A Dynamic Ranch Model of Hardwood Rangeland

A study was started in 1987 to develop a dynamic model of hardwood rangeland management activities using the best available biological and economic data. Firewood production, livestock production, and commercial hunting were incorporated into a multi-product objective function to model the optimal oak canopy levels of hardwood range owners over time. This information will be of value to policy makers evaluating different policy instruments to achieve society’s goals for outputs from hardwood rangelands, and for individual landowners who are seeking to find the optimal mix of products from their hardwood rangelands to maximize economic returns to the land.

Oak tree growth, forage production under different oak crown canopies, hunting revenue, and livestock growth parameters were all estimated in a series of studies. These empirical estimates were used to develop a model incorporating seasonal forage production, as well as yearly increments for hunting and wood volume production. The objective function for this hardwood range model was to maximize discounted net revenue received from firewood harvesting, hunting revenue, and livestock revenue.

This hardwood range management model was solved using nonlinear optimization techniques for forage allocation to hunting, supplemental feed purchased, the number of cattle to hold off the market as replacement heifers, and the quantity of firewood sold. As a result, the number of cow-calf pairs, and the standing volume of oak trees over time could be determined. Ninety different scenarios were evaluated reflecting an array of different range and oak productivity sites, different initial oak volume levels, and areas with and without the hunting enterprise. Although this initial phase of the research did not include variability, future studies will concentrate on uncertain product prices and weather conditions and evaluate how this variability influences optimal decisions.

What is the effect of hunting on total financial return?

Total ranch profitability is one of the most important factors impacting conversion of hardwood rangelands to subdivisions and other more urbanized uses of the resource, and away from the large expanses of extensively managed open space that characterizes most hardwood range operations. The hypothesis is that hunting and firewood harvesting offers a broadened market base for hardwood range managers and improved economic returns to the land, which may help to reduce conversions.

Figure 1 shows the net present value per acre (NPV) for a medium quality hardwood range site with 750 cubic feed per acre. This figure shows the major impact that hunting has on the total economic value of hardwood range management. On the poor range site, NPV is increased by 183 percent with hunting (from $84 to $238 per acre), and hunting is the dominant economic value on the site. On the good range site, hunting increases the NPV by 32 percent (from 4467 to $616 per acre), although cattle production is the dominant economic value on this site. This figure shows the relatively minor contribution that firewood harvesting makes to the total economic value of the operation.

What is the effecting of hunting on optimal wood harvest levels?

Figure 2 shows the cumulative firewood harvest over the 20 year control period on a low productivity range site. This shows that less oak firewood harvesting occurs when hunting value is received, especially in stands with 750 to 1000 cubic feet per acre. This indicates that the marginal decrease in hunting revenue due to oak canopy changes is greater than the marginal revenue from the firewood harvest. Hunting apparently does provide an incentive for hardwood range managers to conserve oak trees. Interestingly, the optimum decision is for no firewood harvesting to occur over a 20 year period on areas with less than 500 cubic feet per acre of oak wood volume (about 6 cords). The marginal cost of harvesting firewood exceeds the market price at these levels. It is also worth noting that ranchers are not likely to completely clear their ranges for forage enhancement because the marginal revenue of the added forage is less than the marginal cost of cutting trees.

How does hunting and oak canopy affect optimal livestock density?

Figure 3 shows the optimum number of cow-al pairs on the 1000 acre parcel for a range of oak crown canopy cover levels ranging from 25 to 90 percent. The overall trend is that as crown cover increases, the livestock density decreases. There is decreased livestock use on areas with hunting, due both to allocation of some of the forage base to wildlife species, and also labor and management constraints.

Currently, there is great interest in California about the private management of the hardwood range resource. Policy discussion is focusing upon whether current private market incentives provide for adequate stocks of oak trees to meet perceived public needs. New markets have developed recently for recreational hunting on private lands, and the preliminary results of the optimal control runs indicate that these markets may provide some incentive for managers of hardwood rangelands to reduce their level of tree harvesting. This research indicates that it is unlikely that any level of firewood harvesting will occur on oak stands with low volumes per acre. The optimum livestock density shows that hunting will reduce the intensity of livestock use, which will reduce the pressure to enhance the forage base with tree harvest. There is no economic incentive to clear dense oak stands for improvement for livestock use based on the range of prices and costs used in this research.

prepared and edited by John M. Harper, Richard B. Standiford, and John W