Privatize Federal Lands
Privatize Federal Lands
Land in its natural state is not owned by anyone, argued John Locke in Two Treatises of Government, but after land is transformed by an individual’s labor, that person earns a right to own the land and any improvements. In the mid-1800s, the U.S. government put Locke’s property-rights theory into practice with the Homestead Act. Russia replicated the act in recent years. Today, America needs a modern version to create new opportunities. Encouragingly, both major political parties call for opening more federal land for housing construction.
The U.S. Homestead Act of 1862
The Homestead Act of 1862, signed by President Abraham Lincoln, offered American citizens the opportunity to settle undeveloped, surveyed federal land. If a homesteader settled, improved, cultivated, and lived on a plot of land (of up to 160 acres) for five years continuously, the land became theirs, with payment of nominal government fees. A homesteader had to be the head of a household or at least 21 years of age. The Act incentivized westward expansion and development, ultimately transferring 270 million acres, or 27 percent of public land, to 1.6 million homesteaders, a land area about the size of California and Texas combined.
Westward expansion, however, came with a cost. Life on the frontier was often difficult, involving disease, pests, droughts, wildfires, isolation, lack of machinery, supplies, markets, and land poorly suited for farming. Malnutrition, suffering, starvation, and death were the fate of many. Historian Fred Shannon reported that two-thirds of homesteaders before 1890 never acquired title to the land, so “for them, the suffering was for naught.”
The Act also fueled conflicts and violence between Native American tribes (especially the Sioux, Cheyenne, and Arapaho) and settlers, sometimes assisted by the U.S. Army. “To settlers, immigrants, and homesteaders, the West was empty land. To Native Americans, it was home,” noted the National Park Service. Rival settlers, bandits, and, occasionally, cattlemen also presented threats.
The race for property rights under the Homestead Act incentivized individuals to migrate to land before it was economically viable in order to claim property before others. Instead of paying for land outright in cash, settlers paid in the “expenditure of effort, capital, and hardship on premature homesteading,” argued economist Richard Stroup. The more optimistic the settler, the more resources that were dissipated through misery and premature settlement.
The Homestead Act had several defects, including the requirement that homesteaders cultivate their land, which limited alternative uses of human capital, financial capital, and land that might have yielded superior returns. Also, in most cases, homesteaders had to toil five years to acquire title to their land, which prevented (1) the immediate bundling of land into optimal-sized tracts for specific activities, such as grazing; (2) the immediate resale of land to those who could use it most productively; and (3) immediately claiming title but waiting to settle the land until farming was profitable in the area.
While imperfect, the Homestead Act embodied the ideal that unimproved land belongs to those who first use it productively. People should be allowed to “make a go of it” on undeveloped land, even if they ultimately fail. On the House floor in 1851, land reformer and Indiana congressman George W. Julian said that homesteading is “the natural right of man, as man, to a home upon the soil, and of course to the fruits of his own labor.”
The Homestead Act continued until 1976, except in Alaska where homesteading existed until 1986. Most transfers of public land to private citizens, however, occurred before the 1940s. In 2016, Russia enacted its own homesteading law and experienced similar hardships.
The Russia Homestead Act of 2016
In 2016, Russia President Vladimir Putin signed the Far Eastern Hectare Law, which gives Russians and foreigners who are naturalized citizens the opportunity to receive 1 hectare (2.5 acres) of land in the Far East if they settle on and develop land currently controlled by the Russian federal government.
The Russian government allocated more than 500 million acres of land to the program. Participants are free to choose the location of their plot from within this area, but they must apply for, and receive, a permit after identifying their preferred location. To acquire title, homesteaders must live on and work the land for five years, just like the American 1862 Act.
Russia’s homestead law aims to encourage population growth and economic development in the Far East. By fall 2023, more than 87,000 families had made initial claims to land, and 23,000 people had become landowners. Assuming that all 23,000 people received 2.5 acres each, then ownership of nearly 58,000 acres of land was transferred from the Russian government to private citizens, or about double the size of San Francisco.
Since the passage of the Far East homesteading law, similar programs have been adopted elsewhere in Russia. Progress in the Far East has been slow, with few people taking advantage of homesteading. The remoteness and lack of infrastructure were cited as key challenges at the 2021 Eastern Economic Forum in Vladivostok.
Moreover, the vast majority of Russia’s population lives in the western portion of the country. It is unlikely that people from Moscow or Saint Petersburg want to relocate to the Far East and adopt an agrarian lifestyle. Also, the New York Times reported in 2020 that many Russian “homesteaders” are actually people who want to build vacation homes.
