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The design of improved technology or production policies depends upon evaluation of alternative options in terms of their efficiency. Measurement of the efficiency of a pastoral livestock system may be based on the food energy output per livestock unit, while rangeland carrying capacity is assessed in terms of livestock units per square kilometre. On this basis we conclude that, for the Sidamo Borana and probably other pastoral societies: (i) rangeland carrying capacity is limited by the existing density of dry-season waterpoints rather than the primary productivity of the rangeland, with the implication that research in hydrology and design of water supplies may be more beneficial than studies aimed at increasing primary productivity of the rangeland; (ii) that pastoralists have a comparative advantage in milk production and, up to a point, human consumption is a more efficient use of milk than feeding it to calves; (iii) the trade of livestock products for grain is essential for survival.