||Historically, the region of Patagonia was built on sheep ranching and the production
of wool. Since the early 19th century, farmers have grazed these temperate grasslands,
which has led to the rapid expansion and growth of the meat and textile industry.
This sudden growth has had numerous negative ecological impacts on this very fragile
ecosystem and broader socio-economic effects. Grazing peaked in 1952 at 22 million
sheep, and since then has steadily declined to approximately 8.5 million sheep (Borrelli
& Cibils, 2005). Concentrated conservation efforts aim to address this crisis and
better manage the land in hopes of recovery.
My research focuses on the farmer’s perspective and the inherent switching costs for
shifting to a sustainable grazing program in order to regenerate the land. This study
analyzes several financial decision models over a five-year investment period within
three ecological areas in Patagonia: the Central District, the Subandean Grasslands,
and the Humid Magellan Steppe. Within each ecological zone, I account for three agricultural
management scenarios: traditional grazing, basic planning, and holistic management.
In addition, this analysis takes into consideration the process of the wool value
chain and influence that the textile industry has on the fate of the Patagonian Grasslands.
By understanding the financial risks in each of the modal farms, the objective is
to provide accurate financial information to the farmer for the assumed switching
costs and the expected timing in which the land is projected to have recovered. The
majority of the research is derived from an Argentine non-profit, Ovis XXI, which
monitors 55 ranches throughout Patagonia. Because many of these ranches face dire
economic conditions, switching to a sustainable grazing program could be their last
venture option. Thus, the expected results of investment are crucial and the value
of switching to a sustainable grazing program can only be captured if the basic fiscal
needs are met. My objective is to understand within each ecological zone the best
agricultural management plan that optimizes both ecological and financial capital.