20 Sep 2016

Demand for elephants can save elephants

Back in 2008, there was a big kuffaw over a paper that said "Lake Mead has a 50 percent chance of going [technically] dry by 2020." (Lake Mead Reservior is close to Las Vegas and an important reservoir in the western US distribution system. It exists due to Hoover Dam.)

I contacted the authors of that paper -- both scientists at Scripps in San Diego -- and asked them how they calculated the progression from current to predicted supply and demand for water from Lake Mead. On the supply side, they considered how climate change might change precipitation, runoff and evaporation. Good science that. On the demand side, they multiplied current demand by future population (perhaps with some trend adjustments) to find total consumption. Bad economics that.

The reason why good turns to bad is that demand (and supply, to an extent) will adjust to changes in policies, behaviors and prices.

I just wrote this for an article that's soon to be published:
In conditions of scarcity, economists think of reducing demand by shifting in or sliding up the demand curve. The demand curve of an individual or group shows how the value of each unit of water falls as more water is consumed. These values show priorities, i.e., for drinking over irrigation. Taking these values as given, actual consumption --- or quantity demanded --- only occurs for units whose values are greater than the price of water. The demand curve can shift in with a change in tastes or technology that assigns lower values to water. One might, for example, decide not to have a lawn or use drip irrigation to produce the same greenery with less water. An increase in price, in contrast, reduces demand by choking off lower-valued uses, e.g., the tenth minute in the shower.
Now what you should take from this is that there are lots of ways of reducing demand, such that shortage never results in the face of lower supplies. In other words...

Demand is not a fixed constant.

The good news is that the authors of the Mead study did somewhat integrate that thought fact* into their revised study.

So, why this post, 6 years later? Because this problem --- of scientists (and just normal folks) taking demand as a fixed constraint --- constantly produces misleading conclusions.

In this case, it's an article entitled "Can We Sustainably Harvest Ivory?" [open access]. In the paper, "a harvest model is developed to estimate sustainable ivory yield from elephants" and the authors conclude that "even in the best-case scenario, the sustainable yield is well below the current demand... Our study shows that lifting the ivory ban will not address the current poaching challenge. We should instead focus on reducing consumer demand."

So they are sticking with the ban on ivory trading (and thus the continuation of the black market in poached ivory) while hoping to shift demand in by telling people ivory is unsustainable, etc., and that they should not buy it.

This is bad advice because it misses the obvious problem of people who still like ivory. I'm pretty sure that their "campaign of hope and virtue" (my label) will fail --- just as the War on Drugs has failed due to users' continued insistence on buying illegal (but very enjoyable) substances.

I emailed the author of the article and asked why they didn't look into markets and prices as a means of converting a common pool resource (elephants that roam without any owner who could make money from them) to a private good that would be sold for as a trophy but that would also provide a living to its owners as well as a huge incentive to get as many elephants as possible.**

He replied that property rights were not clear everywhere and that quantity demanded was far too high to be brought down by prices.

On the former, I replied that it's not hard (indeed it's done all the time) to isolate and protect -- thereby privatize -- elephants. On the latter, I gave this example: "Say you offer a van Gogh painting for $20. You'd have 10,000 people lined up to buy it. The reason it's auctioned is to find the ONE person who will pay $23 million for it. The same dynamic explains how to choke demand by raising prices."

He wasn't interested in changing his mind, so that was that.

But it wasn't, because it's likely that anti-hunting, anti-market people will use this "peer review study"*** in their fight to keep ivory trade illegal. Yes, they will win a moral victory, but they will lose the war: the black market and its customers don't care about your morals. They will pay for tusks from elephants slaughtered in dead of night, by people trying to make a living.

Bottom Line The only thing worse than killing elephants is leaving elephants vulnerable to murder. We can save them just as we save dogs and cats -- by giving them owners who value them, sometimes as dead trophies but more often as a thriving, growing herd.

* It's ain't called the Law of Demand for nothing!

** Read this paper about a successful program that "farmed" wild animals for community income in Africa. If you're into pandas, remember that they are no longer "endangered" in China because the Chinese government [irony!] spent heavily on breeding pairs that can be rented for $1 million/year.

*** It would never have passed peer review by any economist.

Addendum: Here are a bunch of comments (and my replies) to this post on Reddit.

Addendum: These authors are MUCH better at saying what I am


RMills said...

