Financial Efficiency Analysis (to be included in the direct and indirect 

effects section) 

Alternative A: No Action 

Calculating present net value (PNV) is also required as part of the planning process. However, the data 

required for a detailed financial efficiency analysis is unavailable. In order for the Grasslands to meet 

adaptive management objectives, the new plan will not prescribe specific management activities. This 

allows the flexibility to manage resources under ever-changing environmental conditions. A more 

detailed financial efficiency and economic impact analysis should be conducted during the NEPA stage 

for proposals of future management activities. 

The current resource programs managed by the grasslands generate revenue from sale of products, 

permits for various activities and leases for minerals. The programs generating revenue are recreation, 

range, minerals and non-recreation special uses. Grasslands personnel provided current data on revenue 

streams (Table 1). Under the no action it is assumed there would be no impact to these revenue streams, 

and they would continue throughout the next planning cycle. Since these plans are expected to be 

updated every 10 to 15 years, a 15 year planning cycle is used for the financial efficiency analysis. 

Table 1: Annual Revenues and Costs by Program 

Program Annual Revenue Annual Cost 

Recreation $18,000 $242,250 

Range $165,042 $233,524 

Minerals $13,468,000 $45,252 

Non-recreation Special Uses $58,000 $7,393 

The recreation, range, minerals and non-recreation special uses programs are funded under the general 

budget and externally funded activities such as volunteer and service agreements, and in-kind sharing. 

There is much uncertainty about future budgets and no reliable data on future program costs. A three-year 

average for each resource program’s budget was used as an estimate of annual costs (Table 1). There are 

also a variety of ecosystems services projects are part of the management strategy for Grasslands 

resources. There is limited data regarding the costs for these types of projects, which include prescribed 

burning, thinning and weeds treatments. The financial efficiency analysis is limited to only the revenues 

received from management activities and the costs of annually funded ecosystems services projects. The 

costs included in this analysis are just a portion of the total operating budget. This greatly limits the 

informational capacity of this analysis; however, it provides some basis of comparison for future revenue 

streams back to the Grasslands. PNV is defined as the discounted sum of benefits minus the discounted 

sum of costs; however since not all costs are actually accounted for, this analysis should primarily be used 

to evaluate benefits. A Federally prescribed discount rate of 4% is used in this analysis (FSM 1900). 

Inflation is also a variable that can affect the NPV’s associated with each alternative. However, due to the 

uncertainty of future inflation, OMB Circular A-94 recommends the avoidance of making assumptions 

about the inflation rate whenever possible. Thus, for the purposes of this project, inflation will be left at 

zero. 

The PNV if Grasslands management were to continue under the No Action is $152,409,164. In this 

analysis costs are limited to only those for specific program areas and ecosystem services projects 

occurring on the Grasslands. Therefore this value provides a better relative measure of the discounted net 

revenue the Grasslands are expected to generate during the next planning cycle in 2010 dollars. As 
mentioned above, these programs are funded with a combination of the general budget and external 

funding. Currently there is no information available regarding the level and distribution of these funds in 

future years. 

Alternative B: Preferred Alternative 

The PNV for this alternative was calculated using the same methods as described under the No Action. 

There is no data for the future revenues generated by resource program. However, this alternative does 

not prescribe any activities that would cause a change to those revenue streams. Any change in program 

revenues would occur as a result of supply and demand conditions, and tastes and preferences of 

stakeholders in the study area. This would occur regardless of the chosen alternative. Therefore the same 

revenue streams used for the No Action alternative are assumed to carry though under the action 

alternatives. Alternative B places a greater emphasis on vegetation management, which will increase 

restoration costs. This is reflected in a slightly lower PNV than the No Action Alternative. The PNV for 

this alternative is $$151,130,674. Although this PNV is lower than that of the No Action, it does not 

account for non-financial benefits associated with the improved vegetative conditions. 

Alternative C: Wilderness Designation 

This alternative is not expected to result in a change in revenues back to the Grasslands. Therefore the 

same program revenues used for Alternatives 1 and 2 are also used for this alternative. Likewise, the 

expected costs of implementing this alternative are assumed to be the same as Alternative B. Therefore 

the PNV for Alternative C is the same and Alternative B, $$151,130,674. This financial efficiency analysis 

is very limited due to the lack of data availability and site specific prescriptions in the alternatives. In the 

case of programmatic NEPA documents similar to this one, PNV does not provide a reliable indicator to 

base management decisions upon. The PNVs reported in this document are a measure of discounted 

revenues with very limited information on costs. 

Summary Table 

 Alternative A Alternative B Alternative C 

Present Net Value $152,409,164 $151,130,674 $151,130,674 

Present Value-Benefits $158,519,338 $158,519,338 $158,519,338 

Present Value-Costs -$6,110,174 -$7,388,664 -$7,388,664