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Posts Tagged smuggling

Ivory Crimes: Supply or Demand Shock? Brendan Moyle Apr 09

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One of the unsettled issues with the surge in elephant poaching seen after 2008/9 is explaining why it took off. The scale represents a break from the past.  It seems inexplicable in terms of what we understood the drivers of poaching were.  These were basically either affluence in consumer markets (like Asia) or poor governance in African countries.  Neither of these changed dramatically in the 2008/9 period.

One popular theory advanced by some NGOs and conservationists is that there has been a massive demand shock. It’s claimed demand for ivory has exploded in China after CITES approved the 2008 shipment of stockpiled ivory from 4 African countries to China and Japan.  This explanation has a number of problems.  The first is it’s hard to reconcile it with other events in this era like the Global Financial Crisis.

The second problem is that it doesn’t fit the actual picture of illegal activity we have. Using the data collated from the ETIS we can see that the illegal activity in worked ivory pieces is pretty stable.  The harsh truth that while most seizures are of very small items of ivory, these seizures add up to a small total.  If there had been a demand shock, we’d see the worked ivory following the same trend as the raw.

raw vs worked

The second problem with the demand shock explanation is that these ivory items are simply not for sale. Contrary to what some NGOs may want you to believe, buying illegal ivory hasn’t become a national past-time in China. People aren’t joining queues to buy ivory. One thing we did in our last expedition was just eyeball the ID-cards for ivory-pieces for sale in registered retail stores.  They’re still carrying stocks that are several years old. We used locals to see how easy it was to find certain ivory pieces for sale legally and illegally.  The old chopsticks some small antique dealer may have under his counter, doesn’t actually add up to a lot of ivory.  This is a point that has already been made by the CITES Secretariat.  The numbers we’re getting out of China from a diverse group of organisations is just too low to reconcile with a demand explosion.

The other possibility is what we see with this rapid increase in poaching and raw ivory smuggling, is a supply shock.  There are two important events that have occurred since 2008/9.  The first is that Central Africa has got a lot less stable. One casualty of bitter civil conflicts is elephants. Spending on national parks and wildlife protection collapses, whilst money-hungry armed-groups try to cash in with poaching. That’s one supply-factor that has changed.

The second is that shipping costs after the GFC collapsed. Sending raw ivory from Africa to consumer markets for stockpiling got a lot cheaper. We’re not talking about say a 10 or 20% drop in costs. We’re looking costs that have fallen to less than a third what the used to be.  Nearly all of the illegal activity in the graph above, comes from seizures of raw ivory in shipping containers.

These are major and important events that are inconsistent with the demand-shock explanation. Civil war in Africa isn’t going to an increase in demand in China. Neither is cheaper shipping costs. What we seem to have is a significant supply-shock that criminal organisations are taking advantage of to store more raw ivory in final markets- like Asia.  We’re not seeing it for sale in the streets because it’s being stored and it’s likely not in their interests to be dumping lots of ivory into consumer markets.

One final piece of evidence is the time it takes to make a carving.  Raw ivory hits a production bottle-neck because turning ivory into a carving is a slow process.  Production is basically artisanal.  One thing we explored in China in various factories was production time.  To illustrate, the figure below, roughly 1 kg, would take an experienced carver about 2 months to complete, and an inexperienced carver 4 or 5 months. The throughput of raw ivory into carvings is not a rapid process.

A CWP Photo

 

 

 

The dangerous economic ideas acquired by conservationists Brendan Moyle Mar 13

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One thing you quickly find is that many people bring their own ideas of how economics works to the debates on conservation policy. Some of these ideas are quite dangerous and yet, remain part of the folk-economics of conservation.  They are often employed by NGOs and the like.

The first is that legal trade fuels demand for illegal.  Now we do know that legal trade can generate pathways that lead to more poaching, but fundamentally, legal sellers and illegal are in competition. They’re in competition because the products are substitutes. Hermes isn’t going to demand more poached alligator or crocodile leather because they’re buying lots of legal leather. Legal trade doesn’t fuel demand for illegal. It crowds the illegal out (all else being equal).  That’s a big part of why the sustainable, regulated trade in crocodilian skins has crushed the illegal trade.

The caveat is there are pathways where legal trade does sustain illegal. One important is laundering where illegal wildlife products are merged into the market as sold as legal.  But this is a different mechanism to fueling demand. That’s the important point. Legal trade isn’t a panacea or instant solution. But the problems it creates aren’t demand-driven.

