Ranch Profitability of Improving Soil Health on Rangelands

Abstract

Conservation practices can maintain or enhance the quantity of ecosystem services realized by both private individuals and society. However, implementing these practices generally has costs that may exceed the benefit received by a private economic agent, particularly if costs are immediate and benefits accrue in the future. This study presents a framework to evaluate ranch-level financial incentives for grazing management that results in improved soil health. A range of hypothetical scenarios of improved forage production is considered for a representative central-Wyoming, US, profit-maximizing rancher. Modeled scenarios are then compared with the possible costs of implementing a practice to improve soil health. The net present value (NPV) of net benefits is shown to be positive if forage production increased immediately. However, it is likely that the forage response is not immediate and would occur over a significant period of time. Scenarios of linear and logistic forage response over a period of 35 yr and 105 yr, as well as two different initial conditions, all show a negative NPV of net benefits (greater implementation costs of rotational grazing than projected benefits from improved soil health) assuming a 7% discount rate. Due to the time it may take for forage benefits to be realized and the time value of money, financial assistance may be required for ranchers to at least break even when implementing practices that improve soil health on rangelands.