Property Rights Foundation of America®

from Proceedings of the Fourth Annual New York Conference on Private Property Rights (PRFA, 1999)

Swamped—How America Achieved "No Net Loss"
Jonathan Tolman
Domestic Policy Analyst, House Republican Committee, Washington, D.C.

Let me say a little bit about how I got involved in doing this study. I originally moved from Salt Lake City, where I grew up, to Washington, D.C., to work for the Bush Administration, and one of the things in our task was looking at wetlands and the wetland manual, which was being rewritten at the time and was one of the projects I ended up working on. There was an odd thing that I really could never figure out in the White House, and that was everybody talked about how America was losing 290,000 acres a year, 300,000 acres a year of wetlands.

I said, where did this number come from? I asked around, and it turns out it came from an official government study, and I said, well, when was the study done? This was in 1992, and they said that, oh, the study was done between 1974 and sometime in the mid 'eighties. I was, like, well, you are trying to tell me that we are making policy decisions based on a study that ended ten years ago, that began 20 years before that, that this is at least ten or fifteen year old data that we are making policies on. They are, like, yeah, we don't have any better data. We don't have any better idea. And I was, like, that is nuts, but that is Washington.

And after I left the Bush Administration and I started at the Competitive Enterprise Institute, there were a couple of other things that sort of came out, but everybody was still talking about 290,000 acres a year. So I set out to find out exactly how many studies were done on our wetlands, how many acres we have, and how many we were losing every year over the time period that they were looking at this. I came to some very interesting conclusions.

The very first study that was done was done back between the 'fifties and the 'seventies, and it discovered that the United States was losing 458,000 acres of wetlands a year. Most of this was back in the 'fifties and 'sixties when all this was going on, and the results of the study showed that agriculture was by far the biggest loss. Back in the 'fifties and 'sixties there were lower subsidies and there were tax write-offs, there were lots of inducements for people to go out, drain wetlands, particularly in the Midwest, and turn them into corn or soybean or whatever parts of the farm.

In the 'seventies and 'eighties that had gone from 450,000 acres down to 290,000. Then between 1982 and 1992 another study was done and that number dropped from 458,000 to 290,000 in the late 'seventies or early 'eighties down to 80,000 acres a year as a net loss.

I said, wait a minute. This is a trend. And one of the most startling things that I first began looking at was where the trend was going. In all of these studies originally back here in the 1954 to 1974 first study was where you had enormous wetland losses due to agriculture. This is all in agriculture. Wetland losses due to development have largely been constant as people move into the United States. Essentially as we saw at the lunch speech, the concept of sprawl, development has been relatively constant over most of these periods. So really the changes that have been going on have all been going on in agriculture. Agriculture started out here at the enormous level in the mid 1974 to 1983 time period which was the second period, it dropped down, and in the 1982 to the 1992 period it completely flattened off. I asked myself why, and I asked a lot of other people, what is going on here.

Well, some people said, well, there are subsidies going off. I said, yeah, subsidies sort of stopped, and, you know, I work for Congress now, and we just passed a supplemental bill last year where we gave another $6 billion in subsidies, so subsidies are still with us and that can't completely explain this.

What I discovered that fully explained this more than anything else was also something that was mentioned at lunch, and that is productivity. When you start looking at productivity, you see that the nature of the economics of agriculture had completely changed since the 1950's. (Figure 1) [Ed's. note - one of many illustrations, of which key figures are included in these proceedings] Back in the 1950's, if the crop prices went up and you wanted to produce more corn, you pretty much had to go out and plow more land. Today if corn prices go up and you want to produce more corn, you can go out and rent more land or buy more land or drain a swamp to produce more corn, but you can also go out and buy a high yield variety that might be much more sensitive to some pests, but then you can also invest a little bit more in pest management and get a higher yield on the same acreage. So when you look historically at the trend in productivity, it really to a certain extent mirrors, although not obviously linearly, it mirrors exactly the opposite of what is happening in the agriculture sector. What we have seen is that economics have completely changed in agriculture so that now there is no incentive necessarily for the vast majority of the country to go and drain wetlands for agricultural uses. In my opinion, this dramatic drop has completely changed the current political dynamics, or what should be the current policy dynamics, for wetlands, so that wetland losses have declined dramatically.

