more friendly to the overall environment.

It would appear, at first glance, that the federal government has found a brilliant way to broker the developer/environmentalist divide - and bypass miles of political red tape as well. The debate is a thorny one. On the one hand, environmentalists see an absolute value in slowing the pace of environmental destruction and preserving habitats. On the other, "property rights" advocates see private ownership of land as utterly inviolate and begrudge any intrusion of federal regulation or control.

In the past, the federal government simply purchased the land it wanted to save. A federal fund exists, earmarked for the acquisition of land for conservation purposes. That fund, according to the New York Times (Sept. 30), currently has a surplus of some $10 billion - mostly royalties from offshore oil drilling. But, the money (98.6% of it anyway, in 1996) is being used to lower the deficit. Swaps are much easier. The law requires Congressional approval for any federal cash outlay. Swaps, on the other hand, can be brokered through state authorities.

Are land swaps a painless way of using the market to protect critical old-growth areas? Or are they a giveaway to politically- connected developers?

In one such deal, the Phelps Dodge Corporation sought 3,758 acres of federal land adjoining its southern Arizona copper mine. In return, they offered 280 acres of other land adjoining their site, and acquired two other sites of 240 and 680 acres that were (presumably) sought for their wildlife-habitat value. According to the figures presented in the Times, Phelps Dodge generously gave the United States a profit of $197,000 on the deal! This is remarkable, since the program's stated goal is to trade parcels "of equal dollar value".

Trades of "surplus" federal land for environmentally sensitive private holdings have been going on for some time, and, predictably, an "industry" has grown up around the practice. Federal land which has never been put on the market before (and thus, has never had any market value, until just now) is offered to developers in return for the environmentally-sensitive land parcels they offer to trade. Those parcels have been acquired for a song, yet - suddenly - their value equals the value of development rights on the federal land in question. Land speculators pocket the difference. Magic!

Just this week, Maxxam, Inc., of Houston was offered real property worth at least $380 million in exchange for the largest privately-owned stand of old-growth California redwoods still extant. Not enough, though. Maxxam officials immediately stated that they could make no response until these properties were appraised. Most of them were leases, jointly owned by the US Government and the state of California, for oil and gas wells. Private companies are tapping the fields; Maxxam is merely being offered the rent. Also included in the deal were 30 acres of vacant land next to a federal building in Orange County, and 3,000 acres of less sensitive timberland in Humboldt County.

Hearing about deals like this, Georgists can feel something of what antebellum abolitionists must have felt when reading debates about compensation for slave "owners". For here, in Henry George's words, is "a bold, bare, enormous wrong, like to that of chattel slavery," that we watch being perpetrated with ever- greater sophistication and brazenness. Clearly, if the rent of land were collected for public revenue as it should be, speculators would not be gathering, vulture-like, for federal land giveaways. Many argue that too many jobs would be lost, if we didn't encroach upon the public domain. But how can jobs depend on logging the few remaining old-growth forests, or otherwise degrading irreplaceable wild lands, when so many resources go to waste in our urban-sprawl economy?

Lindy Davies, December 6, 1996