Analysis of externality costs of livestock grazing enterprise in semi-arid rangelands

Over-grazing in rangelands leads to a drastic decline in non-forage functions. The rangelands are exploited with no concern for the incurred externality costs. The cost–benefit livestock grazing enterprise and the net profit obtained per animal unit are calculated initially. Following this, the 5 regulation services of rangeland are measured and assessed. The economic analysis of livestock grazing enterprise in rangeland is run for 3 reimbursement conditions for grazing: (1) Concerning the condition of the study area, almost no payment is made for grazing; thus, forage cost is of no concern, (2) the value of grazed forage obtained and added to the forage costs, and (3) the value of regulation services is obtained and considered in the cost–benefit analysis in livestock grazing business. The value of forage and regulation services of 18 vegetation types, separated by the floristic physiognomy method, is obtained. The change in the value of regulation services in the rangelands subject to overstocking and proper stocking conditions is analyzed. The three conditions mentioned above benefit to cost ratios per animal unit are 2.01, 1.2, and 0.46, respectively, indicating that the third case lacks economic justification. Regarding the vegetation types with over-stocking, there are 6.5 units of negative externality effects per animal unit, which will be incurred on the society. The findings indicate the importance of externalities in economic justification of rangeland enterprises, which further could be used to correct the utilization process in the rangelands with poor economic justification.