A Poaching Problem that Regulation Hasn’t Solved

With China and Thailand a destination and Tanzania and Zanzibar their pipeline, the ivory trade is flourishing. One result? Many fewer African elephants.

Below you can see that the poaching numbers are high and elephant population numbers are down.

From: National Geographic

Where are we going? To the power of the market.

Regulation

On the surface, regulation makes sense. African nations can protect elephant sanctuaries, seize and destroy ivory, and everywhere in the world, ivory sales can become illegal,

But it’s not that easy.

The high price of ivory makes it very attractive. At the local level in developing African nations, you have poor villagers with little incentive to oppose poaching. On the national level you have corruption that incentivizes politicians. Furthermore, the cost of a regulatory structure has been estimated at $400 million.

Market Problems

Perhaps because you have to depend on the “invisible hand” rather than visible regulation, the market has been pretty much ignored. By looking at demand and supply, though, we can better identify the problems. On the demand side, one problem is inelasticity. Because the demand curve is almost vertical, when government seizures shift supply, price rises and the quantity demanded remains relatively constant. Meanwhile, when price rises, we incentivize more quantity supplied.

Below, the supply shift elevates the equilibrium price.

Our Bottom Line: Market Solutions

By focusing on demand and supply, new solutions for wildlife conservation become apparent. It works, for example to create a “stigma effect.” In Western countries, new values about appropriate attire brought demand down for fur clothing. On the supply side, researchers are even suggesting more supply. Shifting the supply curve down pulls price down. A lower price makes poaching less attractive.

There are many possibilities. With some regulation, we just have to harness the power of the market.