I would just add this observation: to a farmer in Africa trying to feed his family, an elephant is not a good in any sort of way, but a competitor that may very well "harvest" for itself the crops the farmer is trying to grow. Privatizing turns the elephant from a competitor and liability to an asset. I believe that Kenya has done this with some success in that the elephant population has grown somewhat. Anyway, it is easy, I think, for people living in cities of the developed world to forget how difficult dealing with nature in rural areas can be. To a New Yorker, a wolf is a beautiful animal you see in pictures on the internet, but a rancher in Idaho, who may appreciate the beauty of the wolf, must deal with the reality that the wolf also presents a danger to his livelihood.

Daniel Stiles said...

DZ note: I got this comment via email, which was too long so it's in two pieces...

[I tried commenting on your blog page, but it kept getting deleted. I don’t have time to repeat my whole comment (am at CITES CoP), but here's my reply to a letter Lusseau & Lee circulated to IUCN Suli members asking us not to pre-judge his piece as propaganda]

I always give papers I read the benefit of the doubt prior to reading them, so it is only after reading yours that I concluded it was a piece of propaganda. Either that, or you and your co-author simply do not know anything about ivory trade. Either way, the paper is deeply flawed in many respects.

Take for example the three assumptions you assert that a legal ivory trade is based on. None of the assumptions are in fact made by trade proponents, only by you.

(1) "Harvest regulation will cease all illegal activities" - What harvest? Who has proposed harvesting elephants? Who has said that a legal ivory trade will stop illegal activities? Could you please present some references? And please don’t cite the DMM report of Martin et al., that is ancient history and off the table.

(2) "Defined sustainable quotas can be enforced" - Quotas of what? Who has proposed quotas of anything? I assume you are referring to harvesting (cropping) quotas of elephants, but I am unaware of any such quotas being proposed. Please provide references.

(3) We can define meaningful sustainable quotas that come close to the current demand - ‘Quotas’ should not even be used, ‘supply’ is really what you mean, from all sources. And what do you mean by ‘current demand’? Why do you even assume that the demand for poached tusks would be the same as for legal tusks?

Early on in the paper you allege, “Since 2008, this poaching has increased to unprecedented levels driven by consumer demand for ivory products.” What evidence do you have that all or most of the poached ivory was processed to satisfy consumer demand for ivory products? Most of the experts on ivory trade that I know have accepted the probability that the majority of the smuggled raw ivory to East Asia has been stockpiled by speculators. Even the recent UNODC report on illegal wildlife trade agrees. If speculators have been buying most of the poached tusks, would they continue doing so if legal tusks were on offer, at no risk? The answer is NO.

Further on you assert, "We do not have a current estimate of the ivory annual consumer demand, but from seizures we can estimate that around 210 tons of ivory are poached each year” and continue, assuming that this quantity would represent demand under a legal trade regime. Why? Do you really think that 210 tons of illegal ivory is processed and sold to consumers annually? Ivory market surveys and modelling exercises have estimated only a fraction of this amount is processed in the countries where poached tusks go.

You conclude, “we cannot brush aside the fact that poaching has reached industrial scale fueled by an increase in consumer demand driven by the rise of the middle class in countries like China.” What if consumer demand has not been fueling poaching? What if speculative demand for raw ivory to stockpile has been the fuel?

"Given the large discrepancy between current illegal demand and what can be sustainably harvested from African elephants, we cannot see a way by which ivory harvesting can resume and be sustainable. Thus, there is a very high risk that lifting the ivory ban will lead to the rapid disappearance of African elephants.” This statement is pure propaganda, based on a series of false assumptions that you have fabricated, straw men for you to blow down.


Daniel Stiles said...

[part 2]

A legal international supply of raw ivory would not depend on any harvest regime of the type you propose. The most likely system to work both politically and economically would consist of raw supply from managed legal stockpile releases, natural mortality pick-up, and problem animal control. Consumer demand can (and is traditionally) also partially met by recycled old worked ivory. In all of my surveys, even in China, I’ve found varying proportions of second-hand ivory for sale in market places, antique shops, weekend swap meets, etc. Not all consumer demand is met by newly processed ivory.

Consumer demand can also be suppressed by ivory industry regulations requiring that mainly high quality, high price items be manufactured and sold. The only small, lower-cost items that would be permitted would be made from the processing residue pieces and waste from the larger pieces. Ivory industry people would be delighted with such regulations, as profit margins would be high and raw material costs low.

There is almost certainly enough ivory production available to supply legal demand under such a system, and a regular, predictable legal supply of raw ivory would put speculators out of business, saving thousands of elephant lives every year, while contributing to African range area rural community welfare and to conservation programmes. Poaching will not stop dead, but it will be greatly reduced.

Elephants cannot survive an ivory trade ban.

Best regards,

Daniel Stiles, Ph.D
Ol Pejeta Conservancy
Nanyuki, Kenya

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