The uncomfortable economics of the ivory trade
22 May 2017
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In the past week, the decision by the Conservatives to remove a ban on ivory sales from their manifesto has caused an uproar amongst people who see the move as an endorsement of poaching.
To be clear, the international community banned the trade of ivory back in 1989 with limited success. However since then a variety of caveats and exemptions have been brought in that have led to a huge growth in the international sale of ivory since 2007. Allowances to governments such as China in 2008 were made in an attempt to flood the market, but actually served to cover up a surge in poaching and stockpiling.
According to the World Wildlife Fund, the African Elephant and Black Rhino are the greatest victims of ivory poaching. This is primarily because of the unwaning belief in China, Vietnam, and other parts of East Asia that ivory has strong medicinal properties and brings luck. Furthermore many Americans continue to buy “white gold” despite also supporting a ban on ivory. Research in the past year has demonstrated that ivory being sold comes almost entirely from African elephants killed recently, not from old government-held stock, as the ban exemptions allow. This means that despite the international ban, the presence of highly violent militia in Africa, and international “crush efforts”, poaching is more profitable than ever. The message is clear: where there is a demand for ivory, there will be a supply of ivory.
The irony of the ivory ban is that it threatens poachable animals more by increasing the rate of return on illegal poaching. The demand for ivory has not fallen since the international ban, and therefore the rational criminal has continued to poach and make greater profits within high-functioning syndicates.
Yet, in the face of what may seem like an unsolvable problem, several biotechnology firms have started to develop what could be a promising free market solution. The 3D printing of undetectably fake rhino horns, elephant tusks, and tiger bones presents an opportunity to out-price and flood competitors, as the firms are able to sell the “faux-ivory” at just an eigth of the black market rate. The important thing is that faux-ivory, which is genetically indistinguishable from poached ivory, must be marketed as the real deal in the same high-demand markets. This will be most effective if ivory trade – not poaching – is liberalised, so that the firms can creatively sell their printed ivory in various forms, such as dusts, tusks, bones, and horns.
The result is a reduction in the rate of return on poaching, which already has high costs as a risky, violent, and insecure business. Whilst some poaching may persist, the fact that it will remain illegal and fiercly challenged will make it incredibly difficult to compete with the cheaper cultured ivory. To most consumers, the ivory is intrinsically valuable, and simply buying ivory that they believe to be authentic is enough to protect its value.
There are several conservationist groups hostile to the new solution because it does not directly address poaching. These groups are guilty of a nirvana fallacy, as they are fighting for what is frankly an unobtainable ideal.
Thus far every effort to eliminate poaching has been unsuccessful, and these efforts will almost certainly not prevail. Introducing bans on “unethical” goods and services cannot prevent the exchange of those goods and services so long as demand exists. This is the case with alcohol, drugs, sex work, and fur. The most effective solution is almost always liberation, education, and innovation.
This is why the decision by the Conservatives, or any government, to step away from further ivory regulations is a good thing. The ban on ivory led to an increase in its overall world price, encouraging more illegal poaching; therefore further regulations, insofar as they increase the return on illegal poaching, will encourage more poaching.
You cannot crush demand by attempting to crush supply, but you can reduce the ethical implications of the supply by freeing the market. The influx of artificial ivory, marketed as real ivory, may lower the overall price of ivory which reduces the profitability of poaching.
Ultimately the liberalisation of the ivory trade, whilst maintaining strong anti-poaching regulations, may be the most promising solution to protecting targeted populations.
Reposted from the THINK blog.
Click here to get your ticket for THINK 2017.
To be clear, the international community banned the trade of ivory back in 1989 with limited success. However since then a variety of caveats and exemptions have been brought in that have led to a huge growth in the international sale of ivory since 2007. Allowances to governments such as China in 2008 were made in an attempt to flood the market, but actually served to cover up a surge in poaching and stockpiling.
