Ranch Level Economic Impact Analysis for Public Lands: A Guide to Methods, Issues, and Applications

Legal mandates require public land managers to consider social and economic impacts in planning efforts, and analysts seek models and tools for use in resource planning and impact assessment. In this paper we review state-of-the-art methods and models that can be used to evaluate ranch-level decisions and land-use policy impacts. Most ranch models use profit-maximization as the decision criterion, but it must be recognized that ranchers make decisions with personal objectives that are broader than just profit. Investments in rangeland improvement practices or management changes can be assessed using standard investment analysis (e.g., net present value, benefit/cost, or internal rate of return). Ranching is a year-round endeavor and changes in a specific season of grazing use or management activity may have greater impact on the whole ranch operation than can be accounted for by analyzing seasons or levels of grazing use in isolation. Impacts will vary with available forage alternatives, ranch resources, and management options. Current models use recursive linear programming or simulations to assess impacts over multiple years. Ranching and grazing on rangelands can affect the production of a variety of ecosystem services, though these are often not quantified or included in either investment analysis or economic models that describe ranch businesses. Because no formal markets exist for many ecosystem services, establishing a value has proven difficult. The few studies that have attempted to quantify ecosystem service values report said values without strong justification for the defined level of goods and services expected under alternative actions and policies.