Upload
others
View
3
Download
0
Embed Size (px)
Citation preview
1
New Mexico State University
Economics of Multiple Rangeland Use and ConservationL. Allen TorellProfessor of Agricultural Economics
New Mexico State University
Las Cruces, NM
Outline of Topics• What gives ranches value
– Income earnings
– Land appreciation
– Way of life
• Economics of Conservation Practices – Valuing ecosystem services
New Mexico State University
2
USDA Reported Pasture Values
New Mexico State University
0
500
1,000
1,500
2,000
2,500
3,000
3,500
01 02 03 04 05 06 07 08 09 10 11
Pa
stu
re V
alu
e (
$/A
cre
)
Year
Pastureland Value ($/Acre)
California
Idaho
Utah
Washington
Oregon
Nevada
Montana
Wyoming
Source: USDA-NASS, Agricultural Land Values and Cash Rent Survey
Rent-to-Value Ratio
Year
Pasture Value
($/Acre)
∆ Pasture Value
($/Acre)Appreciation
Rate Cash Rent
($/Acre)
Rent-to-Value Ratio
Appreciation + Cash Rent
($/Acre)
Total Rate of Return
1998 1,050 12.00 1.14%1999 1,050 0 0.0% 10.00 0.95% 10 1.0%
2000 1,000 -50 -4.8% 9.00 0.90% -41 -3.9%
2001 1,040 40 4.0% 11.00 1.06% 51 5.1%
2002 1,400 360 34.6% 11.00 0.79% 371 35.7%
2003 1,500 100 7.1% 10.60 0.71% 111 7.9%
2004 1,600 100 6.7% 11.50 0.72% 112 7.4%2005 1,910 310 19.4% 12.00 0.63% 322 20.1%2006 2,160 250 13.1% 13.00 0.60% 263 13.8%2007 2,800 640 29.6% 14.00 0.50% 654 30.3%2008 3,020 220 7.9% 15.00 0.50% 235 8.4%2009 2,900 -120 -4.0% 14.00 0.48% -106 -3.5%2010 2,850 -50 -1.7% 13.00 0.46% -37 -1.3%2011 2,800 -50 -1.8% 12.50 0.45% -38 -1.3%Average 1,934 135 7.8% 12.04 0.62% 180 8.5%
New Mexico State University
Source: USDA-NASS, Agricultural Land Values and Cash Rent Survey
3
Ranching As a Way of Life
• Rural Values and Living
• Open Space
• Quality of Life
What key factors influence the value of New Mexico Ranches?• Scenic mountainous area
– Northern NM ranches• $1,200/acre
• $71,000/AUY
– Other Areas• $150/acre
• $6,000 - $8,000/AUY
New Mexico State University
1996 - 2010
4
What key factors influence the value of New Mexico Ranches?• Amount of Public and State Trust Land
– 659 sales (1996-2010)
New Mexico State University
0
50
100
150
200
250
300
350
02,0004,0006,0008,000
10,00012,00014,00016,00018,000
$/T
AC
$/A
UY
% Public and state Land
Amount of Leased Land (%)
$/AUY $/TAC
Factors Influencing NM Ranch Values• Population Density – People like more
densely populated areas
• Elevation – higher is better (decreasing rate)
• Distance to town
• Houses, Buildings, Improvements
New Mexico State University
5
Factors Influencing Ranch Values
• Add $1,500 annual livestock income– $2,420 ↑ ranch value
– V= A/r
• Add a $1,500 antelope permit– $37,400 ↑ ranch value
– 15 times more
New Mexico State University
$ ,
.=$37,500
Allocation of California Ag Land Market Price
New Mexico State University
Commercial Production Benefits
43%
Amenity Lifestyle Benefits
57%
Source: Contingent Valuation of Woodland-Owner Private Amenities in Spain, Portugal,and California, Campos et al. (2009)
6
Economics of Range Improvements
• Objectives – Forage for Livestock
– Ecosystem Services• Healthy rangelands
• Watershed Improvements
• Wildlife habitat improvement
• Reduced fire hazard
New Mexico State University
NPV for Broom Snakeweed Control
TimeAdded
HerbageAdded AUMs 50%
ruleAnnual Value
Discount Factor NPV
0 -$22.00 1.000 -$22.001 500 lb/ac 0.313 AUMs/Acre $4.38 0.935 $4.092 500 lb/ac 0.313 AUMs/Acre $4.38 0.873 $3.823 500 lb/ac 0.313 AUMs/Acre $4.38 0.816 $3.574 500 lb/ac 0.313 AUMs/Acre $4.38 0.763 $3.345 500 lb/ac 0.313 AUMs/Acre $4.38 0.713 $3.12
Amount of forage added = 500 lb/acHarvest Rate = 50% -$4.06 NPVForage Value = $14/AUM -0.19% IRRTreatment Cost ($/Ac) = $22/Acre 0.82:1 B/C RatioDiscount Rate = 7%Treatment Life (years) = 5 Years
Traditional Range Improvement Economic Analysis (NPV)
Added Forage
Added Economic
Value
Time Value of Money
7
What the traditional Economic Analysis Shows• Forage production increases 3 to 5 times
• Livestock production benefits alone do not economically justify the majority of range improvement projects– NPV generally negative
– Livestock production pays for about 50% to 80% of total treatment cost
– Cost share treatments
Major Change in Emphasis
• Millions have recently been spent on restoration cooperative efforts – Land agencies
– Private individuals
– Conservation groups
– NGOs
• Individuals and agencies seek ways to realize non-grazing benefits from rangelands
8
Restoration and Rangeland Health
New Mexico State University
• Many cooperative efforts for rangeland restoration– Sage grouse habitat
– Fire prevention and fuels management
– Healthy Rangelands
Restore New Mexico is a Cooperative Effort lead by New
Mexico BLM
New Mexico Quail, Inc.
