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Posts Tagged smuggling

Ivory Crimes: Supply or Demand Shock? Brendan Moyle Apr 22

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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


 

 

 

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?

 

 

Tiger Summit Preliminaries Brendan Moyle Nov 18

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The latest Tiger Summit is going to begin in St Petersburg on the 21st of November. This has been heralded as yet another last ditch attempt to prevent the extinction of tigers in the wild. There may be no animal that has received more conservation attention than the tiger, for little actual gain.

The thing about tigers is that there are lots of meetings held regularly and lots of plans get formulated. In India, Indira Gandhi backed an ambitious recovery program called project Tiger back in the 1970s. That was a system of national reserves backed by rangers, all with the focus on sustaining tiger populations. Nonetheless, since the mid 1980s, global tiger populations have shrunk almost unabated. The twin pressures of habitat loss and poaching have been challenging to overcome. Like so challenging, we haven’t overcome them.

There’s probably be a lot of issues this meeting is going to bring up. A lot of these issues won’t be new. While there’s a lot of agreement about the drivers behind the loss of tigers, it’s been much harder to get agreement on any solutions.

One of the differences with this summit has been the continued involved of the World Bank and its Global Tiger Initiative in 2009. This gave some cause for optimism in the conservation community as it offered the hope that funding restraints would be loosened.  Nonetheless, thus did not mean that suddenly tiger conservation projects were being given a blank cheque. And the IUCN was pulled out of the Nepal meeting last year over differences in the ‘management style’ of the World Bank.  For me, that meant being unable to chair one of the sessions on the demand and supply of tiger parts.

So, what are we going to hear out of this summit?

Well, doubtlessly some NGOs are going to insist that poaching and smuggling can be controlled through better law enforcement. Despite the great difficulty we have with infiltrating poaching rings (often because they are based on ethnic and family associations, making outsiders very identifable), this remains a very dangerous assertion.

Tiger poaching and smuggling is near impossible to control through law enforcement. The reasons are:

1) Habitat- tigers and their poachers have ‘cryptic’  lifestyles in rugged terrain. Poachers are rarely caught and it can take years to identify them. They come from hunting cultures that are familiar with the terrain and habitat.

2) Tiger parts are traded in both domestic and international markets. An increased focus on the international side for instance, doesn’t address the domestic side. The Sumatran tiger for instance, is pretty much thratened by local poaching, not international.

3) Tigers are an infrequently smuggled good. There’s about 300 tigers a year (we think) that get poached. The parts get traded all over Asia. It’s not like the cocaine route from Colombia into Florida. There’s not a plane or boat arriving on a regular basis.  Tiger parts are moved infrequently and via many different routes. This makes the whole intelligence gathering to block them much harder.

4) We have appalling intelligence on the participants in the black market. This was brought home again this year at the CITES meeting.  Despite the palpable threat from poaching facing tigers, Governments have gathered very little intelligence on the organisations that poach and smuggle tiger parts.

5) The borders are very big. China’s southern border stretches from Vietnam to Pakistan. Some of Asia’s busiest ports are now in China.  International borders in Asia are crossed regularly by smugglers and poachers. It’s just too big. The USA can’t stop drugs and people moving across the border from Mexico and that border is a fraction of the size of these Asian borders.

So long as we think poaching and smuggling is a problem that can be fixed with better law enforcement, we ignore actually trying to understand these black markets and where they are truly vulnerable.  And it is a policy call that shuts down discussion of other options. This doesn’t serve tiger conservation at all.

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