J. RICHARD CONNER and ROBERT E. WHITSON, Department of Rangeland Ecology and Management, Texas A&M University, College Station, TX 77845-2126
Abstract: Brush management has long been an important practice on Texas rangelands. Recently, there has been an increased interest in manipulation and management of rangelands to enhance their suitability and/or productivity as wildlife habitat. Regardless of the reason for using it, brush manipulation and management are almost always costly. There are several economic and financial concepts and analytical techniques that managers may use to help insure that the brush management practices employed are as efficient and effective as possible. Planning; competitive and complementary uses of resources; opportunity costs; cost effectiveness; and risk, uncertainty and irreversibility are discussed. The need for analyzing each unique situation is emphasized.
While brush management has long been an important practice on Texas rangelands, it was, here-to-fore, used primarily to enhance livestock production. Recently, there has been an increased interest in manipulation and management of rangelands to enhance their suitability and/or productivity as wildlife habitat. Regardless of the reason for using it, brush manipulation and management are almost always costly, and often requires very large investments. Whether the purpose is to enhance wildlife habitat or livestock production or both, there are several economic and financial concepts and analytical techniques that managers may use to help insure that the brush management practices employed are as efficient and effective as possible. Our purpose in this short presentation is to delineate, describe and explain the possible uses of a few of the most important of these concepts and techniques.
Planning
Planning is the primary function of management. Any brush management practices employed should be the result of a thorough, holistic and strategic planning process like the Integrated Brush Management Systems (IBMS) process (Hanselka, et al. 1996). The planning process is generally expected to consist of five steps:
1. Establish and prioritize goals. Delineate milestones by which to measure progress. Establish and communicate order of importance of goals and resolve conflicting objectives.
2. Inventory and assess resources. The combination and capabilities of the land, animals, finances, facilities and human resources will be different for each and every ranch and must, therefore, be assessed as to their availability and capability.
3. Identify and analyze alternative courses of action. The resources available on a ranch may be used in a variety of different enterprises to achieve a wide array of goals. For each alternative, or combination of alternative courses of action, the planner should determine if there are adequate resources available to support the alternative and assess the expected impact of the alternative on all the goals of the manager/owner(s).
4. Alternative selection. Select and implement the alternative(s) that most nearly achieve all goals and objectives.
5. Monitor results and alter plan. After selection the implemented alternatives should be monitored and the performance information used to reassess and modify the courses of action to better achieve goals.
Use of the planning process will insure that the (expected) impacts of all courses of action (like brush management) on all of the resource manager’s goals will have been considered prior to being implemented.
Competitive and complementary uses of resources
One characteristic of rangelands is vegetative diversity; and this characteristic is especially prominent in brush infested rangelands. Due to the differences in dietary requirements, feeding habits, etc. of different kinds of animals, greater vegetative diversity contributes to the simultaneous utilization of a rangeland ecosystem by a greater variety of different kinds of animals. This characteristic allows for the complementary joint use of many rangeland ecosystems for different enterprises. For example, beef cattle production and deer and/or quail lease hunting enterprises are commonly found simultaneously on many Texas ranches.
We have learned from several of the speakers on this program, however, that landscapes deemed ideal for quail are usually not the best habitat for white-tailed deer. Likewise, habitat ideally suited for Golden Cheeked Warblers is not the best Black Capped Vireo habitat. Yet, on many properties in this State, with brush sculpting we can create habitat that favors any one of these animal species. In so doing, however, we may make the landscape much less habitable to other species of interest. Thus, we are faced with the need to assess the trade-offs associated with sculpting the brush to enhance habitat for a particular kind of animal in terms of what we will forego because the sculpting decreases the landscapes habitability for other kinds of animals. These trade-offs often have real and direct economic and financial consequences, particularly as they impact hunting lesees’ and/or nature tourists’ perceptions of the suitability of the landscape for their purposes or as they impinge on the productivity of the livestock enterprises concurrently utilizing the land.
Opportunity costs
The concept of trade-offs is closely related to another important concept; opportunity costs. Opportunity cost refers to the fact that using ones resources; like land, capital, etc.; for a particular purpose means that the same resources can’t be simultaneously used for an alternative purpose and that the foregone alternative purpose will not be achieved (the opportunity to achieve it will be lost). The implication is that, if we are to use our resources efficiently, we should devote them to achieving a purpose that is at least as important as the next best alternative that we could expect to achieve with the same resources.
Opportunity cost is an important concept in making decisions about capital investments in that if the objective is to maximize the annual earnings (annual rate of return) from ones investments, then one should choose investment alternatives for which the expected pay-off is at least as high as the next best alternative. In many cases, land managers/owners will be faced with several alternative investment opportunities; like brush sculpting, water development, food plot establishment, etc.; for which their will be limited capital available. In such cases, the opportunity cost concept may be quite helpful in deciding on which of the available alternatives to choose.
Cost effectiveness
There are several approaches (treatment options) available to the land manager desiring to manipulate brush and/or modify landscapes. Many of these alternatives have been discussed at this symposium; eg., mechanical, chemical, fire, hand cutting, etc. Many land manager/owners will find the decision as to which treatment or combination of treatments to use difficult. The difficulty stems from a variety of sources, however, uncertainty about the outcome (efficacy, impact on vegetative competition and wildlife populations, etc.) when applied to their specific landscape and differences in cost of, and time required for, implementation of the different treatments are two of the most important reasons that treatment selection is difficult. Since uncertainty will be discussed later in this presentation let us now consider treatment costs. There are three important aspects to the consideration of treatment cost. The most obvious is the direct cost of implementation. This is usually the easiest to estimate in that there are few uncertainties involved. That is, the prices and estimates of quantities required of materials and services (herbicides, fuel, equipment rental and wage rates, etc.) are easily obtained from suppliers.