9
Creosote Controlnear Las Cruces, NM
$20/Acre
The NRCS Conservation Effects Assessment Project (CEAP) - 2011
• Literature Review
• Assess and quantify the effects of conservation practices– Prescribed Grazing
– Prescribed Burning
– Brush Management
– Range Planting
– Wildlife Habitat Improvement
– Weed Control
Available onlineSearch for “Rangeland CEAP”
10
CEAP Project Economic Findings
• Benefit/Cost Assessment:– Societal benefits from ecosystem services and
multiple uses are an increasing priority influencing public land use decisions
– Economic consideration of nonmarket ecosystem services is essential for improved investment decisions for conservation programs
New Mexico State University
We know very little about the economics of rangeland ecosystem services for Multiple Uses• Wildlife habitat improvement
• Watershed benefits
• Carbon sequestration
• Reduced fire hazard
New Mexico State University
11
Sparrowk Livestock Conservation Efforts
• Stream Restoration• Willow Restoration• Timed grazing of Riparian areas
Conservation Practices
• Water Quality• Wildlife habitat• Aquatic Habitat
Benefits
• How much more?• How does society value the change?
• Can SparrowkLivestock economically benefit?
Convert to economic
value
New Mexico State University
Putting an economic value on ecosystem services
Two types of information needed:1. Changes in rangeland output levels
(resource effects, weak link)
2. People’s valuation of those outputs
12
Restoration Practices have PositiveEffects on Breeding Bird Communities in the Chihuahuan DesertJohn Coffman, Brandon Bestelmeyer, Timothy Wright, Jeffrey Kelly, & Robert Schooley
13
Cassin’s sparrow
Eastern meadowlarkLoggerhead shrike
Scaled quail
Bird responses to historical treatments
Horned lark
Grassland specialistsfavored by treatments
Black-throated sparrow
Black-tailed gnatcatcher
Generalist found intreated and untreatedshrublands, but thatrequires shrubs fornesting
Grassland specialist not reliably favoredby treatments
Shrubland specialist favored in untreatedshrublands
Aspidoscelis tesselata
Aspidoscelis tigrisAspidoscelis uniparens
Aspidoscelis inornata
Grassland specialistsfavored by treatments
Shrubland specialistsfavored in untreated shrublands
Lizard responses to historical treatments
Checkered whiptailLittle striped whiptail
Desert grassland whiptail Tiger whiptail
from Brad Cosentino et al., in review
How many more?
14
Procedures for Valuing Ecosystem Services• Market value and productivity
• Contingent valuation and choices– Ask people their willingness to pay
– Scenario preferences
• Travel cost method
• Replacement cost– Cost of removing sediments
• Hedonic pricing models
Some Ecosystem Services provided from rangeland improvements are major
• Livestock benefits
• Improved wildlife habitat and numbers
• Reduced sediment and runoff
• Weed control
• Landscape scenic appeal
15
Sustainable Rangeland Roundtable (SRR)
New Mexico State University
http://sustainablerangelands.org/
Identify a direction of change-- - 0 + ++
We know little about the economics of ecosystem services
We are implementing restoration projects because decision makers think it is the right thing to do!• Economic justification is very
limited and not forthcoming