Tuesday, 16 June 2015

Because crushing ivory is so much better than burning it

Last month I wrote a post on burning ivory:
This week the governments of the Republic of Congo and Chad burned five tons of ivory seized from poachers... to send a message to elephant poachers. But what message are they sending, really?
Burning ivory decreases the available supply of ivory in the market... The equilibrium price of ivory increases as a result... Higher ivory prices increase the potential profits from poaching, and incentivise more poachers to hunt elephants and existing poachers to hunt more intensively. That hardly seems like a recipe for saving elephants.
Not wanting to miss out on the party, now the Chinese are in on the act. Nature reports:
“Like a funeral for elephants.” That’s how Lishu Li, who works on the wildlife trade programme for the Wildlife Conservation Society China in Beijing, described the crushing of over 650 kilograms of confiscated illegal ivory last week. It was “quite dusty”, he said. “I think I inhaled a lot of ivory.”
No prizes for guessing the effects of this, and the effects of the accompanying controls on the 'legal' trade in ivory. Lower supply raises prices, and increases the incentives for poachers to produce more ivory. The end result is that more elephants are killed.

The much better approach is to try to reduce demand, as I noted in this post on poisoning rhino horns a couple of weeks ago. Reducing the demand for these goods lowers the price, and reduces the incentives for more poaching. The problem isn't solved entirely, but at least your solution isn't working against you.

How to reduce the demand for ivory? How about hefty fines (or imprisonment) for possession of ivory? That reduces the net benefits of owning ivory - as a buyer you face the risk of future punishment. Of course, the effect of fines (or imprisonment) depends on the size of the punishment as well as on the probability of being caught. So, enforcement costs would probably be relatively high. And given that these types of enforcement are already in place in many countries, it doesn't seem to be working too well.

I suppose you could legalise and place a high tax on ivory sales. This pushes the price up for consumers, reducing their demand for ivory. At the same time it reduces the effective price that sellers receive (since they receive the higher price from the consumers, but then must pay the tax to the government), which reduces the sellers' incentive to sell ivory. Of course, regulating and taxing the market also involves bureaucratic costs, and if the tax is high there would be high enforcement costs as well, as buyers (and sellers) would have incentives to try and avoid the tax.

As a totally different approach, what about farming elephants and flooding the market with cheap farmed ivory? The problem with wild elephants is that they are a common resource - rival and non-excludable. Rival goods are those where one person's use of the good reduces the amount available to everyone else, i.e. in this case one poacher killing an elephant reduces the number of elephants available to everyone. Non-excludable goods are those where you cannot easily prevent a person from obtaining the benefit from them, i.e. in this case it is difficult to stop the poachers from hunting. Farmed elephants (rather than wild elephants) would be private goods - rival and excludable. The farmers would (in theory) be able to exclude others from obtaining the benefits from the farmed elephants, and would have an incentive to sustainably manage their elephant herd. Farming as a solution for elephant poaching has been suggested before - see this piece by Shaun Jenkins last year as one example. Of course, others have criticised the suggestion (see here in response to the Jenkins article).

Criticisms of innovative suggestions or not, one thing is clear. Current approaches to saving elephants are just not working.

More on endangered species:

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