Assessing the contribution of nonmarket factors to the market value generated by cow-calf operations in rangelands of the western USA: A true cost accounting approach

Abstract

Food system transformation requires a better understanding of the negative and positive externalities involved in food production and consumption. Although negative externalities have received substantial attention, positive externalities have been largely overlooked. True Cost Accounting (TCA) is an economic assessment aimed at accounting for externalities in food systems. The beef industry is an important part of the US food system. In the western USA, beef cattle production is a major land use and economic activity that involves direct links among the cattle, range ecosystems, range management, climate, and ranchers’ decisions and welfare. We present a case study based on a TCA assessment to quantify and monetize the contribution of human, social, natural, and produced capitals, as well as farm structure, to the market value generated by cow-calf operations, a key component of the USA beef industry. We estimated an Ordinary Least Square regression model based on indicators of these capitals and of farm structure derived from publicly available data sources at the county level. From model coefficients, we estimated the marginal revenue product of these factors. Results show that nonmarket factors linked with human and social capitals support market performance by contributing to the market value of cow-calf production. These factors operate at scales above the ranch, usually remain hidden, and seldomly are considered in policy decision-making which can lead to policies that inadvertently hamper or eliminate these positive externalities.