An economic analysis of cell-fencing in semi-arid rangelands

In Australia, livestock predation by dingoes (Canis familiaris) has contributed to what some livestock producers consider a dire situation for rangeland pastoralism, driving demand for cooperative regional-scale exclusion (‘cell’) fencing (i.e. pest-proof fences that encompass one or more individual properties) and landscape-scale predator control. The present case study predicted the effect of four cell-fences in the state of Western Australia (WA) on the gross margin of sheep (for meat or meat and wool) and cattle pastoral enterprises. We modelled the potential effects of the following four key variables: (1) four levels of commodity prices, (2) five levels of livestock weaning rate (based on livestock records collected 1985–1995; weaning rate is defined as number of lambs or calves that are born and survive to weaning, expressed as percentage of total mated females), (3) three predicted levels of time required to remove dingoes from within the fenced area, and (4) five levels of macropod (mainly kangaroo) response as competitive grazers, with a total of 3600 scenarios representing all combinations of these factors. Each scenario was assessed for profitability (i.e. net present value (NPV) over 25 years) and benefit of fencing (i.e. NPV compared with an unfenced enterprise of the same livestock type, region, and commodity prices). Finally, the benefit–cost ratio (BCR) of investment in cell fencing was calculated for each fenced scenario. The majority (67%) of scenarios representing continuation of current management (i.e. no cell fencing) returned a negative NPV (i.e. livestock enterprises were projected to make a loss). However, only 37.4% of cell-fenced scenarios returned a positive NPV, meaning that even with a cell-fence and successful removal of dingoes, the enterprise was still unlikely to be profitable. Only 43.4% of cell-fenced scenarios returned a BCR of cell fencing greater than one. Weaning rate following dingo removal was the most important factor determining return on investment for cell-fencing. Survival and reproduction of small livestock, particularly wool sheep, benefit most from cell-fencing, whereas cell-fencing and dingo removal did not result in greater profits for cattle enterprises. Running sheep for wool and meat within cell fencing coupled with removal of dingoes would maximise the likelihood of achieving a positive return on investment in cell fencing (although the enterprise may remain unprofitable overall); otherwise, unfenced enterprises affected by dingoes should run cattle as this will be more profitable.