I've got nothing to do today. I'm waiting for a sensitivity analysis to finish on a genetic algorithm I'm working with for my research (what?); I started it last night at around 5:30 PM and when I got here at 9:30 this morning, it was only 25% complete. So, while I wait for this thing to finish running, I figured I'd play around on my new laptop and translate the most recent post by raftercm into economics.
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In his post, "Mr. Toad's Wilderness Lawsuit, Part I," raftercm makes the following claim:
"As a result they totally stopped grazing in the High Sierra. This decision cost the packers in that area an untold amount of money because they had to pack in feed. And it put more animals on the back country trails because they needed to pack in that feed, or it forced the packers to take fewer trips because they needed more animals for each trip."
In economics, we analyze the effect on packers of various policies by measuring the resulting changes in "producer's surplus"[1], which is equivalent to profits. The costs incurred by the packing businesses (the producers) were cited as the implementation of fencing and added feed costs due to the prohibition on grazing. This would affect the supply curve in two ways. First, the "avoidable sunk cost" -- the a cost that doesn't vary with the number of trips but can be avoided if the pack train shuts down -- increases due to the fencing. Further, the marginal cost per trip increases due to the increased feed costs. Because the supply curve is the same as the marginal cost curve (as seen in the figure), the supply curve rotates up after the ban on grazing, thereby intersecting the demand curve at a higher point. This means that, at equilibrium, producers will charge a higher price per trip. The increase in avoidable sunk costs raises the price at which the pack train would be indifferent between making trips and not making trips. In concert, these two forces cause changes in producer surplus as seen in the figure, where the gray shaded region is the producer's surplus (profit) before the ban on grazing in the backcountry, and the black region is the producer's surplus after the ban.
Without specific data to parameterize our little model, it's impossible to say whether or not this policy caused economic harm to producers -- we can't tell whether profits are higher before the ban or afterward. The consumer is unarguably worse-off under the ban; the consumer surplus -- the area above the top of the producer surplus region but below the demand curve -- is much smaller under the ban. Therefore, if we're going to criticize the ban on grazing, this is the angle we should take.
The other argument that is usually levied in this type of case has to do with the "irreversibility" of eliminating an endangered species. Collecting data and doing studies on grazers' impacts on Yosemite toad habitat is good, and, ideally, we'd want judges and policymakers to have this information before they make a decision. But this information can be time-consuming to collect and, when we're dealing with the declining numbers of an endangered species, time is really of the essence. While it's uncertain how much the toad is worth in an economic sense (not much toad-related tourism, I imagine), the economic cost of the ban may well be worth waiting for more solid information, depending on the risk preferences of society.
In conclusion, I'm going to defer to raftercm's judgment; he worked for the pack train, so he has more insight as to the financial burden from the policy. However, I do want to make it clear that if we assume a pack train is profit maximizing, the idea that the effects were unabashedly negative for them is untenable.
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1. For those who care, I know this implies quasi-linear preferences. Whether that's realistic or not is beside the point.
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