Should the U.S. destroy its stockpile of ivory?

by on November 15, 2013 at 6:09 am in Economics, Law, Uncategorized | Permalink

Here is one of the latest developments in economic policy:

The US government hopes to send a crushing message to anyone involved in the illegal ivory trade — by decimating a 6-ton stockpile of seized elephant ivory.

In an announcement posted online, the US Fish and Wildlife Services (FWS) describes plans to “pulverize” a cache of ivory on November 14th. All of the ivory was obtained, the agency notes, from law enforcement efforts to crack down on trafficking over the last two decades. “Destroying this ivory tells criminals who engage in poaching and trafficking that the United States will take all available measures to disrupt and prosecute those who prey on, and profit from, the deaths of these magnificent animals,” reads a statement on the FWS website.

There is more here, via Viktor Brech and Bruce Ryan and Kaushal Desai.

Bruce suggests the government announce it has created an artificial form of ivory, to lower expected prices and discourage future poaching.  If they can get away with that lie, great.  Otherwise, we all know the 2000 Kremer and Morcom piece entitled simply “Elephants”:

Many open-access resources, such as elephants, are used to produce storable goods. Anticipated future scarcity of these resources will increase current prices and poaching. This implies that, for given initial conditions, there may be rational expectations equilibria leading to both extinction and survival. The cheapest way for governments to eliminate extinction equilibria may be to commit to tough antipoaching measures if the population falls below a threshold. For governments without credibility, the cheapest way to eliminate extinction equilibria may be to accumulate a sufficient stockpile of the storable good and threaten to sell it should the population fall.

That emphasis is added.  Sell it, not destroy.

The (gated) AER version of the paper is here.  The Montclair State version is here.  A few comments and responses are here.

In other words, our government is pursuing symbolic value but at the same time implementing the wrong incentives.

Here is a piece on elephant music-making.

Mitch Berkson November 15, 2013 at 7:54 am

Re: artificial form of ivory to help elephants

Why haven’t we tried the, arguably easier, production of counterfeit powdered rhino horn to save the rhinos?

Sam November 15, 2013 at 7:59 am

I can understand why the US government hasn’t done that. But why haven’t poachers? It seems way cheaper to grind up some toenails than to actually go out and hunt a rhino.

arne.b November 15, 2013 at 8:13 am

Maybe they already do so? But how would their customers be convinced of their rhino horn being real without, say, a dead rhino photo and the occasional newspaper article about poaching?

Then again, maybe the poachers could recycle old photographs of dead rhinos and convince journalists to occasionally write such articles. But, well, see my first sentence.

Dan Weber November 15, 2013 at 8:35 am

If we want to create the perception among customers that the rhino slaughter continues, it seems relatively cheap for a state actor to fund a special effects team to show off dead and de-horned rhinos. They could probably even make video of it being “killed.”

Mitch Berkson November 15, 2013 at 10:51 am

> But how would their customers be convinced

Ah yes – how to convince the notoriously skeptical consumers of magical tinctures.

Thor November 16, 2013 at 3:19 am

+1, lol

Michael 't Sas-Rolfes November 16, 2013 at 4:17 am

Not so easy, Mitch. It turns out that the rhino horn market is a well-functioning peer-to-peer market, much like the supply of many illegal drugs. Breaking into trusted supply networks like that with counterfeits might work at the margin (think of rookies buying dodgy cocaine from a drug dealer they don’t know in a night club), but for the most part the established network is efficient at keeping unwanted competition out, especially if it’s not the real thing. And, by the way, those in the know have sight of the whole horn to prove its authenticity. The fact that suppliers need to get a whole horn to the end user market provides the opportunity for a far smarter strategy: supply the market with legal certified horn, harvested non-lethally, ethically and sustainably from extant free-ranging rhino farms in South Africa.

Bill November 15, 2013 at 8:32 am

Tax the persons from whom it was taken, thereby reducing the value to would-be value to poachers in addition to taking their ivory. Show commercials with persons wearing ivory being humiliated like those persons who wore fur and had blood thrown on them.

Fashion is a social disease.

