Precipitation acts as a linchpin in the success of ranches and ranchettes—small ranches operated for recreation instead of profit—in the arid Southwest. Ranchettes constitute a major land use in much of the rural Southwest. Precipitation nourishes the growth of the much needed vegetation for livestock consumption; however, climate variability affects the amount and frequency of precipitation. This research focused on ranches and ranchettes in order to provide an economic framework for the understanding of how climate variability information influenced ranching decisions such as stocking and culling rates. Modeling work for the ranch operations was based on the theoretical structure behind the Calfweight Web project, a web-based GIS product that assists ranchers in analyzing profitability tradeoffs, such as deciding how long to wait before they sell their calves. Work with ranchettes focused on the quantification of the value of climate forecasts to this sector.
This project provided insight into the ways that climate factors and climate information could enhance renewable natural resource management and ranch profitability. The goals were to develop a stylized economic model that incorporated economic theory and climate forecast information and to investigate the profit and natural resource implications of different types of climate forecast information.
The main research question for the ranch modeling exercise was this: If ENSO forecasts were the only information available to a rancher, could this information improve management strategies and ultimately promote ranching profitability and viability when the distribution of each ENSO state is known?
Researchers developed a ranch model that incorporates economic theory and climate variability information in rangeland management decisions. Ranchers, cattle, and precipitation are modeled as interactive resources which jointly determine the aggregated size of the herd given varying climate conditions, such as those that may occur in El Niño and La Niña years.
To inform the development of the model, researchers collected data on cattle characteristics for a Registered Hereford Herd owned and maintained by the San Carlos Apache Tribe, the 1,000-year tree-ring reconstructions of cool season precipitation for Arizona Climate Division No. 4, and the El Niño/Southern Oscillation (ENSO) data for Arizona precipitation. These sources provided the ranching model with the range of climate conditions considered for rangeland and herd management.
Additionally, as part of this project, researchers provided a series of climate risk management extension education classes to private and Native American livestock managers using a mobile computer laboratory. CLIMAS investigators presented participants with information about paleoclimate data, ENSO and Pacific Decadal Variability, as well as regional climate outlooks. This information was incorporated into a Planning for Profitability exercise, which explored how climate affects management decisions such as restocking, culling, and supplemental feed purchase, as well as the financial viability of a ranch. Ranchers also used the RightRisk (http://www.RightRisk.org/) educational ranch risk management computer simulation. Typical decisions included the timing and sale of cattle and advance purchase of supplemental feed. The game included several sources of uncertainty, ranging from prices to climate variability. Profits were calculated and ranchers compared their initial profits with the outcomes of others.
Ranch model results suggest that an improvement in the ability to predict seasonal ENSO states would lead ranchers to make more confident stocking decisions in response to droughts. Forecasts may decrease ranch vulnerability and reduce environmental pressure on rangelands, through increased profitability at lower stocking rates.
The climate risk management extension education classes provided ranchers with climate risk information and the tools to use climate information and relate it to their existing knowledge base. Response from the workshops suggests that these sessions were well received. Results from a follow up evaluation show that 86 percent of respondents reported that the sessions had changed the way they made ranch management decisions.
Sengupta, S. and D. Osgood. 2003. The value of remoteness: a hedonic estimation of ranchette prices. Ecological Economics, 44: 91-103.
Tronstad, R., D. Osgood, and T. Teegerstrom. 2004. The role of electronic technologies for reaching underserved audiences. American Journal of Agricultural Economics 86:767-771.