The Hangzhou Meeting: Combating the Illegal Demand For Ivory

By Brendan Moyle 12/02/2015

Reducing the illegal demand in ivory is an important strategy to bring elephant poaching in Africa down to sustainable levels.  With that in mind, the CITES Secretariat and the CITES Management Authority of China organised a workshop in Hangzhou.  This was held over the the 28 and 29th of January.  As I’ve previously posted, I was there presenting some of my research on the ivory black-markets.

It is going be interesting what the 2014 poaching data will look like.  Most people may not be aware of this, but poaching levels have been in decline since the peak of 2011.

Source: MIKE (Monitoring the Illegal Killing of Elephants)


We don’t yet know the 2014 statistics because they are still being compiled.  But we do know that for some key sites in Africa, the poaching rates are still declining.  So it will be interesting to see if this trend continues.  The graph above by the way, uses the proportion of illegally killed elephant carcasses as its metric.  Elephants die naturally, as all living organisms eventually do.  So the statistics are basically what percentage of these deaths is due to poaching.  The overall rule is that if this proportion is 50% or higher (the red 0.5 line above), then poaching is unsustainable.  Elephant populations will be in decline if poaching is above the red line, otherwise they tend to increase.

In terms of the demand reduction, we seem to face two big problems.  One is the belief that the demand for carvings- the so called trinket market- is driving poaching levels in East Asia.  See, once someone reaches middle-class in China, then they have an uncontrollable desire to buy ivory products. Apparently. And once they’re hooked they can’t stop.  So NGO reports and the like, almost give the impression that people are queuing up to buy ivory items on the streets of China.  The second problem is we really still, have little idle of what the drivers of the demand for ivory is.

What isn’t being recognized, is that the biggest illegal market for ivory is actually the speculative.  Ivory isn’t just a consumer good.  It is also an investment good.  Like gold, it can be stored and its value changes over time.  Some of the clues for this are in the pattern of illegal trade.  Almost all the increase in poaching is seen in one segment.  That is the in large shipments of raw ivory.

figure 1
Raw Ivory Seizures

This increase in raw ivory seizures hasn’t been matched by worked ivory seizures.  These remain relatively low, and pretty flat.  Chinese Customs actually reported that for 2014, their seizures of ivory in suitcases and the like, had dropped by 70%.  So the idea that there’s been a massive increase in demand for carvings, isn’t being supported by seizure data.  Apparently even with tons more of the trinkets circulating for sale, nobody is seeing that reflected in arrest data.  But we are seeing a large upswing in seizures of raw ivory.  In 2013 there were 18 interdictions of large shipments, totaling over 40 tons of ivory.  That’s shipments averaging 2+ tons each.  To put that into some context, 4 tons is roughly the amount of ivory used by all 37 factories in China annually.  These are not trivial amounts of ivory being smuggled.

The speculative market hypothesis, makes a strong prediction.  Given ivory is an investment good- and is being stored in anticipation of its value going up- then smuggling of ivory will be correlated with interest rates. Specifically, it will be correlated with what we will describe as investment grade shipments (big shipments of raw ivory).  The tourist smuggling a pair of bangles back from Zimbabwe to China in a suitcase, is doing this for consumption.  So these seizures should have no interest rate link.

My paper on ivory smuggling published last year, tested this prediction.  And that is exactly what we see.  Part of smuggling activity is, as the speculative-market hypothesis predicts, linked to interest rates. It predicts this will be a negative relationship. Smuggling should rise when interest rates fall.

figure 7
Smuggling Levels versus Interest Rates (LIBOR)

Another piece of evidence supporting the speculative market goes to the production of carvings.  Assuming 25,000 elephants are being  poached annually (and note that some people are claiming 35,000 or more), that means whatever factory-system you use, it has to cope with 4000 tusks per month.  The largest factory system we know of is in China.  There are 37 factories.  They go through about 30 tusks a month.  Now, we know there are ways to tweak that number.  They could go through a little faster by making smaller items, cutting corners on quality etc.  But that isn’t going to have much of an impact really on that throughput.  Even they doubled the throughput of ivory, they could not cope with 4000 tusks a month.

This is strong evidence that the speculative market is the largest component of the black-market in ivory.  If we got a 50% decline in the speculative demand for ivory, elephant populations would be safe from poaching.

If we got a 50% decline in the demand for trinkets in China, then it’s unlikely to be noticed. The legal demand for trinkets uses up about 80kg of ivory a year.  That’s nothing in the greater scheme of things.

Can you guess which market gets most of our demand reduction efforts?  It’s the trinket-market.   The belief that the problem is ‘trinket demand’ is driving poaching has diverted efforts away from where it needs to be focused.  Some of these campaigns are truly odd.  There are posters in subways in major Chinese cities, extolling commuters not to buy ivory.  The thing we know about people who use the subway, is they’re generally too poor to be able to afford ivory products in the first place.  Maybe we need to know a lot a more about illegal demand, rather than buy into a narrative that has never had sufficient evidence.

Some of our strategies for demand reduction may even be counter-productive.  I think informing people of how cruel poaching is, is relatively smart.  If people associate illegal ivory products with cruel deaths of animals (and people- rangers are getting killed protecting elephants as well), then that could make it less palatable.  Inflating the risk of extinction- as some NGO’s are wont to do– is very risky.  The bad guys are stockpiling ivory because they think it’s going to go up in value. One reason is likely to be the belief that it is becoming increasingly scarce.  Telling the bad guys their ivory is becoming more valuable through scare tactics of impending extinction, look to make the situation worse.

In the end, I think we need to be focused a lot more on this speculative market.  And we also need to understand what are the motivations driving it. It’s not enough to put up some billboards and posters and hope this will work.