Careless November 16, 2013 at 7:16 pm

Tax the persons from whom it was taken,

The people they already caught and prosecuted for the crime of trafficking in ivory?

john personna November 15, 2013 at 8:52 am

Price is not the only incentive. I think the idea is that the holder of non-ancient ivory knows that he’s got something illegal, which could be confiscated at any time. That is an incentive not to hold non-ancient ivory. If you sell it, with povenence that it is legal-non-ancient ivory, you open falsification and plausible deniability.

jtf November 15, 2013 at 6:19 pm

This. Within a few years as the legal ivory trade began again in the early 2000s in China and the Philippines, the volume of illegal ivory laundered began to exceed the volume of legal ivory. It also changed consumer perception such that demand increased, since before people were under the impression that all elephant ivory was illegal.

Marie November 15, 2013 at 8:54 am

Is the point to save the individuals or increase the population and maintain the species?

If the later, it seems like the answer would be commercial breeding and harvesting. Not easy, but if the products are valuable enough you should be able to get some folks with the resources to create elephant farms — lots more bison out West since they started breeding them. But I’d guess one of the bars to that kind of thing is the backlash folks would have against the breeder butchering the stock for ivory.

Pulverizing confiscated ivory, thinking that will reduce poaching — I got a C in my college economics classes, but I do seem to remember some little thing about supply and demand. . . . .

GC November 15, 2013 at 10:06 am

Fact is, you do not need to “butcher the stock” for the ivory, or the rhinos for their horns. They are butchered because, in the middle of the savannah when wanting to escape the rangers, the easiest, fastest and most cost effective way to keep an elephant down long enough to saw the tusks away is with a dum-dum bullet in the head, but if you have the time and facilities, you can simply put them to sleep during the process.

In fact, there are programs on both elephant and rhinos where the horns are removed by the environmental agencies (de-horning: http://www.savetherhino.org/rhino_info/issues_for_debate/de-horning and, btw, farming interesting hint, horns regrow on rhinos if done right), but in the wild that has complications (mating, defence, status) which wouldn’t be the case in farms. Of course, it’s doubtful a farm would sustain the cost of an elephant after de-tusking it (altho the tusks, and so the possible remain, grows over the lifetime, it grows too slowly for multiple de-tusking) … not much market in the west for elephant rides or elephant drawn carriages.

Marie November 15, 2013 at 10:12 am

Never would have thought of that!

Dan Weber November 15, 2013 at 11:15 am

There are rhinos out there where the horns have been removed and replaced with something different.

The poachers still kill them. They’ve spent days or weeks tracking the animal to find out it doesn’t have a horn. They will want to take it out so they don’t waste that time again.

Question: what if those “hornless-rhinos” were GPS tagged so everyone could easily see their location, especially the poachers? Would the poachers a) be thankful that they can quickly tell that a given rhino doesn’t have a horn, saving them a useless chase, and leave it be, or b) use it to quickly find and kill hornless rhinos?

Adrian Ratnapala November 15, 2013 at 10:26 am

As far as I know, even in countries where elephants are traditional beasts of burden, they not bred in captivity. Presumably, zoos can breed them successfully, but even a for-profit zoo is not a farm. I doubt these animals can be farmed profitably.

GC November 15, 2013 at 10:39 am

I think the main problems are size and space needed: Due size and instinct, elephants aren’t cow you can easily use Intensive animal farming techniques with (which, btw, I’m not sure is a fate better than being killed by a poachr, if you have ever seen a cow intensive farm where they can’t basically move for their whole life), but if one wants to try and raise them “free”, an elephant herd needs a surface of 100 to 600 square kms and pretty large structure to certain them therein. Granted, the surface could be reasonably used for other scopes at the same time, but still…

Sigivald November 15, 2013 at 2:13 pm

I’d rather see governments simply spend money on it, then, rather than spend money destroying existing ivory and ALSO not really stopping poachers.

Because that way at least we still have elephants.

(Plus as something of an antiquarian, and a historical re-creationist, I’d like legal ivory.)

dearieme November 15, 2013 at 9:25 am

Why not flood the market with ivory to drive the price down and reduce the incentive to kill the animals?

Bill November 15, 2013 at 3:20 pm

Need more elephants.

Jim November 15, 2013 at 4:46 pm

Why not poison this lot of ivory and sell it on the black market and destroy the brand for the whole commodity? No one will dare buy any after that.

GC November 15, 2013 at 9:34 am

“the cheapest way to eliminate extinction equilibria may be to accumulate a sufficient stockpile of the storable good and threaten to sell it should the population fall”

The problem is that the majority of poachers are not economists, nor really have an idea of supply and demand. With the limited population of elephants (even worse, rhinos) the time it takes from the messages ot get from the government thro the traffickers to the poachers might be longer than the time needed to practical extinction. Also, it is not at all clear whether the poachers would respond to any economic disincentive in any case when poaching is their only mean of living.. tragedy of the common and all. Sad to say, firing squads are more efficient, in this case.

