Phillip Johnson, Alfonso Gerbolini, Don Ethridge, Carlton Britton, and Darrell Ueckert
The infestation of redberry juniper (Juniperus pinchotii) is a major problem on Texas rangelands, particularly in the Rolling Plains and Edwards Plateau regions. The occurrence of redberry juniper reduces the capacity of these lands to support livestock and wildlife, as well as reduces the amount of water that may be recharged into underground aquifers. As rangelands have become infested with redberry juniper, the livestock carrying capacity of these lands has decreased as forage production has decreased. The 1982 Texas Brush Inventory (TBI), conducted by the National Resource Conservation Service (NRCS) identified 99.3 million acres of Texas rangelands infested by 50 noxious brush species. Ansley, Pinchak, and Ueckert (1995) showed evidence of a substantial increase in the distribution of redberry juniper in a specially defined area of Texas. This area constituted a 65-county area in northwest Texas, including counties in the High Plains, Rolling Plains, and the Edwards Plateau regions of Texas. Redberry juniper infestations in this 65-county region had increased from 6.0 million acres in 1948 to 9.9 million acres in 1982. This indicates a 61% increase in the distribution of redberry juniper over the 34-year interval, with the percentage of the 65-county area infested by redberry juniper increasing from 16% to 26%. The 1987 National Resources Inventory (NRI) indicated that moderate and dense infestations of redberry juniper in the Rolling Plains and Edwards Plateau regions had increased by 16% from 1982 to 1987 (USDA, 1990). A comparison of the 1982 and 1987 brush inventories indicate an increase in the severity of the brush problem in Texas. The general objective of this study was to evaluate the long-run economic feasibility and effects of biological and economic conditions on economic feasibility of redberry juniper control in the Rolling Plains Region
The control of redberry juniper should be considered as an investment in the long-term productivity of rangeland. The costs of control are incurred at the time of initial treatment and periodically thereafter for maintenance of the control level, with benefits being realized throughout the treatment life. The combined treatments of initial control by chaining, followed by prescribed burning two years later, and a sequential re-introduction of fire is the treatment regime used in this analysis.
Increased revenues from greater forage production occur each year after the initial brush control treatment, while added costs are realized only in years when brush control treatments are applied. For the control practice to be feasible, the present value of added revenues from increased livestock production must exceed the present value of added brush control costs over the period of analysis. A 30-year time frame was used to evaluate the investment in brush control as a long-term investment. This planning horizon was chosen for two reasons: (1) it allowed for a more realistic scenario, considering the life of the investor, and (2) it ensured at least two maintenance burns 13 years apart, which is the biological maximum time interval recommended between maintenance burns on flat areas to obtain a high kill percentage (Steuter and Britton, 1983).
Two time periods are important in the analysis, the time following the start of the analysis (represented as t) and the time following the last brush treatment (represented as tw). Because these two time periods occur simultaneously, canopy cover is measured in two simultaneous time-frames, CCt and CCt,tw. The function CCt represents the percentage canopy cover through time with no brush control, and CCt,tw represents the percentage canopy cover through time when brush control is applied to the rangeland. The relationship between canopy cover and time may be expressed as:
CCt = CCt-0 + r(t)
CCt = CCt-0 + r(t)
where CCt is the percent canopy cover in year t without brush control, CCt=0 is the percent canopy cover at time t=0, r(t) is the percent canopy cover increase per year without brush control, and t is as time following the start of the analysis. CCt,tw is the percent canopy cover at year t from the beginning of the analysis and year tw from the last brush control treatment, CCt,tw=0 is the level of canopy cover in years t and tw=0, and r(tw) is the percent canopy cover increase per year following brush control.
To understand the effects of redberry juniper control on forage production and income, several relationships need to be addressed. The brush problem involves both biological and economic phenomena. It is therefore important to understand both the physical and financial relationships associated with the control of redberry juniper.