Indirect costs, associated with implementing specific treatments, however, may be more troublesome. For example, implementing a prescribed burn usually requires that a pasture be deferred from grazing for 6 to 12 months prior to and 2-6 months after burning. This is important, because while the direct costs of prescribed burning are usually low the value of the forage used for fuel may be as valuable, or more so, than the value of the direct costs associated with burning. The value of the fuel depends on the amount of total forage available on the ranch, livestock production practices, livestock prices or the cost of furnishing alternative feeds.
The third aspect of costs that can be troublesome is the timing in which either costs are incurred or benefits (results) are forthcoming. The important consideration here is that costs incurred in one year (eg., the current year) should not be compared directly to either benefits or costs expected to be accrued or incurred in a later year. This is because the costs or benefits expected in the later year(s) do not have the same “present value” as the current year costs. To appropriately compare costs incurred in one year with costs or benefits expected to be incurred or accrued in another, the costs or benefits expected in the later years should be reduced to their “present value” by applying an appropriate discount factor. That is , they should be discounted to reflect the fact that funds used today are no longer available to earn a return that could be obtained from an alternative investment; eg., a savings account; whereas, funds not required until later years are, in the interim, free to earn returns in these alternative investments. An example of this cost, is that funds invested in a CD cannot be used (without incurring a substantial penalty) until the CD matures. However at maturity , interest earnings represent the “value of time”. The actual value of the time that the CD is maturing depends upon the original interest rate specified for the CD. The higher the interest rate the more valuable the time period in question. Thus, an investment in brush control requires a certain time period for maturity, just as a CD requires a certain time for maturity. The higher the individual’s opportunity cost of money , or interest rate, the greater cost must be paid for the time involved for brush control to mature.
Risk, uncertainty and irreversibility
Selection of a brush management program or system to aid in achievement of livestock, wildlife and/or recreational enterprise goals has generally been problematic for rangeland managers, primarily because of the difficulty associated with estimating the impacts of a practice or system on their enterprise goals. The difficulty stems largely from uncertainty about how implementation of a practice or system will actually effect the enterprise productivity of a site in the years following implementation. For example, if the enterprise of interest is livestock production a specific brush management practice (like an herbicide application) would be expected to initially result in a large reduction in the percent composition made up of the brush species, and correspondingly, a significant increase in the production of herbaceous plants. This change in plant composition on the site should then result in increased carrying capacity for cattle and, hopefully, increased net returns per acre.
To date, the accepted methodology for estimating the impacts of a brush management practice or system on livestock and/or wildlife enterprises is through use of estimated response curves. The response curve represents the expected change in carrying capacity over a specified planning period (usually 5 -15 years) of a specific site resulting from implementation of a specific practice or system. Estimation of the response curve requires significant previous experience with the practice or system being considered in a variety of cases to allow understanding of differences in impact related to different growth forms of target brush species, pre-practice utilization, soils, etc. In addition to the carrying capacity changes, other impacts of implementing the practice or system on enterprise goals (like changes in annual operating cost or individual animal performance) must also be estimated.
Several critical assumptions underlie development of response curves, one of which is that precipitation is normal (based on the long-term average) throughout the planning period. In actuality, however, due to the effects of large year-to year variation in annual precipitation on practice efficacy and forage production, the extent of changes in carrying capacity and/or other enterprise impacts can vary significantly from one application of a practice to the next, even when the soils, original species compositions, climates, etc. are similar. Development of an alternative methodology which will allow incorporation of the risk associated with annual variation in forage production into the assessment process for brush management practices/systems is the goal of one of our current research programs in the Rangeland Ecology and Management Department at Texas A&M University.
Another problematic aspect of implementing brush management practices is that once implemented, they are, from a practical point-of-view, irreversible. While it is true that we may not be able to project the result or outcome of a practice with certainty, it is, none-the-less, also true that the landscape will be forever changed significantly by the implementation of the practice(s). This irreversibility further underscores the need for adequate planning before implementing any brush management or landscape manipulation practice.
Concluding thoughts
In conclusion, economic considerations of brush sculpting are important aspects of the decision making process. The concepts of opportunity costs and goals or objectives are not the same for any two individuals. Thus, it isn’t possible to perform a single economic analysis that meets every individual’s situation. Each individual must establish their unique combinations of willingness to take risks, identify their individual opportunity costs and develop acceptable alternatives. Given these factors have been identified, the tools of economic analysis can be consistently applied and a specific decision can be made using the results of the economic analysis. What is right for one individual may be unacceptable for another. However, it is extremely important to understand the role and mechanics of the economic tools that are available to assist the individual in making the right decision for their specific question. Just as all carpenters use the same tools to build a house, not all houses end up looking the same. You are encouraged to learn how to use the broad range of economic tools available to you today. Budgeting, capital budgeting, partial budgeting, cash flows, as well as many other analytical techniques, have been around a long time. New computer software is available to make the tools more operational but the basic concepts of their use do not change over time. Workshops, seminars, formal courses, consultants as well as many new educational opportunities are available within the Texas A&M System. Good luck to you as you consider new opportunities to meet your goals and objectives.
Reference
Hanselka, C.W., W.T. Hamilton, and J.R. Conner. “Integrated Brush Management Systems (IBMS): Strategies and Economics.” B-6041, Texas Agricultural Extension Service, College Station, 1996.
Comments: Dale Rollins, Professor and Extension Wildlife SpecialistUpdated: Mar. 18, 1997