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close this bookThe Improvement of Tropical and Subtropical Rangelands (BOSTID)
close this folderPart I
close this folderThe economic context
View the document(introduction...)
View the documentRange systems
View the documentThe basis of range economics
View the documentProject analysis
View the documentDetermining costs and benefits
View the documentResource evaluation
View the documentMarket price determination
View the documentReferences

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.