RPLong November 15, 2013 at 9:48 am

+1

mw November 15, 2013 at 10:00 am

hard to understand how it needs to be said, but +1

oh and clearly governments without “credibility” are in an excellent position to be making “threats”

Ray Lopez November 15, 2013 at 10:02 am

Firing squads (or a ‘shoot to kill any poacher’ strategy) was tried, in some African country. The trouble is that poverty is so crushing, and IQ level so low, that this does not work in developing countries. The Economist had a IQ by country article, and due to bad nutrition (not genetics) the average IQ of African countries was around 80, which is borderline retardation in the USA (all western countries, Japan, Singapore, and surprisingly China were close to or over 100). The Philippines, where I’m at now, was 86, not that great. And here in certain poor neighborhoods a wino will kill you over a bottle of whiskey. So there’s some ‘perverse incentives’ at work when we are not dealing with the archetypical “rational man”.

GC November 15, 2013 at 10:14 am

I didn’t mention firing squads as a disincentive, but as solution. In fact, it is arguable that, so far, it hasn’t worked because there are too few rangers for too large of a territory, but you think is coincidental that most wildlife agencies in Africa are looking into “civilian” drones with payloads considerably higher than the one needed to just carry a camera? Again, not a pretty solution, but once it’s known that every poaching expedition has a 50%, or even 10%, chance of ending in death, even low IQ people tend to get the message.

Of course, I’m talking on a merely pragmatic point of view , not ethic, because then the question is, is the life of an elephant worth the one of 1 to 5 poachers and the hardships, possibly starvation, of their families? Is the life of 5 poachers worth the life of the hundreds that will starve if they keep relying on poaching once the elephants are gone? And so on and so forth…

JadedRationalist November 15, 2013 at 9:43 am

Why don’t the conservation groups just flood the market with fakes? Surely the buyers of ivory wouldn’t be able to tell a good fake from the real thing, after all at the end of the day the consumer is an individual. If consumers try to use middlemen, just create fake middlemen and undercut the real ones. Ditto for Rhino horn, etc.

The government could even collude with the poachers rather than arresting them! I mean the poachers are hardly going to say “it would be unethical to cheat our customers” are they?

Michael 't Sas-Rolfes November 16, 2013 at 4:21 am

The black market is not as stupid as you think it is. Fakes might work at the margins, but the core suppliers are very good at ferreting them out. See my response to Mitch above.

Alex Godofsky November 15, 2013 at 9:54 am

My understanding is that the purpose isn’t symbolism. Rather, they’ve discovered that periodic legitimate sales of ivory actually stimulate demand by creating the perception that there is “ethical” ivory and legitimizes the whole market.

Peter Honey November 15, 2013 at 11:44 am

This has been the experience in China. The previous sale by governments of stocks of legal ivory has created a legitimate market. The problem however, is that it is impossible to distinguish between legal and illegal ivory, and as a consequence about 3/4′s of all ivory sold in the legitimate market is in fact poached.

That Jim November 15, 2013 at 10:45 am

>>”In other words, our government is pursuing symbolic value but at the same time implementing the wrong incentives.”

True, but why bring up Obamacare? The subject is ivory.

Destroying the ivory is exactly the wrong thing to do. The poachers have already been paid for that ivory. And now they have to replace the goods that have been taken off the market. Probably at double the profit.

All the Feds can do is reduce US demand. You do that by making all private ivory ownership illegal. Not just the “new” stuff. Ivory can only exist in public museums. You perhaps provide an exemption process where certain antique items can be presented for certification and retained privately.

You either do this, or you are just goofing around, and demand continues unabated.

RPLong November 15, 2013 at 11:26 am

(1) Demand for X –> Supply of X
(2) Supply of X –> Negative externalities
(3) Negative externalities –> Law makes supply, but not possession, illegal
(4) Law makes supply, but not possession, illegal –> Supply continues unabated, on the black market
(5) Supply continues unabated, on the black market –> Law makes possession illegal

What could possibly go wrong? Where have we seen this sort of policy implemented before?

mulp November 15, 2013 at 12:32 pm

This topic is proof human behaviour is not driven by what economists consider rational incentives.

