The Economic Impacts of Sagebrush Steppe Wildfires on an Eastern Oregon Ranch

Date of Award

9-21-2007

Degree Type

Thesis

Degree Name

Master of Science (MS)

Department

Economics and Finance

First Advisor

David A. Pyke

Second Advisor

Mike Gamroth

Third Advisor

Neil Rimbey

Abstract

The relative success of restoration practices on cheatgrass infested sagebrush steppe lands in the Great Basin can affect the probability of crossing an ecological threshold and have economic effects on cattle ranches using federal rangelands. Cheatgrass invasion implies an increase in the risk of fire, which in turn increases the likelihood that ranchers will be denied temporary access to public lands. No study to date has incorporated forage availability constraints imposed on public grazing allotments by cheatgrass wildfires into ranch-level economic models. As cheatgrass is known to cause frequent fires, ignoring this constraint could overestimate the benefit of cheatgrass as a spring forage source.

The purpose of this project is to determine the importance of considering specific ecological effects of cheatgrass-associated wildfires on a ranch-level economic model. This study assumes that a representative Oregon 300 cow-calf ranch possesses a Bureau of Land Management (BLM) allotment that exhibits ecological characteristics typical of sagebrush steppe sites that are vulnerable to continued cheatgrass invasion. This project utilizes biological data gathered as part of the on-going Sagebrush Steppe Treatment Evaluation Project (SageSTEP) from a high desert land type in eastern Oregon. The grazing allotment is assumed to have a 15% percent cover of cheatgrass with an associated 20 to 40 year fire return interval. Results from a ranch economic impact analysis of cheatgrass associated fires on a ranch’s public grazing allotment may exhibit directional bias if the baseline model does not consider both the economic contribution of cheatgrass to spring forage and the economic cost of a typical minimum two-year grazing exclusion following a wildfire. These two forage availability constraints are added to the public forage component of a ranch bioeconomic model to address how the representative ranch reacts to the temporary loss of permitted AUMs in terms of forage substitution and/or herd size reductions as the result of the assumed fire return interval; under what circumstances will this temporary loss of AUMs force a representative ranch out of business; and whether there is an economic impact associated with changes in late spring AUMs under the assumed fire regime.

A baseline “No Fire Model” is compared to a “Fire Model” using a forty-year planning horizon with a 7% discount rate. All assumptions regarding a perfectly competitive industry hold in these models, including perfect information. The “Fire Model” is subject to randomly generated fire regimes using a Monte Carlo approach. Precipitation and cattle prices are held constant in order to isolate wildfire effects. Grazing on the BLM allotment is allowed during the fire year and is excluded for the following two years. During these two post-fire years, the representative ranch is forced to choose a substitute forage source and/or limit its herd size.

Results indicate that the ranch impacts of a fire go beyond the time-line of the two years of exclusion from the BLM allotment. This decrease in access to BLM AUMs results in an even greater decline in the average use of deeded range AUMs over time when compared to the No Fire Model. This decline occurs regardless of the fact that the ranch increases its use to the maximum available deeded range AUMs during the two years of the BLM allotment exclusion. Average Net Present Value (NPV) is also lower compared to the No Fire Model. Within the results of the Fire Model, NPV decreases and the probability of bankruptcy increases as the number of fires experienced within the planning horizon increases. As policy makers deal with the impending risk of an increase in cheatgrass associated wildfires in the Great Basin sagebrush steppe, this study shows that failing to include ranch impacts of fire on BLM land will likely result in an overestimation of the benefits or an underestimation of the costs of further invasion.

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