- 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
- 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.
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.