This chart is titled "Agriculture Productivity v. Wetland Conversion." It covers the years from 1954 to 1992. It shows that agricultural productivity per acre steadily went up during that time period (from a low of approx. 92 to a high of approx. 140) and wetlands losses sharply declined (from a high of approx 600,000 acres to a low of approx. 10,000 acres).

The other thing that I discovered working at the White House many years ago was that in addition to some of the programs that we hear about all the time—the 404 program that the Army Corps regulate wetlands and you have to get a permit if you want to do anything, fill or drain or whatever a wetland, in addition to that there were a number of other programs that were much quieter that nobody ever talked about. They weren't the regulatory jackbooted thugs sort of concept, so not a lot of attention was paid to them. But they were scattered throughout various departments in government and they were actually doing a lot of work, not telling landowners what to do with their property, not telling them they can't build this or they have to, you know, create a wetland here or there, but going out and working on a voluntary basis with the landowners and saying, we want to help you create a wetland over here, or, we will pay you. If you will let us, we will just create one over here and we will buy the land from you with an easement. If you are a duck hunter, that is actually a great deal because you got great duck habitat and you didn't have to pay for it.

Figure 2 - Reported Restoration of Federal Programs

These types of programs really started back in 1987. In the late 'eighties, which are illustrated by Figure 2, the bottom areas here represent the Partners for Wildlife program, the block above it represents the North America Water Fowl Management Plan, and this shaded area above represents the Wetlands Reserve Program. Most of these programs started in the late 'eighties or early 'nineties and they are voluntary. They essentially had about the same constant funding, particularly these two programs, and our voluntary programs essentially go out and, because the economics of agriculture have changed, in many cases in the Midwest when a crop price dropped, there is 40 or 70 or 100 acres in a particular farmer's land is pretty marginal cropland. Given his whole operations, he probably isn't going to farm it very often. It used to be wetland and it is a very simple operation to go in, break the tiles that were for drainage, plug up some of the drainage ditches that were used for it, and when the spring rains come again and the snow melt comes again, what you have is a wetland. It very quickly regenerates back into a wetland and this was discovered by a number of these programs particularly, these three, to be very, very cost-effective ways to go out and, with not a lot of money and without any aggravation on the farmer's part, go out and restore a great deal of habitat, particularly duck habitat. The North America Water Fowl Management Plan, essentially this entire block in the early 'nineties, was restoring 70, 80, 90,000 acres a year principally in the Mississippi flyway for duck habitat. Since this program started, every fall you will have massive migrations. I mean for every year it is a new record of migratory water fowl in the Mississippi flyway. They do a count every year and every year it gets bigger and bigger and bigger because to a large extent, on a voluntary basis, they have created a great deal of water fowl habitat which is wetlands in this entire section.

Figure 3 - Net Changes in Wetland Acreage From 1982-1992

What I found particularly interesting was the regional breakdown. This was the last study that was done and what you really see in this study (Figure 3) is the effect of the wetlands restoration. This data itself is ten years old, but at least it is not as old as the stuff that the government seems to keep using. However, even this old data from ten years ago showed that there was actually gains in wetland acreage in the southern plains, the northern plains, the mountain states, which is principally the Mississippi flyway where these programs were engaged in. These improvements are reflected in this data, which goes to 1992. Only recently have they started focusing on the corn belt, the lake states, and still they haven't really focused much on the eastern states as much in terms of these restoration programs. But even in ten-year-old data you can clearly see that in many parts of the country we have been in a state of net gain for more than a decade by the government's own statistics.

One of the other things that this shows you is the relative gains of wetlands. This is what the individual programs purported as wetland restorations, meaning areas that used to be farmlands or upland or whatever and now have been turned back into wetlands, The Partners for Wildlife Program, the Waterfowl Management Plan. In the early 'nineties this was much, much higher. It has dropped down to about 42,000 acres a year, but the Wetland Reserve Program, which is part of the Soil Conservation Service program, is the one that has largely picked up the ball and is restoring massive acreages. Even now it is up in the 120,000, 150,000 acre a year range of turning farmland back into wetlands on a voluntary basis. (Figure 4)

Figure 4 - Reported 1995 Federal Restoration

This last figure over here on the right is the 404 mitigation, when you want to get a permit and you jump through all of the hoops that the Army Corps of Engineers has you jump through. One of the hoops that they have you jump through right at the end is, all right, if you want to build a house on this one acre and you are going to fill in this one acre of wetland, we want you to create three acres of wetland somewhere else. That is what the 404 program calls "mitigation," and this figure right here was the reported mitigation for the entire 404 program.