The second dangerous idea is that concentrating market power in incumbent sellers is bad for their business. This is nuts. Some of how most enduring conservation problems are a result of concentrating market power in large, criminal organisations. For ivory, we’ve choked back the export of legal ivory to an erratic trickle since 1990.  We have large, organised crime networks involved now. And the latest move to destroy ivory stocked by governments is further concentrating market power with the bad guys.  This is literally the only setting I’ve been in, when people argue and believe that competition will make the incumbents (the bad guys) better off.  By analogy, this would predict that Blackberry and Nokia would be much more profitable after Apple entered the market with the iPhone than before.

We’ve done the same thing for rhino horn. The quasi-legal export of rhino horns (as trophies) out of South Africa to key Asian states was tightened up- so poaching increased. Then as a response, it was banned. And poaching exploded. Concentrating market power in the bad guys is a pretty dangerous step to take if you’ve got nothing to counter their responses with.

The third dangerous idea is that everything must be explained in terms of demand. There is an astonishing neglect of the supply influences on poaching.  A good example is the explanations for the rapidly rising poaching levels of African elephants since 2008-9. A number of NGOs are certain that roughly in this period, middle-class Chinese all took evil pills, and became insatiable, avaricious consumers of ivory products.

Figure 1: Ivory Seizures increase rapidly from 2008-9

Raw Ivory Seizures

If we explore the supply-side then there’s actually two very important changes.  The first is the several Central African states have became pretty unstable and they’re a major source of ivory. Not a lot is being spent on parks management and rangers there, and various groups are cashing in ivory to pay for their warring.

The second is that shipping costs have collapsed. Globally, shipping costs were in the rise in the mid 2000s, reaching a peak in early 2008 before the Global Financial Crisis.  They then collapsed. They haven’t just fallen a little bit. They’ve dropped to about a third of pre-GFC levels.  This matters because the ivory has a unique aspect. It is the only wildlife product that is transported by the ton, in shipping containers. It’s a major part of the supply cost.  It’s just dropped. Indeed, the change is so dramatic, there’s evidence ivory in the early 200os is only been exported in this period.

And this supports a crucial observation. We’re not seeing the volumes of carvings for sale that match this influx.  This is a point the CITES Secretariat has made in its summaries of the evidence. If demand had really exploded to match the influx we seen in Figure 1, then we’d detect that with a big increase in number of retailers, stocking rates and turnover.  And nobody has seen that occur. Yes, demand for ivory is going up, but in line with the growing affluence in China. That’s a steady increase. It’s an important increase.  But it doesn’t come close to matching that surge in supply.

Ivory Bust in HK & a question for the economists Brendan Moyle Nov 13

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It’s interesting holding an elephant tusk for the first time.  You’re not quite sure what to expect. But the first thing you notice is that they’re heavy, heavier than I expected. This aspect distinguishes elephant ivory from other wildlife products.  It’s heavy, and it’s going to take up space.  This has to affect the smuggling techniques.

tusks

Last month there was another bust of smuggled ivory in Hong Kong.  There were 189 tusks with an average weight of 4kg each.  The origin of the shipment was (ironically) the Cote d’Ivoire.  West Africa continues to play a dominant role as an export centre of poached ivory.  This was the third major bust by Hong Kong customs this year.  The common denominator is that they’re all shipped, concealed, in containers.

The novel aspect of this shipment is the conspirators were trying to spread their risks this time. Rather than the tusks being on one ship, they came in containers on three different ships.  This suggests the effect of several big busts in late 2012 and continuing to 2013 is increased wariness.

Of the illegal wildlife products I’m familiar with, containers are a technique that I think, specialised for ivory. I can’t think of any other wildlife product that relies so heavily on containers.  So, aside from I think firearms, here’s a question for the economists (or anyone else who knows).  Is there any other illegal product that depends as much on shipping containers for distribution as ivory?

 

 

Back to tigers? Waiting on the paper work Brendan Moyle Jun 19

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I'm hoping I can pull off an expedition to Kunming and Xishuangbanna (Yunnan) in Late July. Currently the paper work has all been submitted. This time round, part of the trip will be pertaining to poaching and smuggling of wildlife. In this case, the focus is back on tigers. Yunnan borders several SE Asian range states for tigers and has a history of being a transit point or destination for tiger parts.

I think one of the problems with wildlife poaching is that its traditionally been seen as a conservation (i.e. biology) problem. One of the key things we need to grasp is that black markets for wildlife also have a strong economic dimension. People aren't poaching tigers and leopards because they're bad people. They're not doing it because they're misinformed. They're doing it because crime pays. Wildlife poaching is an economic activity that is profitable to its participants.