Despite early challenges and limited uptake, homesteading in Russia offers people the opportunity to pursue their dreams and achieve greater independence through transferring underutilized government land to private individuals. Similarly, America has an abundance of land controlled by the federal government that should be transferred to private citizens, which would help ease the housing crisis, encourage business startups, and improve land management including wildfire prevention, among other benefits.
Federal Land in the United States
The federal government “owns” 640 million acres of land, or 28 percent of the nation’s 2.27 billion acres, according to a 2020 report by the Congressional Research Service (CRS). The federal government owns 80 percent of Nevada, the highest percentage of any state. Alaska has the most federally owned land by total acres at 365 million acres or 57 percent of the federal government’s total holdings.
The Bureau of Land Management (BLM) has 244 million acres of federal land used primarily for livestock grazing, timber harvesting, and resource extraction. The U.S. Forest Service (FS) owns 193 million acres of national forests. The Fish and Wildlife Service (FWS) has 89 million acres for the conservation of environmentally sensitive areas and wildlife protection.
The National Park Service (NPS) manages 80 million acres of national parks, monuments, historic sites, and recreation areas. The Department of Defense (DOD) has 9 million acres used primarily for military bases and testing sites. The remaining acreage is spread across various federal agencies, including the U.S. Postal Service. (The CRS report contains two helpful maps that show federal land holdings.)
While it is unlikely that the federal government will offer NPS, DOD, or most FWS land for private ownership, vast portions of BLM and FS land are unpopulated and undeveloped, except for ranchers who use about 35 percent of public land for grazing. BLM and FS lands, therefore, are prime candidates for potential transfers to private owners—437 million acres or 68 percent of federal holdings.
Economists have proposed various methods for transferring federal land to private citizens. President Joe Biden’s approach is perhaps the worst.
Transferring U.S. Federal Land to Private Citizens: Different Approaches
In July 2024, Biden called on federal agencies to “assess surplus federal land that can be repurposed to build more affordable housing across the country,” but he did not name any specific projects. The BLM has announced plans to sell 20 acres of public land to Clark County, Nevada, to build about 150 affordable homes. The agency will also sell 18 acres to the City of Henderson, Nevada, to build 300 rental housing units. The BLM is considering another 563 acres to build 15,000 units of affordable housing in the Las Vegas Valley, but again no specifics have been announced.
Biden correctly recognizes the need to sell federal land, but his sales are a drop in the bucket compared to what would be needed to lower housing prices. Restricting sales to “affordable housing” projects is unnecessary. And the sweetheart sales to local governments raise doubts about Biden’s commitment to greater land and home ownership among private citizens.
Another approach to transferring federal land to private citizens could involve adopting a “modernized” version of the 1862 Homestead Act. Now, however, it would apply to large swaths of BLM and FS land across the entire country, not just in the West. The cultivation requirement and the five-year period before receiving title would be eliminated, as bothcaused wasteful distortions. Entrepreneurs who want to start businesses could participate. And, the socially wasteful mad-dash model would be replaced with an orderly online system.
Thanks to infrastructure investments and technological advancements, locations that were nearly impossible to homestead in the 1800s might now offer better opportunities for success. Companies such as Amazon, Zipline, and Starlink now bring goods and services, along with online work opportunities, to remote locations. Zipline is the world’s largest drone delivery company, and Starlink provides satellite-based internet service to 80 countries with plans to also provide global mobile broadband. And despite the conventional wisdom that all federal land is in “the boonies,” today much of it is near thriving towns, and even some cities, with supportive infrastructure.
Finally, land transfers could involve auctioning plots of BLM and FS land to private individuals. Land titles could be resold and/or bundled immediately, or at any future time, to achieve optimal scale for certain operations. Nobel laureate economist Vernon Smith has also proposed a random allocation, or a universal allocation, of tradable “share certificates.” Either way, a title market (especially without a five-year waiting period) would eliminate the worst of the socially wasteful “rent dissipation” that occurred under the 1862 Act. Taking a cue from President Andrew Jackson, government revenue from land sales should be used to pay down the national debt.
Only individuals with the skillsets needed to productively work a specific plot of land would bid real money for plots or certificates. Either the modernized model or the auction/trade model is preferable to Biden’s paltry, exclusionary approach.
Land values account for about half of the market price of homes, up from 32 percent in 1984. Thus, the opportunity to settle new places, even locations that many people view as unattractive, should not be denied to tenacious and creative people in search of land for a home. Since local opposition has been the biggest obstacle to new home construction, transferring unused federal land in less populated areas to private citizens at a large scale could help jumpstart housing development across the country.
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