A proposal being floated by the U.S. Forest Service to swap the federally owned small Utah town of Dutch John in exchange for private or state property inside national forests elsewhere makes a lot of sense for everybody involved.

Dutch John, located in Daggett County near the Wyoming border, was founded about 40 years ago as a camp for workers building the Flaming Gorge Dam. It survives today as a handful of buildings on 35 acres on the north side of the Flaming Gorge National Recreation Area. Twenty-two federal employees live there.Under the Forest Service plan - which may be still a year from any decision - the town would be traded for yet-to-be-identified, non-federal land inside national forest boundaries. The utilities, roads and other infrastructure would be given to local government at no cost. Up to 2,700 acres of nearby land might be included in any such deal, depending on available trades.

Getting rid of the town would be good for the federal government since it spends an estimated $1 million a year on Dutch John. And it could acquire land inside national forests.

Privatizing the town could mean more businesses and services for residents. Currently there are only a gas station and a part-time convenience store and fast-food restaurant. The nearest town is an hour's drive.

A private Dutch John could attract development, produce property taxes, and offer potential growth since the town is only about 10 minutes from Flaming Gorge and its throngs of tourists.

And if the land traded for Dutch John were school trust lands now isolated in national forests, the exchange could provide badly needed revenue for Utah's school trust fund.

The trade is exactly the kind of thing state officials have been trying to do on a larger scale with many of the 3.7 million acres of school trust lands scattered around Utah. The State Land Board would like to swap some of those acres - useless because they are isolated within federal holdings - for other federal lands. Such exchanges could allow Utah to make use of the lands and earn money for the school trust fund.

Unfortunately, the federal government has been less than eager to make such trades - despite requirements of the law - since they already have the state lands locked up inside parks, forests, reservations, military property and other jurisdictions.

The fact that the arrangement hurts Utah earnings from school trust lands does not seem to be an urgent concern for most federal officials.

Perhaps the Dutch John proposal indicates a more flexible approach to the land exchange idea. Or maybe it is just that in this case, the U.S. Forest Service sees a way to save $1 million in its hard-pressed budget.

But no matter the justification, the Dutch John trade is the right way to go, especially if it can involve exchanging isolated school trust lands for property with more potential for economic development.