Redberry juniper is a re-sprouter; meaning that it exhibits basal sprouting following top removal (Steuter, 1982). Therefore, the initial control of redberry juniper must be followed periodically with maintenance treatments using prescribed burning or individual tree treatments. Figure 1 illustrates the relationship between redberry juniper canopy cover and time. The line labeled CCt represents the level of canopy cover through time if brush control treatments were not applied, while the lines CCt,tw represent the levels of canopy cover through time with brush control treatments being applied. The level of canopy cover is reduced by the initial treatment and maintained below the level of canopy cover without control, CCt by periodic re-treatments using prescribed burning.
Redberry juniper canopy cover and forage production are inversely related. The forage production relationship shown in Figure 2 represents the estimated forage production in lb/ac with respect to percent canopy cover of redberry juniper on very shallow range sites in the Texas Rolling Plains near Roscoe, Texas (Gerbolini, 1996). This relationship was estimated using data from 23, thirty-meter transects which were randomly laid out to measure canopy cover percentage and forage production. Forage production was estimated at each transect’s level of canopy cover by randomly placing 0.25 m2 quadrants along the transect. The effect of redberry juniper canopy cover reduces forage production at an increasing rate up to 33.67% canopy cover. Beyond this point forage production continues to decrease at a decreasing rate as canopy cover increases. The expected level of forage production at a zero level of canopy cover is 1,148 lbs/ac. Forage production decreases to 13.95 lbs/ac at 100% canopy cover.
The functional form of the estimated forge production equation without brush control treatment is expressed as:
FPt = eBO’ + Bl(CCt)2
where FPt is the production of forage in lbs/ac in year t, e is the euler’s coefficient (defined as 2.718282), CCt is percent canopy cover in year t, and eBO’ is the forage produced in lbs/ac when CCt =0. The functional form of the estimated forge production equation with brush control treatment is expressed as:
FPt, tw = eBO’ + Bl(CCt, tw)2
where FP, CC, and eBO’ are as defined before, and t,tw represents year t from the beginning of the analysis and year tw from the last brush control treatment.
The added forage production associated with redberry juniper control is the additional forage produced with treatment compared to that on untreated rangeland. Additional forage produced was calculated as the difference between the production of forage on treated rangeland and untreated rangeland and is expressed as:
AFPt = FPt,tw – FPt
where AFPt is the added forage production from brush control on redberry juniper infested rangeland in lbs/ac in year t, FPt,tw is the forage produced on the treated rangeland in lbs/ac in year t, and FPt is the forage produced on the untreated rangeland in lbs/ac in year t.
Forage production was converted to livestock production using the following equation:
ALPt = K * AFPt
where ALPt is the additional livestock production in lbs/ac in year t, and K is the pounds of marketable livestock produced per lb of forage, and AFPt is the additional forage production in lbs/ac in year t. The conversion factor K (0.020054) was estimated for the Texas Rolling Plains region assuming 26,098 lbs of forage are required annually to sustain one cow producing unit.
Methods and Procedures
The profitability of an investment in redberry juniper control can be evaluated using the net present value capital budgeting technique. The net present value (NPV) of the investment is the discounted cash flows at the ranch’s discount rate. The net present value is expressed as:
where NPV is the net present value of the investment in brush treatment, t is the year following the initial brush control treatment, AR is the added revenue from the brush treatment, AC is the added cost of the brush treatment, n is the treatment life, and I is the discount rate. If the net present value is greater than or equal to zero, then the redberry juniper control treatment regime is feasible.
The added revenue from livestock production was calculated as follows:
ARt = ALPt (PL – AVC) + LS
where ARt, is the value in $/ac of the additional livestock revenue produced in year t, PL is the weighted average price of livestock in $/lb, AVC is the added variable cost in $/lb associated with producing additional marketable livestock, LS is labor savings in $/ac realized from the brush control, and ALPt is as previously defined. Livestock price was estimated using the price of heifers, steers, and cull cows weighted according to the percent contribution of each to a marketable animal unit.