According to the World Wildlife Fund, the African Elephant and Black Rhino are the greatest victims of ivory poaching. This is primarily because of the unwaning belief in China, Vietnam, and other parts of East Asia that ivory has strong medicinal properties and brings luck. Furthermore many Americans continue to buy “white gold” despite also supporting a ban on ivory. Research in the past year has demonstrated that ivory being sold comes almost entirely from African elephants killed recently, not from old government-held stock, as the ban exemptions allow. This means that despite the international ban, the presence of highly violent militia in Africa, and international “crush efforts”, poaching is more profitable than ever. The message is clear: where there is a demand for ivory, there will be a supply of ivory.
The irony of the ivory ban is that it threatens poachable animals more by increasing the rate of return on illegal poaching. The demand for ivory has not fallen since the international ban, and therefore the rational criminal has continued to poach and make greater profits within high-functioning syndicates.
Yet, in the face of what may seem like an unsolvable problem, several biotechnology firms have started to develop what could be a promising free market solution. The 3D printing of undetectably fake rhino horns, elephant tusks, and tiger bones presents an opportunity to out-price and flood competitors, as the firms are able to sell the “faux-ivory” at just an eigth of the black market rate. The important thing is that faux-ivory, which is genetically indistinguishable from poached ivory, must be marketed as the real deal in the same high-demand markets. This will be most effective if ivory trade – not poaching – is liberalised, so that the firms can creatively sell their printed ivory in various forms, such as dusts, tusks, bones, and horns.
The result is a reduction in the rate of return on poaching, which already has high costs as a risky, violent, and insecure business. Whilst some poaching may persist, the fact that it will remain illegal and fiercly challenged will make it incredibly difficult to compete with the cheaper cultured ivory. To most consumers, the ivory is intrinsically valuable, and simply buying ivory that they believe to be authentic is enough to protect its value.
There are several conservationist groups hostile to the new solution because it does not directly address poaching. These groups are guilty of a nirvana fallacy, as they are fighting for what is frankly an unobtainable ideal.
Thus far every effort to eliminate poaching has been unsuccessful, and these efforts will almost certainly not prevail. Introducing bans on “unethical” goods and services cannot prevent the exchange of those goods and services so long as demand exists. This is the case with alcohol, drugs, sex work, and fur. The most effective solution is almost always liberation, education, and innovation.
This is why the decision by the Conservatives, or any government, to step away from further ivory regulations is a good thing. The ban on ivory led to an increase in its overall world price, encouraging more illegal poaching; therefore further regulations, insofar as they increase the return on illegal poaching, will encourage more poaching.
You cannot crush demand by attempting to crush supply, but you can reduce the ethical implications of the supply by freeing the market. The influx of artificial ivory, marketed as real ivory, may lower the overall price of ivory which reduces the profitability of poaching.
Ultimately the liberalisation of the ivory trade, whilst maintaining strong anti-poaching regulations, may be the most promising solution to protecting targeted populations.
Reposted from the THINK blog.
Click here to get your ticket for THINK 2017.
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There is also the possibility of taking real ivory tusks from live elephants (and horns from rhinos) and replacing them with artificial ones, functionally identical, but perhaps made to appear fake.
Statistics directly contradict the assertion that a legal ivory trade would lead to reduced poaching. Following the initial international ban on ivory (which lasted nine years before exemptions began being made), the African elephant population stabilised and the price of ivory went into decline because many people stopped buying it. Companies which specialised in carving ivory were forced to shut down due to this massive decrease in demand. It was only in 1999, following the first exemption (a sale of stockpiled ivory to Japan), that the price of ivory increased once more and poaching became ‘worthwhile’, as during the ban it was more difficult to export illegal ivory.
Legal trade makes it easier to get illegally-poached ivory into markets (the largest being in China and Hong Kong). The only way to prevent poaching on the economic front is to introduce a blanket ban on all products, as this makes it more difficult to launder poached ivory and therefore less profitable and a less worthwhile risk for poachers.
Unfortunately the UK government went in for gesture politics after all. The failure to learn from past mistakes pursuing the nirvana of prohibition spells doom for the world’s elephants.