31 May 2012

Kenya: How Economic Theory Applies to Poaching


When asked what he would most appreciate for his second term in office, Ronald Reagan famously replied "An economic advisor with only one arm". Confused by this answer his interviewer asked what he meant?

"Well", replied President Reagan "the problem with economists is that when you ask them for advice they almost inevitably reply that on the one hand you could do this, but on the other hand this may be a better bet."

In many people's opinion the Reagan administration went on to make some pretty good economic judgements during its time in office. Wildlife conservationists need that kind of wisdom now.

Wildlife has been traded amongst humans in some form or another since time immemorial. Think of cowrie shells and, in a more modern context, the use of livestock amongst pastoralist peoples the world over. There is good evidence to suggest that elephant ivory has been traded as a commodity for many thousands of years. So using wildlife as a currency or to trade in exchange for value is not something that is new. However, somewhat perversely, the impact of trade on individual species and the wider environment remains poorly understood.

In its very simplest form economic theory is a function of supply and demand. If supply of a commodity remains constant as demand increases, the price people are prepared to pay for that commodity tends to increase. Similarly, if demand decreases as supply remains the same, prices tend to decrease. And there are multiple permutations of this basic concept.

The theory is pertinent when considering policies designed to stop the over exploitation of species. The current upsurge in elephant poaching can be almost entirely attributed to rising demand from an increasingly affluent Chinese middle class willing to pay higher prices for ivory. In the late 1980s the poaching of elephants was largely stopped across Africa as a result of successful publicity campaigns that made buying and owning ivory socially unacceptable within western markets. Weakened demand, coupled to better policing in some range states, led to lower prices and reduced incentives to kill elephants. Similar campaigns are now needed in China if the current poaching explosion is to ease off in the future.

Whilst ivory is used primarily for decorative purposes, the market dynamics of rhino horn are critically different. Currently rhino poaching is at its worst level for decades, and rhino horn is retailing to traditional medical practitioners in the Far East for as much as USD60,000 per kilogram. In Vietnam powdered horn is being used frivolously as a cure for hangovers amongst the rich urban elites but for many others it is considered an essential ingredient in medicines to cure cancer and other serious ailments. Reports of people using their life savings to buy a gram or two of powdered horn to cure terminally ill relatives are regularly heard. Given these deeply held beliefs, the chances of a simple publicity campaign reducing demand seem unlikely.

It may come as something of a surprise therefore that a campaign to legalize the trade in rhino horn is gaining momentum. Proponents argue that horn can be harvested once every three years without harm to the animal. Furthermore a tightly controlled but well supplied legal trade would help to drive down prices, thus removing incentives for poachers to kill rhinos and creating a win-win situation. What else are we do to if the rhino is to be saved? They may be right. Alternatively a deeper consideration of economic theory urges caution.

Consider the so called 'one-off' sales of legally harvested ivory from the Southern African range states in the early 2000s. Suddenly a commodity that had become socially unacceptable and largely unobtainable was legitimized. Ivory carving houses in China that were on the point of closure were given a new lease of life. Demand was reawakened, prices started to increase and, in the absence of more 'legal' supplies, the poaching gangs went back to work.

Likewise the legalization of the rhino horn trade may have similar unexpected consequences. For example, despite being comprised almost entirely of keratin (the same innocuous substance that makes up our fingernails), it might send a signal that rhino horn does indeed carry medical benefits. That in turn could stimulate increasing demand amongst two billion Far Easterners, far beyond the capacity of Africa's remaining rhinos to supply. Prices for horn would therefore be driven upwards rather than downwards. In the absence of absolutely watertight controls over the legal trade, the same criminals who currently specialize in killing rhinos would thus be incentivised to remain involved for short term gain, and poaching pressure would increase rather than decrease.

Like most things in life the answers to difficult problems are rarely simple. On the face of it economic theory is inherently straightforward but in fact much deeper thinking will be required about the impact of ancient traditional beliefs on human decision making if we are to save Africa's remaining mega-fauna for posterity.

Richard Vigne is CEO of Ol Pejeta Conservancy

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