WASHINGTON - Federal agencies lose at least $123 million a year keeping public lands open to livestock grazing, according to a government report that environmentalists say bolsters their argument that grazing should be limited.

"If we are going to allow grazing on our public lands, the very least we should be doing is we should be recovering the costs," said Greta Anderson, a Tucson, Ariz.-based botanist and range restoration campaign coordinator for the Center for Biological Diversity.

But Jim Hughes, deputy director of the Bureau of Land Management - which, with the Forest Service, manages 98 percent of grazing permits - said the agency charges a fee set by law and is not advocating a change or an increase.

"That's been the policy for a long time," he said. "We have many programs that cost us more … than we take in. It's never been our mission to be run totally like a business."

Ranching on the millions of acres of public lands has been a mainstay of Western life for more than a century. Ranchers pay a fee to the government often based on the amount of grass and other vegetation their cattle will eat. The agencies spend the money managing permits and leases, building fences and developing water projects, among other activities.

But the arrangement increasingly has caused friction as more demands are put on Western lands. Most livestock is raised on private land. Environmentalists and others question whether taxpayers should subsidize grazing on public lands.

According to the analysis by the Government Accountability Office in a report released Monday, grazing fees cover only about a sixth of the cost of managing the program.

In 2004, the BLM, Forest Service and other agencies spent $144 million and generated just $21 million from grazing fees.

Ranchers who hold public lands grazing permits pay as little as $1.43 per animal unit month - the amount of forage a cow and her calf can eat in a month. But the BLM and Forest Service would have had to charge $7.64 and $12.26 per unit respectively to cover their expenses, according to the GAO.

Jonathan Ratner, with the Western Watersheds Project in Pinedale, said even the estimate of $123 million underestimates the cost of administering grazing on public lands. He said there are indirect expenses also borne by taxpayers related to issues of hydrology, sedimentation, noxious weeds and implications to threatened and endangered species. Ratner put the cost closer to $500 million.

"In either of those figures, in neither case does that really give the full picture as bad as it is," he said. "It's subsidies going to support a particular industry that is being borne by the entire United States."

But Jim Magagna, executive vice president of the Wyoming Stock Growers Association, said the cost estimates are actually inflated because it includes the cost of the entire range program. Those programs would exist even without grazing, he said. Other costs put into that number are those from environmental documents and reviews.

"Those aren't costs that cattle grazing causes - those are incurred because the government mandates them," Magagna said. "If you really look at the costs of administering grazing, I believe the numbers would demonstrate the cost is not as great as revenues produced."

The report was requested by several members of Congress, including Rep. Raul Grijalva, D-Ariz., who last year supported a bill that would have paid ranchers to take cattle out of public grazing.

"In order to adequately protect our public lands, the federal government must recover more of the actual costs by collecting reasonable fees," Grijalva said in a statement Monday.

But Jeff Eisenberg, executive director of the Public Lands Council, which advocates for ranchers, questioned whether the numbers in the GAO report represent the whole picture. Like the damage caused to the environment, the benefits of maintaining a way of life and keeping land free from development also are difficult to quantify, he said.

"We think the public gets a tremendous benefit from public lands grazing," Eisenberg said. "While grazing might not be the No. 1 choice, it's preferable to other uses."