China’s ban on trad­ing in ivory is a huge step

African Independent - - ENVIRONMENT -

com­mer­cial do­mes­tic trade in ivory.

In a pa­per pub­lished in Septem­ber, we ex­am­ined how spec­u­la­tors might re­spond to a do­mes­tic trade ban in China. Given the ev­i­dence that a sig­nif­i­cant vol­ume of ivory is be­ing stock­piled, we sought to un­der­stand the in­cen­tive struc­tures that might be driv­ing spec­u­la­tor ac­tiv­ity.

We dis­tin­guished be­tween whole­sale and pri­vate spec­u­la­tors.

Pri­vate spec­u­la­tors prob­a­bly ac­count for only a small pro­por­tion of to­tal ivory con­sump­tion.

They may be in­di­vid­u­als buy­ing ivory ei­ther as a col­lec­tor’s item or as an “in­fla­tion-proof ” in­vest­ment ve­hi­cle. In this cat­e­gory, the mar­ket struc­ture would prob­a­bly be quite com­pet­i­tive.

Not so for whole­sale spec­u­la­tors. These are likely to be large syn­di­cates that are ei­ther oligopolis­tic or mo­nop­o­lis­tic in struc­ture. They ap­pear to have an in­cen­tive to drive ele­phants to the brink of ex­tinc­tion. Syn­di­cates would not want po­ten­tial com­peti­tors to ac­cess liv­ing ele­phant stock. If ele­phants were to be­come ex­ceed­ingly scarce, the value of their ivory would sky­rocket.

Trade in the prod­ucts of ex­tinct species is dif­fi­cult to reg­u­late, and ex­ceeds the Cites man­date.

Spec­u­la­tors would have had ev­ery in­cen­tive to stock­pile ivory in an­tic­i­pa­tion of earn­ing fu­ture mo­nop­oly rents prior to the an­nounce­ment of a do­mes­tic trade ban in China. This ex­plains the dis­crep­ancy be­tween the vol­ume of ivory en­ter­ing China and the vol­ume be­ing sold (even il­le­gally).

Our pa­per ar­gued that the Chi­nese do­mes­tic ban should be im­posed as soon as pos­si­ble, and for an in­def­i­nite du­ra­tion. Chi­nese au­thor­i­ties have now, with mi­nor ex­cep­tions, com­mit­ted to do­ing so. That is good news – the quicker the bet­ter. The longer the ban takes to be im­ple­mented, the longer spec­u­la­tors have to sell off ivory. In that sce­nario, the ivory price is only likely to de­cline slowly, if at all. The sooner the ban is im­ple­mented, the more ivory spec­u­la­tors will have to off­load in a short space of time, driv­ing prices down. Lower prices will dis­in­cen­tivise poach­ing.

Op­po­nents of the ban typ­i­cally ar­gue that prices will rise in an­tic­i­pa­tion of fu­ture scarcity. But this de­pends both on who is buy­ing and how long spec­u­la­tors be­lieve the ban will be in place.

Ivory prices de­clined by half from June 2014 to De­cem­ber 2015.

This sug­gests that an­tic­i­pa­tion of fu­ture scarcity was not driv­ing prices up as ex­pected. If spec­u­la­tors be­lieved that the do­mes­tic trade would be banned, they may have got rid of their ivory more quickly. De­mand may also have been de­clin­ing as a re­sult of lower in­come lev­els and the ef­fi­cacy of de­mand re­duc­tion cam­paigns.

But if whole­sale spec­u­la­tors be­lieve that the ban will only be tem­po­rary they would have an in­cen­tive to main­tain their stock­piles un­til le­gal sales re­sumed. In the mean­time, they would con­tinue to poach to main­tain or build a mo­nop­oly on the avail­able ivory stock.

So, it is good news that the of­fi­cial word­ing of the ban does not sug­gest the pos­si­bil­ity of fu­ture trade. It may have been prefer­able to state this ex­plic­itly. But that may have been too po­lit­i­cally prickly.

A do­mes­tic trade ban in China may spur what econ­o­mists call a “fire sale”, where stock­hold­ers off­load large vol­umes of stock at the same time. This drives prices ex­po­nen­tially down­wards. It re­mains to be seen whether this will hap­pen. Re­cent re­ports sug­gest that ivory pro­cess­ing and sales are in­creas­ingly mov­ing into Viet­nam, sim­ply mov­ing the prob­lem to a dif­fer­ent ge­o­graphic lo­ca­tion with lit­tle ef­fect on prices.

How prices re­spond to the news will pro­vide some in­di­ca­tion of whether the spec­u­la­tion in our pa­per was cor­rect. Ei­ther way, the hope is that prices will be driven down­wards, dis­in­cen­tivis­ing poach­ing and pro­tect­ing ele­phants.

A do­mes­tic trade ban is only one span­ner in a com­plex tool­kit to achieve sus­tain­able ele­phant pop­u­la­tions. It is nonethe­less a cru­cial one: a strong sig­nal of change from a coun­try that re­cently mar­keted the ivory trade as a her­itage in­dus­try.

There are other threats such as habi­tat frag­men­ta­tion and en­croach­ment. Add to this in­creas­ing hu­man and ele­phant con­flict, and a thriv­ing bush-meat trade, and it’s clear that long-term ele­phant sur­vival is at risk.

An­other com­plex­ity is the avail­abil­ity of mam­moth, or fos­sil ivory, which can be traded legally.

Some ar­gue that its avail­abil­ity sub­sti­tutes for ele­phant ivory and there­fore slows the rate of ele­phant killing. Oth­ers worry that it sim­ply pro­vides an­other laun­der­ing mech­a­nism be­cause it’s plau­si­ble that ele­phant ivory will be passed off as mam­moth ivory.

Ul­ti­mately, ele­phants need to be val­ued as be­ing worth more alive than dead by two cru­cial con­stituents. Con­sumers need to make the cul­tural shift to see­ing ivory as be­long­ing to ele­phants alone. Com­mu­nity mem­bers on the front line of con­ser­va­tion and hu­man-ele­phant con­flict need to re­ceive sig­nif­i­cant ben­e­fits from keep­ing ele­phants alive and their habi­tats in­tact. Only then will the bat­tle be won. – The Con­ver­sa­tion

Ross Har­vey is a Se­nior Re­searcher in Nat­u­ral Re­source Gov­er­nance (Africa), South African In­sti­tute of In­ter­na­tional Af­fairs

PIC­TURE: AP

SEIZED: Ivory stat­ues in front of about a dozen pyres of ivory, in Nairobi Na­tional Park. The Kenya Wildlife Ser­vice torched about 105 tons of ivory last April to en­cour­age ef­forts to stop the poach­ing of ele­phants and rhino.

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