Interdependence between public and private forage markets

Abstract

The concept of market interdependence is defined in this paper as the influence that public market quantity allocations and pricing decisions have on observed quantity and price in private markets. The existence of market interdependence violates an implicit assumption of minimal public market influence when comparable private market prices are used to appraise resource value in public markets. Under interdependence, the comparable market approach becomes inappropriate for determining a fair market value in federal resource markets because government actions have the potential to affect observed prices in private markets. In this research, a case study of the Malheur National Wildlife Refuge (MNWR) is used to empirically estimate the existence of federal/private forage market interdependence. Statistical inferences from econometric modeling show strong support for interdependence between the MNWR grazing program and the alfalfa hay market in Harney County, Ore. The results of this case study can be applied to federal grazing lands managed by BLM and FS for grazing fee policy recommendations.