Abstract

Under nineteenth-century US land policy, newly acceded Western states received large land grants to fund the development of local schools and other public purposes. To identify the effect of these land grants, we review the roughly contemporaneous grants to Idaho, Montana, North Dakota, and Washington to control for institutional variance in the granting acts. Using both water rights and other natural resource development measures, we identify the extent to which the institution of state trust lands had an effect on natural resource development in the US Northwest. Our results indicate that state trust lands were underutilized initially, in that state lands were less likely to be irrigated and were less developed relative to a class of development activities within a state. A closer examination of the data suggests that the early political economy involved states selecting and selling land more tractable to development, resulting in less developable lands remaining in state hands today. Despite our results' persistence, this should not be taken to indicate a net negative effect, as conservation and recreational uses for undeveloped land have since emerged, posing a potential reversal of fortune in terms of contemporary economic measures.