Growing wolf (Canis lupus L.) populations in the US Rocky Mountain Region have increased conflicts between livestock production and wolf conservation. Given that the costs of large carnivore conservation are disproportionately borne by local livestock producers, the United States uses compensation for wolf damage to reduce conflicts and mediate negative attitudes toward the predators. Current compensation programs, however, only consider the direct effects of wolf predation. Indirect effects, such as wolf effects on weaning weights, and conception rates, may also reduce profitability. By not including indirect wolf effects, compensation programs may systematically undercompensate ranchers. We use a stochastic budget model of a representative cow–calf ranch in northwest Wyoming to estimate the economic impact of both direct (death loss and injured calves) and indirect effects (decreased weaning weights, decreased conception rates, and increased cattle sickness) of wolf predation. Our results suggest that short-run (i.e., year-to-year) financial impacts of wolf indirect effects may be as large as or larger than the direct effects. Including indirect effects implies that the compensation ratio (i.e., number of calves compensated per confirmed depredation) necessary to fully offset the financial impacts of wolves would need to be two to three times larger than current 7:1 compensation ratio used in Wyoming.
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