As I started looking at these numbers, I started asking myself, well, this Wetlands Reserve program is doing a lot of restoration; they must be spending money like water. But, when I started looking at the actual budgets, I was really quite surprised. One of the things that surprised me more than anything else was, when you actually started looking at the number of federal dollars, just federal dollars, the amount being spent isn't where I expected. In the 404 mitigation the government requires you to do the mitigation; they don't help you pay for it. You have to restore those three acres all on your own, whereas in all these other programs, particularly the Wetland Reserve Program, the government is the one who is paying for the restoration. And the federal dollars are actually on the ground going in and, you know, breaking the tiles, plugging the drainage ditches, making sure the hydrologies get a return.

So I just started looking at these different programs and just asking questions. You know, the environmental community sets the debate. I live in Washington and I hear this debate all the time where the environmentalists will say, oh well, the environment is important, we really got to save the environment, we need to regulate this stuff. And I say, well, that is not fair to property owners. You can't just go out there and say, well, you have a wetland and it is really important and say you can't do anything, you can't touch that. There is a fairness issue here and the environmentalists always come back and say, but we can't afford to pay for it.

In the case of wetlands, anyway, what I discovered was you can't afford not to, because as it turns out, the way the regulatory program is structured that these other programs—the Wetland Reserve Program, the North America Water Fowl Management Plan, in particular, which are the two larger ones that restore wetlands—in terms of sheer dollars, in terms of sheer acreage that they are producing, are dramatically cheaper than the regulatory programs. (Figure 5)

Figure 5 - Federal Cost of Wetland Protection ProgramsGraph Information

What you end up doing, actually, when you start going around and trying to regulate every individual property owner, you end up hiring a lot of regulators who end up shuffling paperwork back and forth to the property owners. As a result, you end up with an enormously inefficient program that gives you a budget for the Section 404 Program, the regulatory budget, that is actually larger than the Wetland Reserve Program budget is. The Wetland Reserve Program budget in the previous life was doing 2 or 2 ½ times as many acres of wetlands as the 404 Program budget is. So you have this enormous differential—and this is just the government's cost.

When you go in and you actually start talking about what it is costing society, the difference is even more enormous, because, when the government, the Corps of Engineers says, oh, if you want to fill in this one acre over here, you have to create three acres over in this part, they end up having all these regulations about how you can do the three acres. Where you are going to get the water? And well, you know, send us a plan, detailed plan... That plan is not good enough, send us another plan. And you hire hydrologists and biologists and fish and wildlife people and all these people and their people, and what you end up with this is the average cost of the program. When you include what it is costing the person to actually restore the land, when you look at the federal program and look at what it is actually costing on the ground to do it, the difference is absolutely enormous. (Figure 6)

Figure 6 - Total Cost of Wetland Protection ProgramsGraph Information

My whole point, I think, in looking at this was you can't afford as a society not to work with landowners. That the economics, certainly currently agricultural economics, and the scenario we have today is no longer a situation of, oh well, you know, wetlands are this precious resource; we have to protect every single one we have left. We have lots of land out there that is to a certain extent idle or maybe its best use is to be turned into wetlands, to be turned into a habitat for ducks, and working with the landowner on a voluntary basis actually is economically a lot better of a deal.

One of the things that is going to be coming up fairly soon is new survey data. The data that I have based on the most recent data is in 1992. That was the last time the U.S. data was surveyed. The next survey they did was in 1997, and, when they are supposed to come out with their new study sometime this summer, and it is going to be very interesting to see how these programs which largely still have been folks in the upper Midwest and in the Mississippi flyway, are going to show in the 1997 data with USDA—if they ever finally come out with it. I think you will see even more gains, particularly in those areas in the data, and when you start looking at the costs, because actually those initial costs were costs from 1995. The cost figures that I was showing you, those are the earliest programs.