Sundarban Tiger – Source: Shutterstock


Poachers hunt animals because it works for them. They may have particular skill sets and knowledge that makes them adept at hunting. And the risks aren't off-putting. The frequency with which big-cat poachers get caught and prosecuted isn't high. Likewise smugglers are doing it for similar reasons. They're adept at transporting contraband over big distances and international borders.

So, we do need to understand how these criminal organisation operate at the economic level. How is they source their products, locate their customers and organise its distribution? What are the risk-reducing strategies they adopt? What is it that is driving the demand for tiger parts and the like? There are a lot of suggestions that seem reasonable, that also don't withstand a lot of scrutiny. It's been suggested that rich Chinese businessmen are the main customers for tiger skins. Well, with perhaps 300 tigers a year being poached, we can be pretty certain that the vast majority of rich businessmen aren't buying tiger skins. As a trait of the average consumer of tiger parts, this needs a lot of refinement.

Back to tigers? Waiting on the paper work Brendan Moyle Jun 19

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I'm hoping I can pull off an expedition to Kunming and Xishuangbanna (Yunnan) in Late July. Currently the paper work has all been submitted. This time round, part of the trip will be pertaining to poaching and smuggling of wildlife. In this case, the focus is back on tigers. Yunnan borders several SE Asian range states for tigers and has a history of being a transit point or destination for tiger parts.

I think one of the problems with wildlife poaching is that its traditionally been seen as a conservation (i.e. biology) problem. One of the key things we need to grasp is that black markets for wildlife also have a strong economic dimension. People aren't poaching tigers and leopards because they're bad people. They're not doing it because they're misinformed. They're doing it because crime pays. Wildlife poaching is an economic activity that is profitable to its participants.

Sundarban Tiger – Source: Shutterstock


Poachers hunt animals because it works for them. They may have particular skill sets and knowledge that makes them adept at hunting. And the risks aren't off-putting. The frequency with which big-cat poachers get caught and prosecuted isn't high. Likewise smugglers are doing it for similar reasons. They're adept at transporting contraband over big distances and international borders.

So, we do need to understand how these criminal organisation operate at the economic level. How is they source their products, locate their customers and organise its distribution? What are the risk-reducing strategies they adopt? What is it that is driving the demand for tiger parts and the like? There are a lot of suggestions that seem reasonable, that also don't withstand a lot of scrutiny. It's been suggested that rich Chinese businessmen are the main customers for tiger skins. Well, with perhaps 300 tigers a year being poached, we can be pretty certain that the vast majority of rich businessmen aren't buying tiger skins. As a trait of the average consumer of tiger parts, this needs a lot of refinement.

Can the surge in elephant killing be stopped? Brendan Moyle Apr 24

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The CITES meeting in Bangkok (March 2013) highlighted once more the wavering fortunes of wild elephants. We are forced to recognise that poaching has been on a steady increase for over a decade, and that all steps to prevent this so far has failed.

At the policy level, the conflict remains one of whether a strict international ban on the trade in tusks will succeed, or whether a regulated trade will work instead. The skepticism about the international ban approach (which dates back to the 1989 CITE meeting) stems from several factors. These include the failure of the ban and accompanying education campaigns to reduce demand in foreign markets (which are to be honest, not exclusively Asian).

Source: Stock.Xchng
To move the debate on a bit, I'd like to reproduce an argument Michael Eustace made in a letter to the Business Day


DEAR SIR, The Convention on International Trade in Endangered Species banned trade in ivory in 1989 but that has not stopped elephant poaching. There are many different estimates as to how many elephant are poached each year but 20,000 would seem a reasonable assumption. Most of the ivory of about 200 tons is sold to Chinese buyers with criminals making all the profit. The wildlife donor agencies persist in promoting increased law enforcement and changing the Chinese mindset as being the solution but neither is working as is evidenced by the ongoing poaching. Law enforcement in a corrupt society is ineffective and changing the Chinese mindset has been tried over many years and proved futile. China wants ivory and Africa has ivory. Both would prefer a legal trade rather than a criminal trade. Africa can sell the ivory that is gathered from natural deaths to China so as to satisfy some of the demand. There are about 500,000 elephant in Africa and some 10,000 die each year of natural causes. They leave 100 tons of ivory. That ivory could be sold by a broker, with a monopoly over all legal supplies of ivory, to a Chinese cartel of ivory carvers who could then sell to licensed retailers. That would establish a clear legal pipeline and China, as part of the deal, could undertake to close down the illegal trade and also confiscate stocks from speculators. With the price of ivory having risen strongly in recent years, speculation is likely to have been a significant part of overall demand. Some poaching will continue but it will be a lot less and a legal trade will save the lives of at least 10,000 elephants every year. In addition there would be $100 million in profits each year for Africa’s parks rather than international criminals.



