“Trade fuels demand”: Phrases that should be banned

By Brendan Moyle 28/11/2011 4

There are many phrases that cause me to wince. The oft-used ‘missing-link‘, beloved by newspaper headline writers, creationists and 1950s B-movie writers is one.  Another that is stubbornly popular in conservation literature is the oft-repeated claim that trade will fuel demand for wildlife parts.  This is typically used as a reason why trade in wildlife (or their parts) should not be allowed.

There are of course, legitimate reasons why trade could lead to increases in sales of wildlife parts (both legal and illegal). These are issues like laundering, a conspicuous problem during the 1980s with elephants.  Now, I would really prefer to debate these sorts of real reasons trade generates risks.

Instead we end up going over the same old ground, time after time.  Wildlife apparently is different to other economic products.  The act of making these goods available is sufficient to cause people to want them. Poor McDonalds or the like, have to spend advertising dollars in an effort to get customers into their stores. All wildlife producers have to apparently, is make their stuff available. It practically sells itself.

This is rather counter to our evidence. The trade in rhino horn has been banned since the 1970s, and despite proposals from time-to-time to have a legal trade (a legal harvest could simply remove horn from time-to-time on living animals), we’ve not seen that this has curbed demand. Poaching levels have remained unsustainable, populations of rhinos have been wiped out, and the price has soared from $US500 per kg in the 1980s to $50,000 per kg now.

Now, we don’t really have the counter-factual available here (would rhinos do better with some system of trade?), and the increase in price could also be sustained by the decline in supply.  So let’s have a bit more of a formal look at another example.

The idea behind trade fueling demand could be manifested in a couple of ways.  First, if I increase the supply of wildlife products in one year, this should increase demand (and sales) in the following year.  More people will want these products as their demand has been piqued. So increases in supply should lead to further increases in sales, decreases likewise.

The second way is via prices. If we’re increasing sales, is that because we’ve increased production and the market has cleared at this higher output? Or is it because demand has increased.  Well, a key variable there would be prices.  If prices go up- even as we’re increasing production- this would also imply supply is fueling demand.

So lets have a look at the Louisiana alligator production.  It’s a classic wildlife product, and at one stage subject to unsustainable harvests. It’s also a long data set, as the production and harvest level go back to the early 1970s.  This should be long enough to pick up any trends.

So, first question- does an increase in production in say one year, lead to an increase in production in the following:

Red line- the actual data from the Louisiana alligator market
Green line- the estimated data based using the previous year’s production as the predictor
Blue line- the residuals, the graph of the difference between the actual and estimated values.  The tighter and closer this graph is to the 0-line, the better the fit.

Regression: Farmed Skin Supply
Regression: Farmed Skin Supply

The regression had no significant fit here whatsoever, neither does the previous years supply have any effect on this years.  So this quick and simple test doesn’t support trade fueling demand. The blue-residual line is extremely volatile, reflecting the insignificant fit.

Let’s then consider whether there might be a price effect from this supply.  Again, I want to know if an increase (or decrease) in supply in a previous year will fuel (or correspondingly, reduce) demand in the current year.

Regression: Production and Prices
Regression: Production and Prices

And once again, there’s absolutely no relationship. The quantity supplied in the previous year has no detectable influence on prices. We’re not able to fuel demand here by our supply-decisions.

The third point is that maybe, it’s not that legal trade fuels demand for the farmed (or ranched products), but that it fuels the demand for the wild product. This may better reflect the concern conservationists have.  It is also something we can again test.  Louisiana has wild harvests operating alongside their farmed output. So lets see if our farmed output is affecting our wild harvest levels.


Again, there’s no relationship. Supply decisions in the farmed industry in a previous year, have no effect on either the price or the output of the wild skins in the current year.

In summary, there’s no good reason to give wildlife a special status.  There are certainly good reasons why a legal trade could increase conservation risks.  But the supposition that it will fuel demand is not one of them. The evidence we have from trade in wildlife products is that the usual market parameters drive demand. There’s nothing unique about wildlife that would cause a departure from this.

One also suspects that the opposition to trade in many cases is based on the charisma of the wildlife involved, rather than inherent conservation reasons.  It’s clear that there’s more opposition to say, trade in rhino parts than there is in alligator or crocodile.

4 Responses to ““Trade fuels demand”: Phrases that should be banned”

  • […] In reality, if body parts from captive tigers were supplied to the market, their price would most likely drop (in line with basic principles of supply and demand). And lower prices would mean reduced rewards and incentives for poaching and illegal trade. The theoretical argument for trade stimulating demand is phony. What about empirical evidence?  Conservationist Brendan Moyle analyzes data from the commercially-exploited Louisiana alligator population and finds no correlation to support WWF’s claimed relationship. […]

  • It might also be germane to point out that wild and farmed alligator leather isn’t the same in terms of market demand. Wild alligator leather commanded the premium price for much of this period. As the graphs above show, farmed products are not leading to an increased desire for the premium “wild” product.

    Increase farmed products supply by 10% in one year, and there is no increase in demand (measured as either sales or prices- for both wild and farmed products) in the following year.

  • Hi Brendan
    I suspect the term ‘trade fuels demand’ most likely represents the observation that increased (legalised) supply of a product pushes down prices and therefore leads to higher demand. This is perceived as a bad thing because in many cases the controlled sale of the wildlife product cannot be distinguished from the (illegally) poached one (a good example is the failure of controlled ivory trade). so the real difference between a wildlife product and a ‘produced’ good is control I guess (or to put it another way: the ability of a government to enforce any type of regulation). Since most wildlife products come from developing countries, this is a real issue. This reminds me of something I learnt during my masters. Developing countries are growing by following into the footsteps of western countries by converting their vast natural capital into ‘man-made’ capital (a good example is China), yet what they could (should?) be doing is utilizing their natural capital instead. But this requires the embracement of wildlife trade and farming. It is a debate we should be having. What annoys me is that some people are disgusted by the idea of tiger or alligator farms (or even dog farms as I saw on TV recently), yet every day we slaughter sheep, cows and pigs for daily consumption. what’s the difference???

  • I think you’re partly correct. “Trade fuelling demand” is a kind of shorthand for people bringing up the laundering issue. But it’s sufficiently fuzzy as a concept it also often means it stimulates demand. That vagueness alone should be enough to ban it from use in conservation discussions :)

    It’s pretty incoherent as a concept really.

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