Cooperative Institute for Research in Environmental Sciences

Ranchers, farmers, water managers, even local road engineers, all have something in common: They make decisions subject to the vagaries of weather and climate.

Something else too: They are also all studied by CIRES researchers trying to decipher how people can best respond to changes in climate.

“Each party faces some unique challenges—they could be dealing with drought, flood, or extremes of heat and cold,” said Bill Travis, director of the CIRES Center for Science and Technology Policy Research (CSTPR). “But similarities in how they make decisions under uncertainty allow us to look for patterns.”

Travis and his colleagues have investigated the choices facing—and subsequently made—by ranchers and farmers in drought conditions and water managers in both drought and stormy conditions. “We’re studying how people make decisions under environmental uncertainty,” Travis said, “both to better understand human behavior and also to see if we can help people make better decisions when they get weather or climate information.”

The team conducts their research by first interviewing the decision makers and building lists of the choices available to them. Then, they model how these choices turn out given alternative weather and climate scenarios.

To model the ranchers’ thought processes in hot, dry summers, CSTPR graduate student Kristen Gangwer visited some 20 ranchers in the region where Colorado, Wyoming, and Utah meet. This area—the “three corners”—was the heart of the 2002 drought—one of the driest years in the interior West. The choice of location was deliberate. “That particular year was remarkable,” Travis said. “All the families we interviewed remembered it in detail and were able to talk about the decisions they made.”

Various factors feed into how ranchers might react to drought, from the health of grazing pastures and the long-term weather forecast to the price per head of cattle and what neighboring ranchers are doing, Travis said. “Ranchers can take actions to reduce the impacts of drought but can’t reduce risks to zero,” Travis said.

Opportunely—solely for the research study—when the scientists were halfway through one cycle of analysis, a severe drought hit the entire nation. Suddenly, the study went “live” as ranchers nationwide faced the same stark decisions that the CSTPR team were investigating.

Managing their “stock” portfolio

The immediate weather isn’t the only factor that plays in to whether a rancher will sell his cattle, Travis said. Although cattle need healthy grass to feed on, ranchers are often thinking about the bigger picture, he said. “If it is a dry year and the rancher has 400 head of cattle, he might know that if he is careful, he can graze them enough to get them to market weight and break even that first dry year,” Travis said. “But what if it is dry again next year? That is the big unknown.”

Farmers, ranchers, and water managers are always thinking about next year, Travis said. If a rancher believes it is going to be dry again the following summer, it will affect decisions in the current year. In one sense, the rancher is “gaming” the environment, he said. “What is the probability of next year being a drought and even the year after that?”

If the rancher believes next year the weather will return to normal, he will graze the cattle more this year knowing that the grass will grow back and the rangeland will recover, Travis said. If he is worried that this is the beginning of a few years of drought, he may act more conservatively, reducing the cattle’s grazing and their subsequent market weight. If the rancher is really concerned, he may even sell some of the cows early and reduce the herd size, often taking a loss, Travis said.

“That is a big decision because once a rancher sells, it can take years to build the stock back up,” Travis said. If the next year is a better one and the grazing lands are healthy, the rancher won’t have the stock to take advantage of it, he said. But if he keeps his stock and he grazes down his land, he could damage the land’s ecology. “Either way it takes time for the recovery,” Travis said.

The weather isn’t all the ranchers have to think about—the behavior of other ranchers also factors into their deductions. If a lot of ranchers believe that this is the beginning of a longer drought, then many of them might cull their herds, and the price of cattle goes down, Travis said. “So the rancher might think, ‘What if I sell sooner? Maybe I better sell some of my herd right away to get the price I want and just live with the consequences,” he said.

So ranchers are trying to outguess fellow ranchers as well as to outguess nature, Travis said. But even then the decision is not as simple as just trying to predict future weather scenarios. Just as in stock market trading, where the decision to buy or sell might depend not just on price trends of a few stocks, but on the overall portfolio of more or less risky stocks, some ranchers might be able to “run out” the drought because of the diverse landscapes they can graze.

“Some ranchers we interviewed have told us, ‘I was able to wait because I have got some land that is down by the river, which even in a drought has some green grass,” Travis said.

Stock market traders have a portfolio, and ranchers also have a portfolio—one that reflects grazing resources at varying elevations that respond differently to climate conditions, Travis said.

Mimicking the ranchers’ dilemma

Using the data they have collected from the interviews, another CSTPR graduate student, Mary Huisenga, is creating a model that will reflect the difficult calls that ranchers must make in the face of climate and market uncertainty. Once this model is fully developed, the team will test the probability of success and failure of the ranchers’ decisions under different drought scenarios: one-year droughts, two-year droughts, and three-year droughts and throw long-term climate change on top of all that.

“It is really about understanding what cognitive model the ranchers are using and what kind of risk they take based on what they know about the climate,” Travis said.

The ranchers are supportive of the study, Travis said. “They have a lot of enthusiasm for the subject of risks and decision-making because it is their daily life,” Travis said. “If you want to talk about climate and weather, then go talk to ranchers and farmers; I think the students enjoy the field work.”