“Pre­serv­ing – rather than burn­ing – stock­piles is the in­ef­fi­cient choice. Main­tain­ing a stock­pile is ad­min­is­tra­tively and op­er­a­tionally ex­pen­sive – and of­ten point­less”

Financial Mirror (Cyprus) - - FRONT PAGE -

Kenya has de­cided to de­stroy its en­tire stock­pile of ele­phant ivory. More than 100 met­ric tons of “white gold” – both il­le­gally har­vested (con­fis­cated from poach­ers or traders) and nat­u­rally ac­cru­ing (from nat­u­ral mor­tal­ity) – went up in smoke last week­end. In China – where the ma­jor­ity of the world’s ivory is con­sumed or stock­piled – the re­cently re­ported price is $1,100 per kilo, putting the to­tal value of the ma­te­rial burned at roughly $110 mil­lion.

To most econ­o­mists, the idea of de­stroy­ing some­thing with so much value is anath­ema. But there are good rea­sons for a coun­try – even one as poor as Kenya – to sur­ren­der its ivory wealth to the flames.

For starters, stock­pile de­struc­tion for­ti­fies the cred­i­bil­ity of de­mand-re­duc­tion campaigns in East Asia, with­out which the poach­ing prob­lem will never be solved. De­mand re­duc­tion aims to weaken the mar­ket for the prod­uct by chang­ing con­sumer tastes. As prices drop, so does the in­cen­tive for poach­ers to kill ele­phants.

When coun­tries keep their stock­piles, how­ever, they sig­nal that they an­tic­i­pate be­ing able to sell ivory in the fu­ture. This un­der­mines the cred­i­bil­ity of de­mand-re­duc­tion ef­forts; if the trade is likely to be le­galised one day, any stigma as­so­ci­ated with ivory con­sump­tion will be eroded.

Pro­po­nents of a reg­u­lated, legal in­ter­na­tional ivory trade ar­gue that de­mand-re­duc­tion ef­forts can co­ex­ist with a lim­ited le­git­i­mate sup­ply. But this line of rea­son­ing has a dan­ger­ous weak­ness: It as­sumes that a legal car­tel – one pro­posed model for reg­u­lat­ing sup­ply – would crowd out il­le­gal sup­pli­ers by pro­vid­ing ivory to the mar­ket at a lower cost.

This as­sump­tion is du­bi­ous at best. The quan­ti­ties traded through a legal mech­a­nism would be in­suf­fi­cient to flood the mar­ket and sup­press the price. In­deed, with le­galised trade un­der­min­ing de­mand-re­duc­tion ef­forts, the price of ivory is likely to re­main high, en­sur­ing that poach­ing con­tin­ues.

Some southern African coun­tries ar­gue that they should be al­lowed to sell their ivory in CITES-per­mit­ted, one-off sales to fund con­ser­va­tion ef­forts aimed at main­tain­ing healthy ele­phant pop­u­la­tions. But, aside from the low prob­a­bil­ity in some coun­tries that the rev­enue would be di­rected to that end, it is not clear that much money would be made.

Un­der CITES reg­u­la­tions, gov­ern­ments are per­mit­ted to sell only to other gov­ern­ments. But what other gov­ern­ments are will­ing to pay may be as low as one-tenth of the il­licit value. And even then, gov­ern­ments can sell only nat­u­rally ac­crued ivory, not what was con­fis­cated from poach­ers or il­licit deal­ers.

China and the United States are in the process of for­mu­lat­ing bans on do­mes­tic ivory trade, so it is not clear which gov­ern­ments would be in­ter­ested in pur­chas­ing African stock­piles. Viet­nam and Laos are likely can­di­dates, but they are also part of the in­fa­mous “golden tri­an­gle,” where il­le­gal trade in wildlife and wildlife prod­ucts con­tin­ues to thrive. The pos­si­bil­ity of the legal ivory trade shift­ing to poorly reg­u­lated mar­kets calls for a con­certed in­ter­na­tional re­sponse, spear­headed by African gov­ern­ments through coali­tions like the Ele­phant Pro­tec­tion Ini­tia­tive, to­gether with coun­tries such as China.

Pre­serv­ing – rather than burn­ing – stock­piles is the in­ef­fi­cient choice. Main­tain­ing a stock­pile is ad­min­is­tra­tively and op­er­a­tionally ex­pen­sive – and of­ten point­less. In­ven­tory

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