incurred and benefits derived from the production of 

 an additional unit of AUM of grazing to the nation. 

 So, the determination of the optimum grazing neces- 

 sitates the estimate of the marginal cost (i.e., the ratio 

 of the increase in cost to the increase in output) and 

 the benefit (i.e., the AUM value) of grazing at differ- 

 ent levels of demand and supply. 



The estimated value for an AUM of grazing in 1976 

 is $4.22 and would increase (in constant dollars) to 

 $6.12 by 2030. The marginal cost is estimated at $4.46 

 in 1976 for a production level of 213 million AUM's 

 of grazing and would increase to $5.00 for a produc- 

 tion level of 365 million AUM's. These estimates 

 indicate that the projected demand of 300 million 

 AUM's, medium projection, or 347 million AUM's 

 high projection, for 2030 could be supplied with eco- 

 nomic justification, because the estimated value of 

 grazing covers the cost of producing this level of 

 AUM. Annual production up to 365 million AUM's 

 falls within the range of economic feasibility, but 

 increasing production above 365 million AUM's 

 would increase costs more than the economic value of 

 AUM's produced. 



Estimated cost of supplying the different levels of 

 range grazing indicates that the nation has the capa- 

 bility to meet expected demands. Achieving this level, 

 however, will require investments in management and 

 range development programs to increase the supply 

 of range grazing above the current level. However, if 

 grazing could be distributed across the rangeland in 

 the most advantageous way from both economic and 

 environmental points of view, the cost of producing 

 the current level of grazing would be significantly 

 reduced. Such a distribution has been analyzed as a 

 part of this assessment effort. ^^ Increased manage- 

 ment intensity and grazing would occur on desirable 

 locations, and grazing would be eliminated from 

 marginal or undesirable locations. Average produc- 

 tion on the acreage grazed would increase by 85 per- 

 cent, from 0.27 to 0.50 AUM's per acre per year. The 

 most significant changes were suggested for private 

 lands and the Federal lands administered by the 

 Bureau of Land Management. 



Impact of Increased Energy Prices 



Increases in the prices of energy used in agricul- 

 tural production may change the projected economic 



'"Ashton, Peter G., James B. Pickens, Coryell Ohlander, and 

 Bruce Benninghaff. Many resources, many uses ... a system analy- 

 sis approach to current and future renewable resource develop- 

 ment. Presented at the 15th Annual American Water Resources 

 Association Conference on Water Resources Management in a 

 Changing Society. Las Vegas, Nevada, September 24-28, 1979. 

 Estimates are derived from use of this multi-resource interaction, 

 linear programing model. 



supply of range grazing. Increases in energy prices 

 increase the production costs of all agricultural pro- 

 duction including range grazing. It is estimated that a 

 doubling of real energy prices could result in on-farm 

 agricultural production costs rising by 8 percent. ^5 



Energy prices will be significant to projected range 

 grazing only if range production costs increase at a 

 different rate than production costs of other sources 

 of livestock feed. The increased costs of energy will 

 have the largest impact on costs of producing those 

 feeds using the most energy (particularly fertilizer) 

 such as the feed grains. Therefore, the first impact of 

 increased energy costs is to increase the cost of grains 

 relative to forages, and hence lead to increased use of 

 grazing in the production of beef. 



Increased energy costs also are expected to modify 

 the geographic distribution of grazing at economi- 

 cally feasible levels. For example, those areas with 

 lower levels of response to fertilization become less 

 competitive as fertilizer prices increase. As the price 

 of fuels increases, range practices requiring large 

 inputs of such fuels will become more expensive. Sim- 

 ilarly, grazing areas in more remote locations requir- 

 ing the use of vehicles over long distances also 

 become less competitive as the price of fuel for these 

 vehicles increases. 



Range livestock production is a relatively low con- 

 sumer of energy compared to production systems 

 using large quantities of grains. Forage production 

 on range is largely a function of natural processes 

 using energy from the sun, whereas grain production 

 depends on cultivation activities using high-cost fossil 

 fuel energy. Therefore, one way for the livestock 

 industry to meet production and income goals in the 

 face of higher energy costs is to produce red meat by 

 more effectively utilizing range and other roughages 

 and by reducing the use of grains. Thus, energy price 

 increases will result in grazing, including range graz- 

 ing, being an increasingly advantageous economic 

 situation. Eventually, the production limitations of 

 the land use for grazing, and especially range grazing 

 in the more arid areas, can be expected to equalize the 

 energy cost relationship as more intensive manage- 

 ment is applied. Therefore, the initial effect of energy 

 price increases will increase the relative demand for 

 range grazing. Later, as the resource capability of the 

 range is utilized, the increased demand for livestock 

 feeds will have diminishing impact on the demand for 

 range grazing. 



"U.S. Department of Agriculture, Economics, Statistics, and 

 Cooperatives Service. Energy policies: Price impacts on the U.S. 

 food system. Agric. Econ. Rep. No. 407, 44 p. 1978. 



187 



