Determining costs and benefits
Computing costs and benefits involves use of simple without with
comparisons. Specific allowances are not made for time lags, except for charging
interest for use of capital. Budgeting in such a static framework, or
without-with project-context comparisons, can give a first indication of
feasibility or nonfeasibility of a rangeresource-improvement project. Simple
comparisons ignore time lags in phasing different stages into production and can
overlook or ignore costs of capital through the developmental stages, exaggerate
returns and feasibility, and underestimate problems that can arise. Budgeting
year-to-year estimated changes through the transition period, though
complicated, will aid in anticipating some of those problems. If the project
resources are suitable and the project is successful, changes in physical
production responses on a year-to-year basis may be predictable with some degree
of certainty. Price changes often are unpredictable. Evaluations can be based on
longer term average prices with year-to-year changes in production. Discounting
procedures can be used to allow for valid comparisons of alternatives through
time.
Benefits that might accrue from and be attributed to
range-improvement projects may include increases in both the quality and
quantity of outputs, depending on factors previously mentioned. When considering
a resource improvement project that produces an intermediate product, such as
forage, then improvement in quality of output may still be important but is of a
somewhat different form. These are called intrinsic benefits. For example,
improvement in forage quality has one or a combination of the following
characteristics:
· Higher protein content
· Lower fiber
content
· Higher total digestible nutrient (TDN) content
·
Greater palatability to some species of animals consuming the forage.
While some of these characteristics are being improved during
the periods of active plant growth, and on through the periods of maturity, an
added bonus of residual plant biomass during periods of plant dormancy is also
useful for soil conservation. A second benefit could be simply an increased
quantity of output.
Marketable output is the benefit most commonly expected from
range projects. The increased physical production may result from: (1) improving
the productivity of the native resource; (2) expanding the land area in
production by conversion of native range, woodland, or jungle land to cropland
or improved forage; (3) extending complete or supplemental irrigation water to
arid or semiarid lands; or, (4) improving seasonal water supplies, even in more
humid areas. Production may also be increased without increasing land area when
projects use genetically superior seed, hybridization, fertilizers, or
pesticides for control of weeds, insects, or disease. Increased production may
result in marketing of the larger amount of products for the benefit of society
or may allow greater consumption for the family or the social unit directly
involved in the project.
When a resource development project involves forage production
and livestock, then increases in forage production can be followed by increases
in the number of livestock on the land and a greater yield of consumable or
marketable livestock and products. This would produce one kind of effect on flow
of returns, as the requirement for increased animals requires a savings (or
investment) in addition to the resource development costs. It is also important
to recognize that benefits in livestock production may be reflected in increased
production of calves, lambs, kids, or young camels without larger numbers of the
basic breeding herd.
Overstocking of rangeland is detrimental to livestock
production. Increased production of livestock, therefore, can only be considered
in light of long-term efforts to improve the range resource. Increased forage
supply used only to ameliorate overutilization of rangelands can result in
improvement in percent age of calf or lamb crops , in increased gains of growing
animals, and probably in reduced mortality of both breeding stock and growing
animals. Special use pastures or pastures to fill particular seasonal needs may
produce these effects also. Benefits of these types may well be associated with
very high returns on resource development costs. Output may also be increased by
a simple increase in forage production and expansion of livestock output.
Increased forage also makes it possible to increase the number of breeding herd
animals; even if they are producing at the same level as without the project,
output will
increase.