Federal land ownership decisions have left a pattern of economic history on Western United States landscapes.   In the 1860's, Congress passed the Pacific Railroad Act, providing land grants to railroad companies.   The  grants were offered as incentives, and  allowed the sale of land and timber by the new owners in order to finance railroad construction.  Historians estimate that over 45 million acres were exchanged  to industry  in return for the public benefit of a transcontinental railroad.  The land exchange contributed to western expansion and economic development.   The land grant map (inset) depicts the general corridor within which odd numbered township sections were allocated to the railroad companies. The number of sections per mile of track varied depending on whether the rail line traversed a state or a territory.


The Headwaters of the Lochsa River displays the pattern of the ownership history 150 years later.  As part of the Northern Pacific Land Grant,  President Lincoln  authorized the incorporation of the Northern Pacific Railroad Company in 1864.  The property eventually transferred to Burlington Northern, which became Burlington Northern Resources prior to the restructuring of Plum Creek, the largest private forest land owner in the United States.  More recently, Western Pacific Timber purchased the property from Plum Creek with a business objective to return the property to federal ownership in exchange for other timberland.  To accomplish respective management objectives, Western Pacific Timber and the USFS propose a land exchange - trading the private parcels in the Lochsa Headwaters for federal land located in the Clearwater, Nez Perce, and Idaho Panhandle National Forests.  Some of the parcels involved in the exchange will have completed a full circle.  The private land, once pubic, returns to federal ownership after 150 years -to be restored and managed for public purposes.  The current Forest Service parcels  would  transfer to Western Pacific Timber, and managed by the company for the benefit of investors.   A portion of these  Forest Service parcels were privately owned prior to the depression.  The industry owners defaulted on taxes, relinquished ownership to the counties, and the counties transferred the deeds to the federal government.  The forest game board has changed multiple times over the decades.
 

 Local support for the Lochsa exchange has received mixed reviews.  County commissions and city councils have  formally voted for and against the plan, depending on the community affected.  Advocates affirm the benefits to both parties of the exchange.  The Upper Lochsa ownership consolidation provides management benefits to the Forest Service, eliminating the potential for recreation real estate development on parcels that are private in-holdings within the Clearwater National Forest.  An increase in private land area benefits rural communities with higher harvest levels that contribute to  log markets of local mills.  In addition, the change from federal to private ownership adds to the ad valorem tax base, an economic development consideration. 


Those opposed to the  exchange acknowledge the benefits to public ownership of the parcels in the Lochsa basin, but anticipate an undesirable outcome for the Forest Service parcels transferred to Western Pacific Timber.  The conflict centers on the potential land use of the acquired parcels - the management intensity, restricted public access, and conversion to real estate development are issues that top the critics'  list.


Map notes - zoom-in to either marker on the map and select Satellite for a land use pattern overview of the respective areas.  The markers include a link to maps of candidate exchange parcels.




View Lochsa Land Exchange in a larger map
 


National Open Space Strategy

Stakeholders have discussed alternatives, and public comment on the environmental impact statement for the land exchange will provide a forum for further consideration.  Is there a strategy that meets the public concerns about future land use while providing a financial outcome acceptable to Western Pacific? 


The exchange EIS should include an alternative not yet considered - an approach for the land exchange that retains a public interest in the real estate exchanged.  This alternative supports the agency's published Open Space Conservation Strategy.  The National Strategy was announced in 2007 as a collaborative effort to address conservation of forests and grasslands by cooperating across boundaries of working lands.  The  goals and actions documented in the strategy advocate a decrease working lands conversion.  The exchange transaction should be structured to be consistent with the national open space conservation strategy.


Land exchanges between the Forest Service and private landowners present an opportunity to implement the strategy with a policy change.  Working in concert with the Forest Legacy Program,  the EIS for land exchanges should analyze an alternative that places a conservation easement on the lands acquired by the private entity. In simplest form, the easement terms under this alternative extinguish development rights and stipulate public access within a defined set of guidelines for permitted uses.  Idaho's Forest Legacy Program includes working forest easements with terms appropriate for these parcels.  A capital allocation from the national Forest Legacy Program is not required. to complete the transaction.  The easement provides a financial incentive through the diminution of land value for the property encumbered.  This decrease in land value may seem counter intuitive as an incentive, but the lower value for the land would be compensated by additional acres exchanged by the Forest Service to Western Pacific Timber.  Candidate parcels to compensate for the value difference will contain growing stock volume that meets the private owner's business objectives.  The exchange partner receives an incentive of additional acres and timber volume as a consequence of accepting the easement as part of the land transaction.  Fee title and the Deed of Conservation Easement will transfer between parties at the same closing.


How big is the incentive and gain?  Using a few assumptions and the Lochsa feasibility study acres, the additional acres required are  estimated in the table below.
  • Initial Forest Service acres:  28,000
  • Land value (excluding stumpage):  $200/acre
  • Easement diminution of land value:  low - 40%, medium - 50%, high - 60%.
  • Average acre volume of additional parcels:  20 mbf/acre
  • Average stumpage value:  $150/mbf
Given the assumptions, how many additional acres are required to "pay" for the Forest Legacy easement in the exchange?

Diminution $/Acre Decrease
Total Land Value Decrease
Additional Land
 (Acres; %)
Low  (40%)
$80$2,240,000718 (2.6%)
Medium   (50%)
$100$2,800,000903 (3.2%)
High  (60%)
$120$3,360,0001,090 (3.9%)
 

The answer depends on the easement appraisal and assumptions above, but a back-of-the-envelope estimate ranges between $2.24 and $3.36 million dollars for the easement value.  The property would be encumbered in perpetuity; the easement would allow no development.  The terms of the easement would also define acceptable public accessForest Service Webistes to the private property.  This alternative will increase total acres transferred, by 2.6-4%.  The conservation easement would encumber all acres transferred from Forest Service ownership. The additional acres and associated timber volume offer the incentive to the exchange partner.  The Forest Legacy strategy  for the exchange retains a long-term public interest in the property exchanged, addresses the business partner's short-term financial objectives as a timber manager, and supports the National Open Space Conservation Strategy of the Forest Service.  The EIS should incorporate this alternative because the action seeks cents to retain a sense of place valued by the local communities and also by the Forest Service.