All Commentary
Wednesday, November 13, 2013

The Elephant in the Policy Room

U.S. government bureaucrats don’t understand the basic principles of supply and demand. But we knew this.

In yet another example of economic ignorance, the U.S. Fish and Wildlife Service (FWS) will destroy a six-ton stockpile of seized elephant ivory tomorrow in an attempt to send a message to poachers that the killing, harvesting, and selling of ivory won’t be tolerated. This declaration of war against the poaching industry is meant to strike fear into the hearts of these criminals. From the FWS website:

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.

While the desired end is noble, destroying the stockpile actually further encourages poaching. That’s because it sends a message all right: a market signal.

Crushing the ivory only decreases the supply, making it more valuable in the marketplace. The black fruits of new poaching will fetch an even higher price. That’s because a higher price incentivizes a higher quantity supplied, meaning more elephants will be slaughtered and poachers reap the rewards. If any potential poachers were on the fence about harvesting elephant tusks before, the increased price may just encourage them to start up business or ramp up production.

If the Wildlife Service really wants to halt the extermination of elephants, it should instead sell the confiscated ivory and donate the proceeds to private wildlife conservation groups. Not only would these conservatories have more resources to better protect animals, but flooding the market with six tons of ivory will surely reduce its demand and lower the price—which means lower profits for poachers. And if profits are low enough, poachers will seek better opportunities elsewhere.

Poachers do not harvest elephant tusks because they are evil, animal-hating people. They do so because, in their current situations—these are normally poor people in poor countries—poaching is their most profitable endeavor. But if their profits are diminished, alternative occupations become more appealing.

So instead of wasting valuable capital and labor in the destruction of the ivory, the government could do a lot more good by auctioning this valuable product, or letting a private conservation group do so.

One way to more effectively control poaching might be to assist countries in developing property rights over the elephants. According to this January 2000 study in Contemporary Economic Policy, countries with property rights systems in place over the elephants have more rapid elephant population growth rates than do those countries that have anti-poaching laws.

Many are praising the government for taking a firm stance against this evil industry. They are hopeful that Uncle Sam’s involvement will be what it takes to discourage poaching. But we all know how well declaring war on an illegal trade has worked out for the government in the past.

Only by understanding the incentives in place for the poachers and the unintended consequences of government action will we get closer to finding an effective solution to the problems of threatened species.

  • Jason Kelly was the Operations Manager at FEE. In this role, he managed FEE's budgets by regularly monitoring financial actuals against budgeted numbers, as well as assisting in evaluating new projects and proposals with respect to their impact on fiscal responsibility.