As the program gets off and running, generally what you see happening is by the time they figure out how to do this efficiently, and it takes a few years, but once they figure it out, the cost will come down and then your program cost for the North America Water Fowl Management Plan and other programs will be even lower in terms of acres restored. It takes a couple of years; bureaucrats don't learn as quickly as everybody else does. By comparison, so far even the Army Corps of Engineers should have figured out how to shuffle paper back and forth more efficiently, so I don't think your cost for your Army Corps of Engineers figures are going to come down much at all. So far their budget hasn't and so far it hasn't been doing a very effective job of reducing costs.

The other argument that I have often come across in Washington is that, well, you know, maybe these programs are more efficient, but, you know, we don't want people going out and destroying these wetlands. You know, even if it saves only a few, we need to save these wetlands, not just create new ones. And, depending on how you define the goal, one of the other things I started to look at in the 404 Program is something that sort of started as this: It was almost an accident in 1972 when it started, and it has evolved not because Congress sat down and said, we want to regulate wetlands and here's how we want to do it. It has evolved because of a small interpretation of the Clean Water Act that has expanded over the years by agency actions and by court cases.

Figure 7 - Growth in 404 Jurisdiction v. Urban Wetland Loss

So, what I tried to do on this chart (Figure 7) is to show the sort of landmarks and marks along the way that have to a certain extent shaped the law. These go back here to 1972, when they passed the first Clean Water Act. In 1975, NRDC, the National Resource Defense Council, sued the Army Corps of Engineers to expand the jurisdiction of wetlands in probably the first seminal case in wetlands called the NRDC v. Calloway. I tried to look at what sort of impacts each landmark may have had, you know, if you want to look at wetland losses and wetland gains, such as the 404 Program. Here is a Supreme Court case. In 1992 they issued their delineation manual and greatly expanded their jurisdiction. If you want to look at what has happened to wetland losses due to development, when you compare it with how the 404 program has gone, there is no correlation.

Wetlands are lost due to development because of economics. We have people move into the country. They need places to live. And there are economic forces. The economy is booming right now. People are building all over the place. People are building in wetlands. You have gone through this, obviously a bust cycle right here. As you go through economic cycles, they have no relationship whatsoever as to whether or not the Army Corps of Engineer's program is actually reducing wetland losses. And you see no correlation whatsoever.

You end up with essentially the program that, in my opinion, is gradually extending its regulatory reach. Big boys know how to do the system and hire the consultants to figure out ways around this. There are loopholes here and there for them and for other people and what you end up with is a system that doesn't slow down wetland losses. We are still losing as many acres to development as we were back in the 'sixties. We are still losing as many acres of wetlands because of economic forces. We have a regulatory program out there that to a large extent is a sort of regulatory drift net that lets lots of people through the net, which results in lots of wetland losses. But for the ones that it catches it is a nightmare once you get caught in this regulatory net. This is what I think is most outrageous about most of the federal regulation.

Whether it is ESA or whether it is the 404 Program, there is no easy way out of it and there is no rhyme or reason from a national policy level why you need this sort of a system. It is not slowing down wetland losses in development. There are other programs that are more effective at restoring wetlands. If what you want is actually to protect the environment and protect ducks and protect habitat, there are better and cheaper ways to do that. Then what you end up with is a system that is largely arbitrary and once you get caught in the net, there really is no explanation. I mean, I have talked to people who have literally had the life ground out of them because they have been caught in this federal regulatory net with nothing as an answer, with some of this "well, we have to protect wetlands and that is why we are running you through this," because they have gotten caught in the net.

The short of that is, I guess, we are in a hopefully more knowledgeable period as we get more data coming out of the federal government on wetland losses and gains. I think that, hopefully, more people will begin to understand that, number one, we are not losing wetlands at these enormous rates. That is simply not true any more. In fact, in most parts of the country we are going to be in a situation of net gain. I think we need to start asking ourselves and our political leaders, well, if there is a better way to do this, why are we stuck in a system that is arbitrary, ineffective, and largely unfair, particularly to small landowners? They are the ones who can't afford to and who end up getting caught in these nets. That question needs to be asked again and again, and particularly as, hopefully, we get some more data on this issue. Thanks.

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