Grazing Fees versus Stewardship on Federal Lands

Myles J Watts, Jay Shimshack and Jeffrey LaFrance ()

Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series from Department of Agricultural & Resource Economics, UC Berkeley

Abstract: Livestock grazing on public lands continues to be a source of intense conflict and debate. We analyze this problem using a dynamic game. Low grazing fees let ranchers capture more rent from grazing. This increases the incentive to comply with federally mandated regulations. Optimal grazing contracts therefore include grazing fees that are lower than competitive private rates. The optimal policy also includes random monitoring to prevent strategic learning by cheating ranchers and avoid wasteful efforts to disguise noncompliant behavior. Finally, an optimal policy includes a penalty for cheating beyond terminating the lease. This penalty must be large enough that the rancher who would profit the most from cheating experiences a negative expected net return.

Keywords: Renewable resources; public lands grazing policy; optimal contracts (search for similar items in EconPapers)
Date: 2006-10-01
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Citations: View citations in EconPapers (1)

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Working Paper: Grazing Fees versus Stewardship on Federal Lands (2006)
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