Ranching and Ranchette Economics

Project Dates

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?