Stochastic Rangeland Use under Capital Constraints

The stocking density on Kazakhstan's extensive rangelands is well below traditional levels. To analyze dynamic flock performance, we develop a stochastic dynamic programming model for livestock systems with stochastic forage production. The model contains continuous five state and 12 control variables, allowing improved characterization of the biophysical relationships and economic tradeoffs inherent in such systems. Most Kazakhstan herders have restricted access to capital. The model indicates that the cost of capital strongly affects flock size and productivity. We conclude that capital constraints are important to explaining the current low stocking density. Improving capital markets in rural areas warrants policy attention. Copyright 2007 American Agricultural Economics Association.