Zooillogix

The Economics of the Ivory Trade

As reported in the NY Times and elsewhere, an auction of 108 metric tons of ivory took place today in Namibia, Botswana, Zimbabwe and South Africa. The buyers were exclusively from China and Japan. Not surprisingly, this sale has raised the ire of animal welfare groups, such as the International Fund for Animal Welfare (IFAW).

You might be surprised to learn however that this was a legal auction sanctioned, and in fact run, by CITES, the Convention on International Trade in Endangered Species of Wild Fauna and Flora. So here are the facts:

* All of the ivory sold comes from government stockpiles compiled from elephants that died of natural causes and culled elephants from overpopulated areas (a controversy in itself).

* All revenues “must be used exclusively for elephant conservation and community development programs within or adjacent to the elephant range.”

* This is the first such legal sale since 1989 and the moratorium will be reimposed until 2017.

(For my take on this issue, read below the fold. This post is dryer than our usual fare…)


The IFAW’s main objections as represented by their Program Director, Michael Wamithi, in their press release are as follows:

#1 “Even though the ivory was not obtained through illegal poaching activities, these legal sales only encourage poachers to launder their illegal stocks”

#2 “We have no doubt that flooding the market with over 100 tons of ivory will put this endangered species in even further jeopardy.Throughout west and central Africa, isolated populations have actually been wiped out completely due to illegal hunting. If we do not take this trade seriously, we will surely continue see the demise of these majestic creatures – and sooner rather than later.”

#3 “The international trade in ivory simply cannot be justified by a perceived short-term gain such as profits from these sales. Not only are elephants a keystone species, but African tourism relies on their existence. To toy with that is to toy with the livelihoods of the citizens within these poor African nations.”

I am not an economist nor am I an expert in elephant conservation. That being said, the Program Director for the IFAW offers no research to support his claims. It may indeed exist, and I have emailed the IFAW to explain the basis for these statements (see response in Comments). However, at this time I have trouble understanding his rationale.

Point by point:

#1 These legal sales only encourage poachers to launder their illegal stocks – As all revenues (as opposed to simply profits) are to be used for elephant conservation and community development around elephant populations, there is no new incentive to launder illegal ivory.

#2 We have no doubt that flooding the market with over 100 tons of ivory will put this endangered species in even further jeopardy. – A legal auction flooding the market with 108 tons of ivory should reduce the price of ivory worldwide, thereby disincenting poachers with reduced profits.

#3 The international trade in ivory simply cannot be justified by a perceived short-term gain such as profits from these sales. – I can’t refute this. That being said, CITES is taking a pragmatic approach to a complex problem. What’s more, CITES’ mandate is “not to inhibit trade, but to facilitate regulated trade in endangered species at sustainable levels.”

However distasteful in concept, it seems pretty reasonable to me in practice. What are your thoughts?

Comments

  1. #1 Jenbug
    October 28, 2008

    I can certainly understand why an organization like CITES exists, although I found it initially abhorrent. It’s sort of like legalized prostitution or drugs–people are bound and determined to do it, so someone should legally regulate it. Otherwise you get illegal trafficking and increased crime and dangerous conditions. Its definitely distasteful, but it seems necessary as well.

    If they’d destroyed the ivory, would that really have driven costs up? If goods are being held by the authorities, do they still count as being ‘in play’ by the markets, black or otherwise? I would think not, only because getting hold of it would probably be expensive and risky. I’m curious, now!

  2. #2 kevin
    October 28, 2008

    I buy the laundering argument: the availability (short term) of legal ivory gives great cover for long term laundering. Before the sale, if you were shipping raw ivory, it was illegal ivory. Now you can claim it is legal ivory from the sale. Thus: you’re going to see many hundreds of tons of purportedly legal ivory appear on the market.

  3. #3 Andrew B
    October 28, 2008

    IFAW got back to me. Responses below:

    #1 These legal sales only encourage poachers to launder their illegal stocks – As all revenues (as opposed to simply profits) are to be used for elephant conservation and local community, there is no incentive to launder illegal ivory.
    Unfortunately, there is great incentive to launder in illegal stocks whenever a legal sale takes place. The legal sales signal to poachers that it is open season on elephants as they are given a very real means to launder their illegally poached ivory into legal marketplaces. For example, since China’s approval as trading partner for this ivory just over a year ago, poaching rates in Kenya have continued to be on the rise.

    #2 We have no doubt that flooding the market with over 100 tons of ivory will put this endangered species in even further jeopardy. – A legal auction flooding the market with 108 tons of ivory should reduce the price of ivory worldwide, thereby disincenting poachers with reduced profits.

    Again, it’s unfortunate, but this is not the reality concerning repercussions of such stockpile sales. It is next to impossible to contest that the previous one-off stockpile sales have not resulted in more elephants being killed and more ivory laundered.

    #3 The international trade in ivory simply cannot be justified by a perceived short-term gain such as profits from these sales. – I can’t refute this. That being said, CITES is taking a pragmatic approach to a complex problem. What’s more, CITES’ mandate is “not to inhibit trade, but to facilitate regulated trade in endangered species at sustainable levels.

    CITES is a conservation convention designed to protect wildlife from the threat of trade, not a tool to promote trade. CITES should be adopting the precautionary principle in legislation and enforcement to ensure our wildlife survives for future generations. That is the spirit of CITES.

  4. #4 Andrew B
    October 28, 2008

    @kevin – i see your point. i suppose it depends on the logistics of the shipments after purchase. are all, say, 50 tons of ivory China buys going to be sent on one container ship or piece-meal over the course of a year? if it’s the former, i don’t think it provides any cover. if it’s the latter, it definitely could be a problem.

  5. #5 Pat
    October 28, 2008

    My quick answer: If they continued such efforts of selling ivory that is gathered in this “elephant friendly” way (as described above), that just *might* drive the cost and the DESIRE for such illegal goods down. It is not as if this is a drug that people can become addicted to, it is just scarce. Or am I wrong about why people even want ivory in the first place??? Is it considered “lucky” or “medicinal?” If so, then my argument won’t hold water.

    To answer another question, yes, it *seems* distasteful, but this is rather a conundrum….so many things to consider and conjecture about.

    One thing I know for sure: It would be a shame if someday, there were no elephants! :-(

  6. #6 william e emba
    October 29, 2008

    The economic argument is simply that owned resources generally flourish (farming) but unowned resources are at great risk (overfishing).

  7. #7 wesele
    October 29, 2008

    It is not as if this is a drug that people can become addicted to, it is just scarce. Or am I wrong about why people even want ivory in the first place??? Is it considered “lucky” or “medicinal?” If so, then my argument won’t hold water.

  8. #8 zay?flama
    October 31, 2008

    The legal sales signal to poachers that it is open season on elephants as they are given a very real means to launder their illegally poached ivory into legal marketplaces.

  9. #9 Turkish Delight
    March 11, 2009


    For an update on China’s position on this, see the statement their embassy in Kenya put out. They say, Well, Chinese nationals bought the ivory in other African countries, and just so happened to bring it with them to Kenya….


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