The Economic Impacts of Increased Grazing Fees on Gila National Forest Grazing Permittees

Abstract

The purpose of this research was to estimate the impacts of increased federal grazing fees on current holders of grazing permits on the Gila National Forest (GNF) in western New Mexico. A multi-period linear programming (LP) model was developed using 1992 national forest ranch budgets as baseline data. Discounted net returns (returns over variable costs) were maximized over a 60-year planning horizon under current fee regulations, and with alternative fees computed for various recent legislative and administrative grazing fee proposals. Small, medium, and large ranches were considered in the impact assessment. In addition to livestock income and expenses, off-ranch income, family living expenses, and debt obligations were directly considered in the analysis. An estimated 7% of the current Gila National Forest grazing permit holders--those medium and large ranches with high debt--would be expected to go out of business even if the current grazing fee were continued. At a federal grazing fee of $3.96/AUM as proposed by Rangeland Reform '94, an additional 20% of GNF permittees would be expected to go out of business. These would be the small high-debt ranches and large ranches with intermediate levels of debt. A grazing fee of $8.70/AUM would be expected to cause all current GNF ranchers with debt to go out of business. Average annual USFS grazing use by existing permit holders was estimated to decrease by about 120,000 AUMs when the grazing fee was increased to $3.96/AUM, but grazing fee receipts would increase by 31% with the higher fee, assuming no new permit holders or consolidations occurred. The largest grazing fee receipts were generated at the $3.96/AUM fee.