Rangeland Economics

October 05, 2012 Print Friendly and PDF

Written by John Tanaka, University of Wyoming

Rangeland economics is the application of economic theory and principles to issues related to rangeland management. Historically, it has been used to decide whether a rangeland or ranch management practice would be profitable and to estimate values for different rangeland goods and services.

Similarly, rural sociologists have applied social theory and principles to how rural communities are affected by rangelands or how rangeland management affects them.

In this section, we will examine different aspects of economics and sociology and how they are applied to rangeland and ranch management.


Ranch Management

Ranches are the primary unit by which private rangelands are managed and used. This section will examine how ranches can be managed to improve or maintain the conditions of rangelands. Those management choices will have economic impacts both on the ranch and rural communities.
Ranch economics are affected by livestock production choices, forage sources, prices of inputs and outputs, values of nonmarket goods and services, the mix of enterprises a rancher may choose, and a variety of other factors. We will discuss what is known on many of these factors in the following pages.

Economics of Rangeland Improvement Practices

Rangeland improvement practices are designed to either change the vegetation on a piece of land or to facilitate better livestock management on rangelands. Vegetation management can be done by using mechanical, chemical, prescribed fire, or biological control methods. Seeding of desirable plants can be done with any of these methods, or the land can be left to recover naturally. Practices to improve livestock management include fencing, developing water, herding livestock, or prescribed grazing methods.
The practices themselves are discussed in different sections. In this section, we will describe the basic economic analysis methods used to evaluate whether a practice is economically feasible. We will also examine how economically optimal levels of projects can be identified.

Economics of Invasive Species

The economics related to invasive species fall into two categories. First is the cost of controlling the species. Second is the cost the species imposes on other resources and resource uses. Generally, the first cost can be calculated fairly easily for different control methods. The second type of cost is much more problematic to estimate, especially when the invasive species impacts resources that are not traded in markets.

Economics of Public Rangelands

Public rangelands are primarily managed by the U.S. Bureau of Land Management and the U.S. Forest Service, although other federal agencies such as the U.S. Fish and Wildlife Service and the Department of Defense manage significant acreages. These lands are owned by the people of the United States and are managed for various purposes as outlined in public laws and regulations. In this section, we will examine the economic aspects of different uses and how those uses affect the national treasury in terms of receipts and how local governments may be affected.

Ranch Values

Ranches are valued for a variety of different uses. Historically, most of the value of the ranch could be estimated based on its productive capacity for producing livestock and crops. More recently, other values must be considered such as open space, lifestyle, and amenity values. In the public land states, besides the values for production, the grazing permits on public land can also increase the value of the ranch.

Uses of Rangelands and Their Values

Rangelands are used for a variety of purposes. The traditional use is for domestic livestock grazing. In addition, rangelands can also provide wildlife habitat, water quality and quantity, open space, recreational opportunities, and a variety of other uses and products. Each of these will have different values that can change over time.

Regional Economics Related to Rangelands

Economic impacts from activities related to rangelands can affect larger economies. Livestock produced on rangelands result in income to the rancher which is then spent on a variety of goods and services. That money is either spent locally or sent out of the region. The money spent locally is then spent by those businesses and so on. Regional economics seeks to estimate the total impact of the direct and indirect spending as well as the impacts on jobs.

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This work is supported by the USDA National Institute of Food and Agriculture, New Technologies for Ag Extension project.