Originally Posted by BTM
An Economic Perspective of the International Ban on Ivory Trade
Despite that the existing international ban on ivory trade is nearly 30 years old; controversy and uncertainty continue to impede on efforts to accurately evaluate its ecological success—and economic consequences. The policy’s ecologically-centric objective—to restore elephant populations to ecologically acceptable levels—ignored inevitable consequences to be incited upon the unstable and underdeveloped economies characteristic to the main elephant-range states . This paper will inform upon the economics of ivory markets, examine the economic and ecological consequences of the ivory trade ban, and describe stratagem conducive to both economic development and ecological protection.
In order to understand the economic consequences imposing the ivory ban has had on development on the Southern African elephant-range, a basic knowledge of how ivory markets function when unrestricted is essential. Because elephant poaching is the primary means of generating ivory, and because guns are a relatively cheap and efficient means of poaching, there exists a relatively low cost of entry into ivory markets. (Raffolovich, 2006) Additionally, as elephants are an open-access resource , elephants roaming non-federally protected land are vulnerable to (legal) consumption (e.g. poaching). Open access provides an equal opportunity for poachers to attain resources, promoting intense competition to secure as many elephant carcasses as possible before other market participants—behavior which can result in a “tragedy of the commons” .
The consequences made possible by these market determinants were exacerbated by the (relatively) recent increase in efficiency of resource generation (afforded for by higher availability of modern weapons), and have provided for ivory markets’ expansion to levels at which exists the potential for significant ecologic and economic impact associated with increased poaching. Exploitation of elephants was further worsened by government failure to accurately assess and value the non-use economic benefits elephants provide (such as attracting tourism) and rapidly increasing international demand for ivory (championed by Hong Kong, Japan, and Taiwan)—resulting in elephant populations depleted to ecologically threatening levels by the end of 1980’s—hence prompting the subsequent international ban on ivory trade by CITES (the Convention on International Trade in Endangered Species) in 1990. (Raffalovich, 2006)
Imposing the ivory trade ban as an instrument to reduce elephant poaching, is, on the surface, a logically sound and intuitive response. Economists, however, fundamentally object to this conclusion, instead contending that the ban will cede only a minor ecological improvement, if any. (The theory is as follows.) Criminalizing ivory trading effectively reduces the quantity of ivory supplied legally available for trade to zero. As a result, the total ivory supply is severely decreased to include only traders willing to accept the heightened risk of illegal trading; and as demand remains unaffected , the price of ivory soars as relative non-use benefits plummet. This dramatic increase in value subsequently strengthens incentives for elephant poaching while abating incentives for elephant conservation. Additionally, the ivory ban relegates all ivory exchange to the black market, rendering economic benefits achieved through ivory-export as unobservable, non-taxable and non-accruable in traditional measures of economic development, such as GDP.
Conversely, empirical evidence shows a considerable resurgence in elephant numbers since 1990. In fact, demand for ivory has decreased—some citing that the ban, (along with environmental organizations and educational programs), erected a “moral barrier” stigmatizing the consumption of ivory products. (Raffalovich, 2006) This decrease in ivory demanded offset the decreased ivory supply, leading to a decrease, rather than increase, of ivory prices, which have since fallen below pre-trade ban levels. (Sack, 1993) Accordingly, ivory’s relatively low value has disincentivized poaching, allowing elephant populations to achieve levels exceeding the specified endangered species population levels mandated by CITES. (Raffalovich, 2006)
From an economic perspective, CITES’ ban on ivory trade (resulting in elephant overpopulation) is inciting economic repercussions detrimental to developing Southern African elephant-range countries. (Bennett, 1997) Botswana and Kenya, for example, have been significantly affected by these unanticipated consequences. Originally opposing the ban and experiencing favorable pre-ban conditions—which include prosperous ivory markets and stable elephant populations—conditions in Botswana and Kenya are now such that overinflated elephant populations are in direct competition with rural peoples for land and water resources. (Raffalovich, 2006) Elephants are further impinging on the communal areas (which are used mainly for subsistence agriculture), trampling crops and causing increasingly meager harvests as elephant populations continue growing. (African Wildlife Foundation)
It is thus evident that the ivory ban’s ecologically positive results have been achieved at the expense of economic development—attaining a better balance between ecological conservation and economic expansion must be sought. Many ban-critics argue the optimal solution, which maximizes benefits to both facets, is to “maximize revenue from the consumptive use of (ivory) while at the same time maintain a stable population to maximize the non-consumptive use and to protect the ecosystem.” (Bennett, 1997) Accomplishing this requires developing economic incentives that increase the non-use economic value of elephants to levels exceeding their potential consumptive value, effectively disincentivizing ivory trading. Ecotourism, greatly dependent on (living) elephants, has been proposed as just such a solution. In Zimbabwe, for example, tourism generates $100 million annually, with (measured) ivory trading accounting for only $4 million. (Hara, 2008) Expanding ecotourism can promote economic stimulus in creating more stable sources of income, employment, and development—the benefits from which are realizable by all Southern African citizens. Improving overall well-being will undoubtedly facilitate disincentives for ivory extraction and encourage elephant conservation.
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