All the elephants being killed for their tusks are legally owned (private tourist reserves or the citizens in public ownership). The owners are spending a lot of money trying to protect their property because the economic value of the property has been established. The poachers don’t care that they will ultimately kill off their entire enterprise if they are successful and kill and sell the last tusk. Increasing the supply of illegal ivory by the government selling seized illegal ivory will merely increase the incentives to poachers to kill elephants for the ivory because even if seized, the illegal ivory will hit the market. The poachers who take the biggest risks get paid a very small portion of the ultimate price of the ivory with most of the profits going to those taking the least risk.

Michael 't Sas-Rolfes November 16, 2013 at 4:25 am

Mulp, this is not quite accurate. Most of the elephants being slaughtered are owned by central governments who invest little to nothing in actually protecting them. There are very few privately owned elephants and they are mostly very well-protected. Look at where the actual poaching is taking place and you will most likely find it is in the places where the least effort is made to enforce property rights.

athEIst November 15, 2013 at 1:49 pm

Ray Lopez November 15,
The Economist had a IQ by country article, and due to bad nutrition (not genetics) the average IQ of African countries was around 80.
Good you got that disclaimer in there. It couldn’t be due to genetics. It just couldn’t. Funny how the bad nutrition doesn’t keep the population down.

Alejandro Salazar November 15, 2013 at 1:49 pm

I think you can remove a considerable portion of the tusks from live elephants. If this kind of ivory is allowed, people would have an incentive to raise elephants.

Floccina November 15, 2013 at 3:27 pm

Sell it and use the proceeds to tranquilize and detusk elephants sell that ivory repeat.

Floccina November 15, 2013 at 3:34 pm

artificial form of ivory to help elephants

Biotech to the rescue? Cattle with ivory?

Careless November 16, 2013 at 10:56 pm

Pigs would probably make more sense.

Thanatos Savehn November 15, 2013 at 11:07 pm

May I have the remaining 5.4 tons, please?

Larry Rothfield November 16, 2013 at 1:53 am

As others have noted, there are major signaling problems with the dumping strategy, and also problems with the assumption that dumping would ever lower the price sufficiently and for a sufficient length of time to lead impoverished poachers to think it not worth their while to poach or for middlemen to buy from them and simply stockpile until the market cleared after governmental dumping. The only possible solution is to deter looters by making the government’s — or non-governmental security firms’ — power to protect herds and to catch poachers stronger and thereby more credible.

That, of course, in turn requires financing, and not from one off dump sales of seized tusks, but sustained and substantial. Ideally the funding would come from a Pigovian tax on sales of worked ivory in China (the dominant market), with the proceeds going into a fund dedicated to paying for herd protection in Africa. Failing that, funding will have to come from international initiatives like the one that the Clinton Global Initiative recently announced.

Kit Sunde November 16, 2013 at 2:07 pm

“the cheapest way to eliminate extinction equilibria may be to accumulate a sufficient stockpile of the storable good and threaten to sell it should the population fall”

Doesn’t this backfire against against free actors, instead of legal institutions with long term goals? Hunter A and Hunter B are strangers and thus can’t communicate. It’s understood that if Hunter A and Hunter B doesn’t hunt too much both are better off. If either hunter poaches more than his fair share, they are both worse of. This is an industry where – presumably – you can’t trust anyone. If I was a hunter I would have an incentive to poach as much as possible before the other hunters spoil the market and deal with the future when the future comes.

x November 16, 2013 at 5:22 pm

Why not just farm elephants for the ivory?

Careless November 16, 2013 at 11:10 pm

Because they cost about $50,000 a year to keep. Each. So you’re out more than half a million dollars to get two tusks with, say, 10kg of ivory each. So maybe if the price of ivory exceeds $30,000 a kg.

Careless November 16, 2013 at 11:11 pm

And then another couple million dollars to keep them for the rest of their lives, because no one is going to let you raise elephants for slaughter just for their tusks

Tony Parrack November 16, 2013 at 5:36 pm

Just stick it all on the market, watch the price plummet, and then it won’t be worth the poachers’ time to kill more.

Careless November 16, 2013 at 11:12 pm

6 tons isn’t 1% of what’s out there, apparently.

Axa November 17, 2013 at 7:38 am

Why ivory is illegal while elephant skin is traded on internet? http://www.rojeleather.com/species-and-leathers/elephant-leather/ In theory an elephant needs both to survive =)

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