New in PERC Reports: Tale of Two Ranches

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by Reed Watson

On an early September morning, Cody Ball, a rancher near Roundup, Montana, sees two dozen elk cross the public land boundary onto his ranch. To many wildlife enthusiasts, this scene would be idyllic, but to Ball it is a nuisance. Big game animals routinely bust fences and forage on valuable crops. Because of this property damage, many landowners in Montana consider wildlife a liability and do nothing to improve their habitat on private lands.

Six hundred miles south, a similar scene unfolds as Stan Deroulis, a rancher in northwest Colorado, sees a herd of elk foraging on the alfalfa meant for his cows. Between the forage consumption and the property damage, wildlife costs the ranch thousands of dollars each year. But as Deroulis watches the elk feed, a wry smile comes to his face. He considers the elk an asset and actively invests in improving their habitat on his ranch.

Why such a disparity in these two ranchers’ outlook toward elk and elk habitat? Each is merely responding to the incentives created by their state’s wildlife management programs.

Under Montana’s Block Management Program, landowners have little incentive to provide quality wildlife habitat or public hunting opportunities. In Colorado, however, a program known as Ranching for Wildlife (RFW) uses financial incentives to encourage wildlife stewardship and quality public hunting experiences on private land. The difference in the two programs is subtle, yet it has an enormous effect on wildlife management in two otherwise similar states.

The source of much of the tension that pervades rural land management discussions is the existence of public wildlife on private land. This creates what economists call a split ownership problem: the state owns the wildlife, but private landowners own much of the habitat critical to wildlife survival. What matters for successful wildlife management is a combination of these two valuable resources: wildlife and habitat.

The challenge of split ownership is dividing the returns from the resource combination of public wildlife and private lands in such a way that both resource owners—the landowners and the state—are rewarded for their contributions. Instead, in many states, landowners don’t get any returns from wildlife habitat, they only pay the costs. Ranchers like Ball bear the costs of wildlife eating their crops and damaging their property but rarely receive compensation from the state. In Montana alone, the estimated annual cost of forage consumed by big game species on private lands exceeds $31 million. This expense threatens the financial stability of cash-strapped agricultural producers as well as their provision of public goods such as open space. It also turns wildlife into a liability for many private landowners who then allow public hunting as a way to drive the wildlife off the property.

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Reed Watson is the executive director at PERC. He is also the Director of PERC's Enviropreneur Institute, an educational program and launchpad for environmental entrepreneurs. Watson’s research focuses on the implementation of market-based solutions to natural resource conflicts. With Terry Anderson and Brandon Scarborough, he coauthored Tapping...
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