The additional cost from control of redberry juniper was estimated by considering the cash outflows incurred from the brush treatment practices and the cost of deferment of rangeland to build up fuel for the prescribed burns. Added cost of the investment was estimated as:
ACt = TCb, t + DCt
where ACt is the added cost in $/ac in year t, TCb,t is the cost of treatment b in $/ac in year t, b is the type of brush control treatment used, and DCt is the deferment cost of the land in $/ac in year t. The type of brush control treatment used was either chaining or prescribed burning. Deferment costs were the costs associated with accommodating livestock from the treated rangeland on leased pastures during the deferment period, six months prior to and six months following a prescribed burn.
In addition to the NPV, the internal rate of return (IRR) was used to evaluate the brush control investment. The IRR is the discount rate necessary to equate the present value of all future returns to the investment costs. Therefore, the IRR will be greater than the discount rate used to calculate the NPV if the NPV of the investment is positive.
The burning cycle was the time in years between prescribed burns on the treated rangeland. Thirteen years represents the maximum number of years between burns that fire can be used as a successful control measure on redberry juniper re-establishment on flat land (Steuter and Britton, 1983). Therefore, burning cycles were evaluated between 2 and 13 years. The optimum burning cycle was the burning cycle that resulted in the highest NPV for the investment over the 30-year time horizon.
Sensitivity analysis was performed to determine how the economic feasibility of redberry juniper control responded to biological and economic variables. Net present value was calculated at the optimum burning cycle for the biological and economic variables at baseline conditions and variations from baseline conditions. Biological variables that were changed include the percent redberry canopy cover increase per year (r) and the initial percent redberry canopy cover (CCt = 0) of the rangeland. The economic variables were price of livestock (PL), real discount rate (I), and treatment cost (TCt). The values of the variables at baseline and variations from baseline values are given in Table 1. Values of the variables at baseline conditions are: r = 2.5%, CCt = 0 = 20%, PL = $1.810/lbs, I = 10.753%, TCchain = $37.58/ac, and TCburn = $8.73/ac. The level of redberry canopy cover following treatments was assumed to be 5%.
|r in %||5.0||2.5||1.6|
|PL in $/lb||0.895||0.823||0.750|
|I in %||—||10.753||4.926|
|TCchain in $/ac||18.251||15.208||—|
|TCburn in $/ac||4.238||3.533||—|
Net present values of an investment in redberry juniper control on very shallow range sites in the Texas Rolling Plains were estimated at baseline conditions for the biological and economic variables using burning cycle lengths from 2 to 13 years. These results are presented in Table 2 and show positive NPV at baseline conditions for all burning cycles. The NPV under baseline conditions was highest at $90.48/ac with a 7-year burning cycle, which represents the optimal burning cycle. The effect of variations from the optimal burning cycle on NPV were small, which indicates that the introduction of prescribed burns at intervals shorter or longer than the optimum did not decrease the NPV by a great amount. The IRR under baseline conditions at the optimum burning cycle was 27%. The present value payback period at baseline conditions was 8 years, which is the period required for cumulative net present value to become positive, and gives an indication of the required period to recover the investment in the brush control treatments.
The sensitivity of NPV to changes in the biological and economic variables may be evaluated by the information shown in Table 2.
Table 2. Net present value of redberry juniper control for very shallow range sites with biological and economic variables at various values and burning cycles from 2 to 13 years.
|Biological and Economic Variables|
|Cycle||Values||r low||r high||CCt=0 low||CCt=0 high||PL low||PL high||I low||TC high|
Net present values were calculated for each length of burning cycle while holding variable values at baseline conditions and varying one of the variables to its high or low value. For instance, the NPV with a 7-year burning cycle with all variables at baseline conditions except CCt=0 being at a high value of 30% is $57.34/ac. The corresponding NPV with CCt=0 being at a low value of 10% is $15.99/ac. The NPV increased as livestock price (PL) increases, while the optimal burning cycle was 7-years at PLbaseline and PLlow conditions and 6-years at PLhigh conditions. The level of discount rate had no effect on the length of burning cycle, with the burning cycle being 7-years under all levels of discount rate.
