Saturday 13 July 2019

Saving the elephants, only for the hippos to be hunted

When two goods are substitutes, if the price of one of them increases or it becomes less available, consumers switch to the other. So, this report from The Telegraph (gated, ungated version from the New Zealand Herald here) last week should come as no surprise:
The elephant ivory ban is killing hippos, conservationists have said, as poachers and hunters take advantage of a loophole in the new law.
The Ivory Act, which will come into force later this year, was championed by Michael Gove, the British Environment Secretary, but conservationists argue that it puts hippos at grave risk as the import of their tusks will still be legal.
Hippo ivory, which resembles that of an elephant, is being increasingly traded globally with 12,847 hippo teeth and tusks, weighing 3,326kg, bought and sold in 2018. Trade increased from 273 items in 2007 to 6,113 in 2011...
Campaigners have called on the Government to close the loophole to ensure the ban applies to all ivory-bearing animals. They have also warned that it is nearly impossible to tell whether a tusk is from a hippopotamus that was slaughtered recently or many years ago, and whether it was poached or legally killed.
Will Travers, president of the Born Free foundation, said authorities were "shifting pressure" on to hippos by only banning ivory from elephants.
Banning elephant ivory doesn't completely shut off the supply of elephant ivory, but it does decrease it. This is because the costs of supplying ivory have increased (due to the penalties for supplying an illegal product). This decrease in supply shown in the diagram below, by the shift from S0 to S1. The equilibrium price of elephant ivory increases from P0 to P1.


Elephant ivory and hippo ivory are close substitutes (in the article, Will Travers says that "I sometimes can't tell the difference between different types of ivory and I've been in this for 35 years"). Elephant ivory has now become relatively more expensive, so more price-sensitive consumers switch to hippo ivory. This increases the demand for hippo ivory, as shown in the diagram below, from DA to DB. This increases the price of hippo ivory (from PA to PB) but importantly, it also increases the quantity of hippo ivory traded from QA to QB.


I have to admit, I hadn't realised the number of animals that produce ivory, including walrus, wart hogs, and narwhals (as well as elephants and hippos). But if you're going to ban ivory to save the elephants, it probably pays to ban all of it.

1 comment:

  1. There was an explosion in poaching after some legal sales of rhino ivory about 10 years ago. The reason was that a market in China developed for counterfeit legal ivory. Because there was legal ivory sales, you could pretend you're ivory was obtained legally

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