This neatly encapsulates some of the frustration some conservationists have with the ban. It is the bans failure that motivates the rethink of the strategy. The basic weakness as I see it, is the ban was implemented to frustrate the illegal market of the 1980s. Expecting it to still work in the 2000s depends on the black-market not having changed- that the criminal conspiracies have not worked out means to circumvent it. The problem is the black market has changed. It is no longer hidden within the legal market. It operates with independent smuggling and sale into an underground market (at least, within China the unregistered factories and shops serve this function).

There is also a lot of elephants in Southern and Eastern Africa. That's where the 500,000 mentioned above comes from.

Source: www.grida.no; Author: Riccardo Pravettoni, GRID-Arendal
We are in a position where natural deaths could supply a lot of demand in China. To put things into perspective, the one-off sale in 2008 to China of ivory, was an export of 62 tonnes- which they are eeking out by releasing 4-5 tonnes a year. As the letter above notes, we can actually supply a lot more than that, every year.

At the moment, the Chinese legal trade is really, just too small-scale to be impacting on the illegal trade. If we are serious about reducing poaching then this trade will have to increase in volume to crowd out the illegal market.



Radio Interview done, some musings Brendan Moyle Mar 30

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Well, back from my radio interview with Kim Hill. As I expected, we kind of hit the laundering issue surrounding elephants a lot. I think the laundering issue (one where poached tusks are passed off as legal, in the legal market) is exaggerated. One of the reasons is that in China for instance, the legal market (of registered sellers) and illegal (of unregistered) has split apart. The other is we do have examples of other wildlife markets where monitoring and regulating the legal trade has been proof against laundering. In many ways, there seems to be a drive to fight the black market of the 2010s, using the tactics of the late 1980s.

I think there is another element to this debate. While the risk of laundering is something we should be concerned about if there is a regulated trade, it doesn't mean the total ban is free of risks. By persisting with a total ban, we keep alive a number of threats to elephants. Chiefly, by reducing competition to smugglers, we keep ivory prices high and maintain their pool of buyers. This isn't working out so well. Poaching has been on the rise for over a decade. It hasn't abated. The black market today isn't the same as the one of the 1980s.

The other point is really, there's no such thing as one elephant population in Africa. The distribution is heavily weighted towards the Southern African region.

Source: www.grida.no; Author: Riccardo Pravettoni, GRID-Arendal

Most of the loss of elephants has been in West and Central Africa of the Forest African elephant. Populations there are also smaller and more fragmented. Perhaps more importantly however, is that these are the regions where there is a high degree of political chaos. The main driver for poaching in Africa may well be instability in some key states, rather than demand in Asian countries. The populations of savannah elephants in Southern and East Africa have been growing or stable.

Ten Years On: The Elephant Ivory Problem Brendan Moyle Jan 14

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In 2003 the chapter I wrote on wildlife trade[1] mentioned the illegal ivory market a few times. This was in the wider context of the conservation effects of bans. The chapter was based on a 2001 meeting in Cambridge University in September. I was unable to attend this meeting because, well, the 9/11 terrorist attacks stopped a lot of international flights at the time.

The (commercial) international trade in ivory was effectively banned at the 1989 Convention on International Trade In Endangered Species (CITES) meeting. Elephants were listed on Appendix I instead of Appendix II. An Appendix I listing does not permit commercial trade in the wildlife or their parts. It has no implications for domestic trade however. An Appendix II listing allows a regulated trade under a system of permits (and sometimes quotas).

There have been two one-off sales of stockpiled ivory to China and Japan since then. The demand for ivory products has not as far as we can tell, waned in these Asian markets. Rising incomes in China are if anything, leading to an increase in demand. The one-off sales are intended to reward those African countries with well-managed elephant populations. If you have elephants, then you accumulate tusks (from natural mortality, culls etc). The better you are at conserving elephants, the more there is, and the more tusks you accumulate. Cashing in those tusks can be a way to support this conservation. It’s also contentious. Many conservationists continue to support a tough, ban-the-trade strategy.

From the book chapter ten years ago:

The rationale for the ban was straightforward. The legal trade in ivory was providing poachers with a means of smuggling ivory into final markets in Europe, North America and Asia. Authorities and consumers were unable to distinguish poached ivory from legally obtained ivory. This gave poachers the least-cost way to market their product in overseas markets. Hence if the legal trade was sacrificed, poachers would not have this smuggling route available. The sacrifice did, however, give elephant populations a chance to recover p48



This is a view I share with some other conservationists. The 1989 ivory-ban was a temporary measure. It was going to buy time for elephants. That time could be used to implement better trade and management. Or we could blow the opportunity and let smugglers develop counter-measures.