Two important variables regarding the economic feasibility of redberry juniper control are the initial canopy cover (CCt=0) and the rate of re-infestation of the brush over time ( r). The conditions for these variables influence the optimal burning cycle and the level of NPV of the treatments. As the level of CCt=0 increased, the NPV increased because higher levels of initial canopy cover mean a greater advantage in income with the removal of the brush. Yet, the optimal burning cycle remained at 7-years for all levels of CCt=0. The rate of re-infestation had an effect on the length of optimal burning cycle. As the re-infestation rate increased the length of burning cycle decreased. These results were as expected, with the lower rate of re-infestation resulting in a longer period between maintenance burns.
The sensitivity analysis revealed that under all conditions specified, the NPV of an investment in redberry juniper control was positive. The investment was most attractive when the discount rate is low and least attractive when the initial canopy cover is low. An optimum burning cycle of 7-years was found under most conditions. The optimum burning cycle was most sensitive to the re-infestation rate, decreasing to 4-years with a high re-infestation rate and increasing to 9-years with a low re-infestation rate. The present value payback period varied from 5 years when the rate of re-infestation was at the high value of 5.0% per year or the initial canopy cover was at the high value of 30%, to 16 years when the initial canopy cover was at the low value of 10%.
This study identified the conditions under which control of brush on redberry juniper infested rangelands is economically feasible on very shallow range sites in the Texas Rolling Plains Region. The control of redberry juniper appears feasible under all conditions considered, with the investment in brush control increasing range productivity and net revenues over the 30-year time horizon assumed for the study. The NPV for all combinations of conditions for the specified variables was positive.
The optimal burning cycle for maintenance burns was found to be approximately 7-years under most conditions. The optimal burning cycle was found to be most sensitive to the rate of brush re-infestation, with a higher rate indicating a shorter optimal burning cycle. The sensitivity of NPV to the length of burning cycle was low which indicates that if range conditions should cause the need for a shorter or longer burning cycle, the effect on NPV would not be significant. The recommended reintroduction of fire at 4-years for the high level of re-infestation may be delayed a couple of years to make the burning schedule ecologically sustainable without realizing a significant decrease in NPV.
Redberry juniper control is a long-term investment that requires periodic retreatment to maintain the benefits over an extended period of time. The evaluation of the investment using a 30-year time horizon was intended to recognize the need to evaluate this type of investment over several maintenance cycles. The results indicated that the investment is feasible over this time period. The present value payback periods under baseline conditions and variations from baseline conditions ranged from 5 to 16 years, with the present value payback period under baseline conditions being 8 years.
The returns to investment in brush control on redberry juniper infested rangelands may be compared to the capitalization rate of rangeland income into rangeland values. Historically, capitalization rates (expected rates of return) for rangeland have been relatively low when compared to other types of agricultural lands and non-farm real estate. The capitalization rate for native pasture in the Texas Rolling Plains for 1994 was estimated at 3% (Gilliland, 1995). A rancher with redberry juniper infested rangeland who is considering expansion of their operation should consider investment in brush control to increase production instead of additional land because the expected returns for brush control (IRR of 27%) is higher than the expected returns to additional land investment.
Ansley, R. J., W.E. Pinchak, and D.N. Ueckert. 1995. Changes in redberry juniper distribution in northwest Texas. Rangelands. 17:49-53.
Gerbolini, A. J. 1996. Economic evaluation of redberry juniper control in the Texas Rolling Plains. Unpublished Masters Thesis, Dept. of Agricultural Economics, Texas Tech University, Lubbock, TX.
Gilliland, C. E. 1995. Texas rural land prices. Technical Report 1087. Real Estate Center. Texas A&M University.
Steuter, A.A. 1982. Ecological role and potential use of fire in redberry juniper-mixed grass habitats. Ph.D. Diss., Dept. of Range and Wildlife Mange., Texas Tech University, Lubbock, TX.
Steuter, A. A., and C. M. Britton. 1983. Fire-induced mortality of redberry juniper: Juniperus pinchotii. J. Range Mange. 36:343-345.
U. S. Department of Agriculture. 1990. National Resources Inventory Database 1982-1987. Soil Conservation Service. Temple, TX.
Comments: Allan McGinty, Professor and Extension Wildlife Specialist