Ivory- it’s a business

By Brendan Moyle 02/10/2014

The first of the papers I’ve written on the illegal trade in ivory has appeared.  It’s in the journal Ecological Economics. This is some research informed by work in China but also from data outside there.  It’s about some of the macro-drivers of poaching and partly explains why poaching did surge after 2009.

One of these drivers is shipping costs.  This comes back to the problem that ivory is bulky and heavy, and that the most important consumer markets are located in a different continent to the source.  Smuggling levels correlate to the cost of sending shipping containers to foreign markets.

One point I hope people appreciate is that this does make the ivory trade, a traffic explicable in economic terms.  The bad guys do care about their operating costs.  Elephant poaching and ivory smuggling isn’t being done by criminal master minds in tropical island fortresses.  It is not being done by “Ming the Merciless” types who are plotting the demise of elephants in some grand, nefarious scheme.  It is being done by unscrupulous people who have figured out they can make a lot of money doing so.  That’s why they care about their costs.  It’s a business decision and not an evil plot.  Sure, the guys doing it are probably a bit evil, but the motivation really is just the money.  We should be thinking of policies in these terms, and not as a moral enterprise against a dark cabal of evil.

This shipping cost angle makes prices tricky to interpret.  The bad guys care about the cost of landing ivory- mostly at the moment- in Asian markets.  Two things that matter are the price they have to offer to get ivory from poachers, and the cost of transporting it.  If the cost of transportation goes down, they can increase their offer-prices to poachers without changing the cost of landing the ivory in Asia.

Increases in ivory prices in Africa don’t necessarily mean that demand for ivory carvings has changed.  That’s a very Walrasian view of the world of competition and no market power.  In a world where the intermediaries can make prices, changes in prices might just be a different distribution of the profits of the trade.  We need to know a lot more than just the basic prices for ivory.