Economics of Wild Horse Gathers

Refer to the data and remarks in this post and this post.

  • Cost to remove a horse from his home range, $400
  • Cost to place him in long-term holding, $2 per day
  • Revenue from selling his food to a public-lands rancher, $16 per year

Assumptions:

  • Costs of transport and short-term holding ($5 per day) can be neglected
  • Most horses removed from public lands won’t be adopted
  • Fee for livestock grazing is $1.35 per AUM

The adoption assumption is based on a removal rate of 12,000 or more wild horses per year, which floods the program, as in 2018 (lands managed by BLM and USFS).

A wild horse consumes 12 AUMs annually, yielding payments to the government of $16 per year from the rancher to whom the unused forage is sold (12 times 1.35).

The annual cost of holding him in off-range pastures is $730 per year (2 times 365).

Note that $2 per day equals $60 per AUM.  Are you seeing a problem here?

You’re spending $730 per year so you can collect $16 per year.  This is how the mortgage deduction works on federal income taxes.  Ditto for property taxes.

This is what the situation looks like on a cash flow diagram.  There is no payout, no rate of return.

Cash Flow Roundups-1

The BLM removed 846 wild horses last fall from the Warm Springs HMA.  The diagram for that would look the same but the figures would be different.

The initial outlay would be -$338,000 (846 times 400), the annual expenditure for long-term holding would be -$617,000 per year (846 times 730) and the revenue from grazing would be +$13,000 per year (846 times 16).

The grazing fee would have to be raised to at least $65 per AUM to make the program economically viable (internal rate of return greater than zero), a 4,700 percent increase from the current amount.

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