Faced with a sudden rise in distribution costs, smugglers patiently developed alternative routes that were independent of the legal traffic. Instead of simply waiting and hoping for the ban in ivory to be lifted, new routes and new markets were developed p49-50



In a not very prescient observation, I noted that shipping containers were starting to be used to smuggle poached ivory. In December last year a shipment of 24 tonnes[2] was found in two such containers by Malaysian customs. Shipping containers are being interdicted that have ivory concealed in them. This is probably a function of the bulky nature of tusks. You need some way of moving a lot to make it economic.

Anyway, this is what we have seen happen. New routes have developed. New markets, especially in South East Asia and China have grown.


…Simple policy measures may work for a time but they end up being circumvented. Regulations rearrange costs and have flow-through effects to final markets. These market spill-overs spur participants to circumvent these costs …



The poaching crisis for elephants is now recognised to be as extreme as the 1980s.
I don't think my book chapter was very wide off the mark.



—-
[1] Moyle, B. (2003). Regulation, conservation and incentives. In Oldfield, S. (ed). The Trade in Wildlife: Regulation for Conservation, Earthscan Publications Ltd., London & Sterling, VA. Pp. 41-51.
[2] This news item also employs the popular and erroneous urban myth that the trade in wildlife is about Traditional Chinese Medicines.

Mapping tiger smuggling Brendan Moyle Nov 05

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One of the first problems I ran into with researching tiger smuggling was the bias. A lot of the studies had been done by organisations based in India. Imaginative and creative arrows were being drawn across India, Nepal, into Tibet and over into the eastern provinces of China. The two big gaps were interdiction rates inside China, and the case of the Indo-Chinese tiger.

At the last SCB meeting I gave a paper on the breakdown of interdictions inside China. This data was obtained after some patient relationship building within China. The basic breakdown is as follows:

Figure 1: Smuggling Map 1999-2010


Province in coloured as deep-red are hotspots. These are provinces that have had multiple cases of smugglers being intercepted. The obvious characteristic is each is a province that borders range states with wild tiger populations.

Provinces in pale-red are low-interdiction cases. These are province that have had one arrest only.

The map also is instructive as it gives some idea of the scope of the international borders smugglers can take advantage of. It should come as no surprise that parts also show geographical trends also. Amur tigers are intercepted in the north (Heilong-Jiang/Jilin), Indo-Chinese & Bengali in the south (Yunnan), and Bengali in the west (Tibet).



Smuggler caught with 16 Tiger Cubs Brendan Moyle Oct 29

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A colleague drew my attention to this story out of Thailand
BBC-News Thailand

The story is principally about a truck-driver, paid to smuggle 16 tiger cubs from Thailand into Laos. The driver was caught when he attempted to avoid a police checkpoint. With 16 cubs, it is practically certain these same from a 'breeding facility' within Thailand. Tigers can produce 4 cubs in a litter but less is also common. Getting 16 cubs from the wild within Thailand would involve a very serious effort in search, risks of mortality in transporting cubs out of the wild, and risks of being caught within the reserves. It would be much easier and less risky to get the cubs from a captive source. Such animals would also be more familiar with people and hence, more sedate to transport.

The interception is indicative of two enforcement issues. First, crossing borders is the riskiest aspect of the illegal supply chain. From an economic perspective, the 'black-market firm' is better placed to pass this risk on to people who are willing to bear it at a lower price. The driver said he'd been paid 15,000 baht ($US 490 or £300) for the job. The second is that the size of the shipment (16 live animals) shows that enforcement agencies are being ineffective. A good sign that enforcement is effective is reductions in shipment size. This is the easiest thing for smugglers to do to reduce their risks. It does inflate their other costs (fewer units transported each trip drives up the average costs). So, the fact they are making large shipments here mean that they have little to worry about from law enforcement.

The story implies that the cubs are being smuggled for parts for traditional medicines. This seems unlikely. It would be much easier to kill the tigers within Thailand and transport the parts in a more cryptic way. This would also mean the smugglers did not have live animals to care for and feed for the duration of the trip. I suspect the most likely explanation is that this is the nucleus for a 'tiger farm' within Laos. Thailand and Vietnam are known to have breeding of tigers occurring in 'commercial quantities'. This may now be a reflection of the attempt to do the same within Laos. With actual wild tiger numbers in Indo-China being critically low, captive sources of tigers are much easier to locate and transport.

This also means that the CITES resolutions that call upon certain range states to end such breeding is largely being ignored.