ARS | Publication request: Economics of Grassland Conversion

Submitted to: Meeting Proceedings
Publication Type: Proceedings
Publication Acceptance Date: November 8, 2011
Publication Date: June 29, 2012
Citation: Archer, D.W. 2012. Economics of grassland conversion. IN: A. Glaser (ed.) America’s Grasslands, Status, Threats, and Opportunities: Proceedings of the First Biennial Conference on the Conservation of America’s Grasslands. National Wildlife Federation and South Dakota State University, Brookings, SD. Meeting Proceedings. June 2012.

Technical Abstract: In this paper we provide an overview of economic factors that contribute to changes in grassland area including the relative profitability of crop and livestock production, effects of land productivity, and effects of conversion costs. We also identify other potential socio-economic influences on grassland conversion, and describe a case farm where the use of multiple enterprises is being investigated as a method for improving economic returns from grasslands and reverse the trend toward conversion of grasslands to crop land. From an economic perspective, land use decisions are influenced primarily by the relative profitability of alternative land uses. Data from the Northern Great Plains indicate a trend toward increasing profitability for cropland since 2002 with no similar trend for cow-calf production. This would tend to favor conversion of grasslands to crop land. However, converting between crop and grass uses is costly. Presence of conversion costs can serve as a barrier to conversion in either direction, so that producers want to be sure that they will stay with the new land use for a long enough period of time to recoup the conversion costs. Other socio-economic factors can also influence land use decisions. Some of these factors include off-farm employment, lifestyle goals, and demographics. It is also important to consider interactions among multiple enterprises. Looking at a single enterprise ignores potential synergies among enterprises, spreading time and risk across multiple enterprises, and the potential for generating multiple income streams from the same piece of land, including income generated from the production of ecosystem services. This approach is being investigated on a demonstration grass farm to determine if multiple grassland enterprises can improve the profitability of grasslands and reverse the trend of grassland to cropland conversion.