The Bend Bulletin serves up another example today of public agencies selling use of public natural resources to private interests for less than it costs the government to administer that use and, often, well below market value.
In 2002, the grazing fee for state-owned grazing land in Oregon was $4.52 per animal unit month (AUM). The U.S. Department of Agriculture National Agricultural Statistics Service reported the 2002 average grazing fee for privately owned, nonirrigated grazing land in Oregon to be $12.60 per AUM.
This underpricing of natural resources is fairly well known on federal lands, where ranchers with long-held grazing permits pay little to run their cattle on national forest and range lands. The Northwest states and British Columbia also charge little. (We documented the scale of these subsidies in this book (sorry, not on line) and discussed a market-friendly approach to eliminating them here.)
Charging too little for grazing permits encourages overgrazing. Charging the market rate would be good not only for the state budget but also for range ecology.