California’s 10 million acres of hardwood rangelands, or oak woodlands, are the most biologically diverse broad habitat in the state. Most of the state’s water supply flows through these lands. They also supply aesthetics and recreational opportunities. However, these important public values are mainly supplied by private landowners, who own 80 percent of the state’s hardwood rangelands. Over two-thirds of all hardwood rangelands are grazed by domestic livestock.
The continued supply of public values from these private lands depends in large measure on the economic value of these lands, and the opportunity costs of competing land uses, such as urban developments, intensive agricultural enterprises, and rural ranchettes. Economic institutions such as conservation easements and property tax policies such as the Williamson Act, provide opportunities for private owners to benefit from the amenity values supplied by their lands. Broadened markets for products from hardwood rangelands, including fee hunting and recreational leasing, also increase returns and help maintain extensively managed private rangelands. Several of the factors affecting hardwood rangeland values are discussed below.
Factors Influencing Grazingland Value
A variety of economic, site productivity, and management factors influence the value of hardwood rangelands for grazing enterprises. These include:
- Livestock prices
- Management practices
- Rangeland productivity
- Improvements (fences, water sources)
- Forage quality
- Other products p roduced (hunt clubs, recreation, firewood)
- Risk, variability
- Access to other feed sources
- Opportunity costs (alternative land uses: urban developments, intensive agriculture)
Grazing enterprises have high inherent risks. Livestock prices have often varied by 20 to 50 percent from year to year. Similar variation in hay prices also exists. In addition to these economic fluctuations, forage production varies annually as a result of annual rain and temperature variation. It is not unusual for forage yields to vary by 100 percent between years. These factors create large annual variation in returns. An individual owner’s capacity to respond to this risk and uncertainty depends on borrowed capital, interest rates, management strategies, and general financial standing.
Research on grazing land value has been carried out by the Integrated Hardwood Range Management Program. This has shown how general rangeland site productivity, types of enterprises (such as livestock and hunt clubs), and risk affect land value, and annual lease value. Table 1 shows the results of this research. When considering risk, overall land value decreases. Broadening the economic portfolio by including other compatible uses such as hunt clubs, reduces the impact of risk and increases the overall return to landowners. In fact, hunt clubs may represent 30 (on good sites) to over 50 percent (on poorer sites) of the value of the ranching enterprise.
Table 1. Value of hardwood rangeland for livestock grazing and hunting leases.
|Enterprise||Risk*||Good Range Site (1.3 – 2 AUMs per ac.)||Poor Range Site (0.4 – 0.7 AUMs per ac.)|
|Land Value ($/ac)||Lease Value ($/ac)||Land Value ($/ac)||Lease Value ($/ac)|
|Livestock Grazing||No Risk||$375||$15||$125||$5|
|Grazing and Hunt Club||No Risk||$550||$22||$270||$11|
*Risk factor evaluated is a 1 in 10 chance of losing money
Opportunity Costs of Hardwood Range Land Uses
In many areas of the state, grazing and hunting values represent only a small fraction of the actual land value. There are a wide variety of alternative land uses on hardwood rangelands that affect these values. In some areas, rangeland soils have potential for high value-added agricultural products, such as wine grape production. Land use planning policies in many hardwood rangeland areas permit subdivision of large parcels into smaller ranchettes of 5 to 40 acres. Urban developments also are occurring on many hardwood rangelands. Many of these higher value land uses, unless carefully planned, have the effect of fragmenting hardwood rangeland habitats, and diminishing their capacity to supply amenity and conservation values that have historically existed.
In the Central Coast of California, grazing land value may be worth less than 10 percent of the value of the land for alternative uses, creating tremendous pressure to move to land uses that may cause higher environmental costs. Some general estimates of general values are:
- grazing land – $300 to 500 per acre
- vineyard development land – $8,000 per acre
- land for residential development – $20,000 per acre
Values and Markets for Amenities
In some cases, markets and markets for hardwood rangelands incorporate the amenity values supplied. Research has shown, for example, that oak stands contribute to overall property value. The oaks on the property, the presence of oaks in a neighborhood, and the presence of hardwood rangeland open space adjacent to a community, all have been demonstrated to affect property values. For privately-owned rangeland, this shows that the economic value of large private blocks may contribute to not only the value of the specific property, but may increase the overall value of an entire community.
Research was done on different spatial arrangements of oak stands and how this contributed to overall property value. On five acre lots, rangeland with at least 40 oaks per acre (33 foot spacing or less) was worth 27 percent more than open land. There was a similar value for open to heavy tree stocking (40 to 460 trees per acre) on these lots. Similar trends were also observed on two acre lots, with 40 trees per acre being worth 22 percent more than bare land. Denser areas (over 40 trees per acre) were not worth as much as the more open stands, but still had higher value than bare land.
Recent research was carried out on the value of a 6,000 acre oak woodland open space in northern San Diego County. This open space is surrounded by 4,800 individual parcels. At this time, 57 percent of the parcels had home construction. Analysis of the actual land and housing prices of these adjacent parcels was carried out, and the relative contribution of distance to the open space and native oak stands was determined. This research showed that land value decreased by $324 for every 1000 feet a property was from permanent oak woodland open space The distance from a home to native oak stands in the neighborhood showed that house value decreased by $3 per square foot for every 1000 feet a house was from an oak stand.
Open space blocks, in addition to maintaining ecosystem processes and habitat values, also have been shown to contribute to the overall economic value of the community. The quality of life value of large blocks of rangelands may have justification in economic, as well as in social values.
Maintaining and Enhancing Property Value
The use of rangeland for grazing and other types of extensive management is only a fraction of the value of the land. However, land markets are beginning to include amenity values of these areas. Conservation easements can help provide economic incentives for landowners to maintain the conservation value of the lands they own. These easements can provide outright compensation of landowners through the purchase of development rights. They can also provide tax and estate planning benefits through donation of the land value differences between extensive rangeland management and land uses with higher economic values.
Given the increasing value of hardwood rangelands, it is beneficial for landowners to maintain the health and vigor of trees on their land. Owners should attempt to maintain stands of trees in areas that may be developed, because of the higher value for these lots. Also, since neighborhoods with native tree cover have higher value, it may be wise for homeowner associations to utilize Covenants, Codes, and Restrictions (CC&R’s) to maintain overall oak stands in a neighborhood. Also, the effect of undeveloped open space on enhancing adjacent property values, points to the role of compensation of large ownerships through land trusts, because of the economic, as well as the conservation value of these types of lands.
- Diamond, N.K., R.B. Standiford, P.C. Passof, and J. LeBlanc. 1987. Oak trees have varied effect on land values. California Agriculture 41(9,10):4-6.
- Standiford, R.B. and R.E. Howitt. 1993. Multiple use management of California’s hardwood rangelands. Journal of Range Management 46:176-181.
- Standiford, R.B. 1996. Tax incentives encourage open space conservation. U.C. Integrated Hardwood Range Management Program On-line Leaflet IHRMP-51
- Costello, L. and D. Lobel. 1986.
prepared and edited by Richard B. Standiford, Justin Vreeland, Bill Tietje
Richard B. Standiford
University of California Integrated Hardwood Range Management Program