Why We Need Markets To Know Who Should Own Western Lands by Ryan McMaken

Why We Need Markets To Know Who Should Own Western Lands” is the title of an interesting article about changing land use patters in the western US as well as a reminder about the importance of prices to facilitate economic calculation so that goods and services are produced that reflect the most urgent wants of consumers.

As the debate over federal lands continues, those who are jockeying over who controls the land often assume that their own preferred use of the land is the “correct” use of the land. Environmentalists hold that without federal control of land, all lands would be sold off to miners and ranchers who will strip and graze the land into dust. Meanwhile, rancher activists have implied that if federal lands would only be handed over ranchers, then the land would finally be used properly, since — it is assumed — ranching is the only reasonable way to use the land. 

But, the fact of the matter is that we have no idea what the “correct” use of the land is in the absence of market prices. Without functioning market prices, we have no way of knowing if the owners of land would use it for ranching, mining, recreation, or for hunting preserves. That is, market prices would tell us how owners and consumers value a particular piece of land. Without market prices, we have no way of knowing this, and at that point, wealthy special interests tend to take over.

From Rangeland to Cropland: Land Use Changes Over Time 

It is not a law of nature that the West be cattle country. The fact that the West ended up being associated with cowboys and cattle drives is largely a function of popular culture and a brief period in American history when Western lands were so cheap and remote, that they lent themselves — in response to market forces — toward being used as cattle pasture.

For example, by the 1870s, with the Indians largely forced onto reservations, the West became an attractive place to graze cattle. Unlike sheep, cattle do not require daily supervision, and in a region with few or no roads, the land was not useful for much other than pasturing cattle on it. In other words, since cattle can be raised on land with few improvements (besides making water available), it made sense to put cattle there before other people began to arrive and develop the lands for other purposes.

Indeed, the movement of cattle Westward allowed for lands back East to be freed up for purposes other than cultivated pastureland. This is part of the reason that by the 1940s, the forest land in the East began to get larger after centuries of deforestation. Eastern trees were no longer being cleared to make new pasture lands. (The grasslands out West never had any trees to begin with.)

Land Use Changes With Access

Over time, however, the spread of roads, railroads, and other improvements (including massive amounts of federal spending) greatly change the value of land, and the purposes for which it is best suited. The arrival of large scale irrigation will often lead to range land being converted to cropland, and ready access to water will bring urban development as well.

Now, many will claim that total rangeland in the West is being underutilized because federal land restrictions prevent cattle production from meeting its full potential in the West. There is no doubt that federal regulations are highly restrictive, and make it more difficult for small businesses (including small ranches) to succeed in this respect. Regulations also cause distortions in the market. Overall, however, we saw that market forces were already causing grazing lands to contract well before the EPA came along.

In fact, from 1890 to 1930, rangeland in plains and northern Rocky Mountain states fell by about 184 million acres — an area the size of Texas — while cropland increased by 165 million acres. According to Kenneth Frederick and Roger Sedjo, “the dominant factor in changing land use during this period was conversion of rangeland to cropland.” Cropland, which was relatively more productive than rangeland, disappeared less quickly.

Land use, then as now, was influenced heavily by consumer demands for food and land. As consumer wants changed, the most profitable use for a plot of land changed, depending on its climate and proximity to trade routes and water.

As Peter St. Onge shows here, the nature and value of land also changes significantly as access to it changes. Thus, as access increases to what was once remote range land, farming and crop cultivation becomes more feasible.

The entire article can be read here.

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