An Economic Assessment of Risk and Returns from Prescribed Burning on Tallgrass Prairie

Abstract

A stochastic (Monte Carlo) simulation model was developed to evaluate the influence of prescribed burning on the expected value and variability of net returns from a representative stocker cattle enterprise. The model was applied to both shallow prairie and eroded prairie range sites in eastern Oklahoma. Prescribed burning is shown to be an economically feasible means of improving the productivity of eastern redcedar infested rangeland. Implementation of an annual burning program resulted in a $69.00 and $4.80 per hectare increase in the net present value of the 10-year return stream generated from stocker cattle production on shallow prairie and eroded prairie range sites, respectively. Prescribed burning does not increase the variability of annual income from stocker cattle production. However, when risk is measured in terms of relative variability (coefficient of variation) or the probability of annual returns below zero, prescribed burning is determined to be a risk-reducing practice.