Economic analysis of the values of surface uses of state lands, task 3 : fair market value for grazing leases

166 Pages·1993·3.8 MB·English

by  Duffield, John

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FINAL REPORT
ECONOMIC ANALYSIS
OF THE VALUES OF SURFACE USES
OF STATE LANDS
Task 3
FAIR MARKET VALUE FOR GRAZING LEASES
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MONTANA STATE LIBRARY
1515 E. 6th AVE.
John Duffield Helena, Montana 59520
Bruce Anderson
Report for the Montana Department of State Lands
February, 1993.
Bioeconomics, Inc.
MT
Contact: Bioeconomics, Inc. 250 Station Drive, Missoula. 59801.
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FINAL REPORT
ECONOMIC ANALYSIS
OF THE VALUES OF SURFACE USES
OF STATE LANDS
Task 3
FAIR MARKET VALUE FOR GRAZING LEASES
John Duffield
Bruce Anderson
Report for the Montana Department of State Lands
February, 1993.
Bioeconomics, Inc.
MT
Contact: Bioeconomics, Inc. 250 Station Drive, Missoula. 59801.

ACKNOWLEDGEMENTS
We are indebted to a number of individuals who contributed time and thought to this study.
We appreciated the patient, professional and courteous help of the Montana Agricultural
Statistics Service staff. We are especially indebted to Jim Sands, Curt Lund, and Steve
Susemihl for overseeing the grazing survey effort and for responding to numerous data
requests. Steve Susemihl programmed the grazing survey instrument. Dan Ledbury provided
us with historical data for private grazing leases in Montana. We thank Jon Souder for help
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with our literature review and for sharing his insights into policies in other states.
appreciated the assistance provided by Jeff Hagener and Gregory Hallsten in making data
available from Department of State Lands files and for helping coordinate the survey effort.
We also appreciated the cooperation of the commissioners and staff of the other western state
land commissioner offices who participated in our survey and responded to data requests.
Keith Kuhlman of Oklahoma and Linda Kehling, Cort Dewing, and John Wurdeman of
Nebraska were particularly helpful. We appreciated the cooperation of Anita Bauer and Bill
Nathwig in providing information on Bureau of Indian Affairs leases in Montana. We would
like to acknowledge our appreciation for the hard work put in by our approximately 40
telephone survey operators. These surveys were generally implemented in the evening or on
weekends. While too numerous to list, our enumerators' professional and timely
We
implementation of the grazing survey was central to fulfilling our study objectives. are
likewise grateful to the over 1600 Montana ranchers who were kind enough to participate in
the sometimes lengthy phone interviews. Finally, we appreciated the careful and timely
review of our draft that was provided by Jim Almond, Dr. Brian Sindelar, John Hansen,
Dr. Thomas Power and Dr. David Patterson. The authors are solely responsible for the
interpretations made here or for any remaining errors.

PROJECT PARTICIPANTS AND AFFILIATION
A. Survey Design. Analysis and Report Writing.
John Duffield. Ph.D. Economics, Professor of Economics, University of Montana, 1974-
present. Senior economist, Bioeconomics, Inc., 1988-present. Project director, author or co-
author all reports.
Bruce Anderson. M.S. Hydrology, Computer sp>ecialist/Scientist, Bioeconomics, Inc., 1992-
present. Data base management, computation, analysis, report writing grazing and cropland
studies.
Chris Neher. M.A. Economics, Economist, Bioeconomics, Inc., 1989-present. Database
management, survey supervision, computation, report writing, recreation and outfitter
studies.
Jim Boyer. M.S. Urban Planning, economic consultant, survey of western state land
managers, report writing.
B. Reviewers and Survey Design
Jim Almond. M.A. Economics, 27-years experience ag. credit banker, manager family ranch
in Hysham, chairman Tax and Finance Committee National Cattleman's Assoc. Survey
design and review grazing study.
MSU
Allen Bjergo. Ph.D. Economics, cooperative extension service. Survey design and
review cropland study.
John Hansen, M.S. Range Science, range scientist with Rangehands, Inc. Survey design and
review of grazing study. Implemented pilot grazing survey.
Daniel Hellerstein. Ph.D. Economics, Economic Research Service (Washington, D.C.).
Survey design and review recreation study.
David Patterson. Ph.D. Statistics. Assoc. Professor Department of Mathematical Sciences,
University of Montana. Review of statistical content of all reports, consultation on
procedures.
Thomas Power. Ph.D. Economics, Professor and Chair Department of Economics,
University of Montana. Review all studies.
Brian Sindelar. Ph.D. Range Ecology, formerly professor of range management MSU,
currently scientist with Rangehands, Inc. Survey design and review grazing study.
Implemented pilot grazing survey.
Thomas Stevens, M.A.I. appraiser, Missoula, MT. Review of cabin lease study.
,

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TABLE OF CONTENTS
EXECUTIVE SUMMARY
INTRODUCTION
1.0
• 1.1 Introduction
1.2 Background and Literature Review
METHODS
2.0
2.1 Theory and Methods
2.2 Hedonic Price Model
2.3 Pilot Survey
2.4 Survey Design and Methods
2.5 Cooperative Agreement with Montana Agricultural Statistics
DATA COLLECTION
3.0
3.1 Survey Administration
3.2 Response Rates
4.0 RESULTS
4. Overview of Land Tenure and Lease Characteristics
4.2 Lease Rates
4.3 Lease Services and Productivity
4.4 Hedonic Price Modeling
4.5 Predicted Fair Market Prices
4.6 Competitive Bids on State Lease
4.7 Per Acre Leasing
4.8 Leasing on a Per Ranch Basis
4.9 Recreational Access
4.10 Attitudes toward Public Leases
4.11 Comparison to July Cattle Survey
INTERPRETATION
5.0
5.1 Current Montana Policy
5.2 Policy in Other Western States
5.3 Evaluation of Current Policy
5.4 Conclusions