How Not to Treat Elephants Like Fish

A clever neoclassical model offers new ideas for conserving endangered species.

The New York Times, "Economic Scene" , May 18, 2000

The recent film title, "I Dreamed of Africa," captures a common Western attitude. We tend to see the continent as a mythic place of romantic dreams -- of exotic adventures, lost ancestors and awesome creatures.

In the real world, of course, Africans face the same issues of scarcity and incentives that affect everyone else. The continent's natural abundance and human poverty simply raise the stakes.

Last month, delegates from around the world met to consider revisions to the Convention on International Trade in Endangered Species, or Cites, the treaty governing trade in endangered species. One of the hottest issues was what to do about ivory. Four southern African nations -- Botswana, Namibia, South Africa and Zimbabwe -- wanted permission to sell their stockpiles of ivory, amassed mostly from culling herds of elephants in their national parks. They would plow the revenue back into conservation programs. Vehemently opposed by Kenya, the southern African effort failed. Cites will take up the issue again in two or three years.

Economists take two distinct approaches to the problem of preserving elephants. Neoclassical analysis starts from the assumption that elephants are "open-access resources" like fish in the ocean -- available to anyone for the taking.

Governments regulate access by locking up the elephants and forbidding poaching. Neoclassical models take the legal regime and the incentives of poachers (to make as much money as possible) more or less for granted.

Institutional approaches, by contrast, emphasize the social and legal context. They explore how the structure of property rights might be changed to encourage people to protect elephants. While institutional economists realize that elephants can't be treated like cows, they look for ways to make them similarly valuable.

In the March issue of The American Economic Review, Michael Kremer and Charles Morcom offer an ingenious neoclassical model for elephant conservation. They start by noting that the ivory from elephants (or the horn from rhinos) isn't like fish. It can be stored indefinitely.

That means that it is possible to speculate in ivory -- to stockpile it if you think the price will go up. The result can be a death spiral for the species.

"If some people go out and poach a lot of elephants, and everyone thinks that the elephants are going to be extinct and there's not going to be any more ivory, that can induce speculation on ivory prices," said Professor Kremer, of Harvard University and the Brookings Institution. "And that speculation on ivory prices can induce more people to go poach. So you get the possibility of self-reinforcing expectations." The economic review's paper offers two policy prescriptions that might counter the problem. Both use the size of the elephant population as a trigger. A government can say that if the number of elephants drops below a certain level, it will crack down on poachers, presumably with Draconian penalties. Then, says Professor Kremer, everybody knows that elephants will not become extinct "and therefore you don't get into this bad, self-fulfilling trap."

But if people do not believe the government can stop poachers, the authorities can block speculation a different way. A government can build up a large stockpile of ivory and threaten to dump it on the market if the elephant population drops too low, or if the price rises too high. That would in theory depress the price and stop the death spiral. This approach could also be taken by a nongovernmental organization.

For all its cleverness, this neoclassical scheme does not consider why people poach or whether elephants must be open-access resources. Institutional approaches do. They start from two facts: elephants are a natural resource, attracting tourists and providing meat, hides and ivory, and, they are also pests, trampling villages and destroying crops.

"This philosophy recognizes that poor rural people living with wild animals have no incentive to conserve them without having clear user rights and receiving tangible benefits from them," write Urs P. Kreuter and Randy T. Simmons in a paper published in "Elephants and Whales: Resources for Whom?," a 1994 collection edited by Professor Kreuter and Milton M. R. Freeman. Poaching rates, they observe, "seem to be a function of the proportion of local residents receiving benefits from wildlife management."

Institutional experiments that give local people a financial stake in wildlife have had some striking successes, particularly in Zimbabwe. There, the government in the mid-1980's began the Communal Areas Program for Indigenous Resources, better known as Campfire. The program gave local districts wildlife-management authority in communal areas outside the national parks. In some cases, the local districts devolved control further, down to groups as small as 200 villagers.

The purpose "was to get away from the idea of having these island preserves, and to try and expand the geographic area over which we could implement wildlife conservation," says Professor Kreuter, a Zimbabwean now teaching at Texas A & M University. To do that, he said, the rural people who faced ruin if elephants wrecked their grain bins, houses, or crops "had to have economic income associated with the wildlife; otherwise they just considered it to be a liability."

Villagers who reap benefits from wildlife will be less likely to shoot elephants that threaten their crops and more likely to police poachers. Under Campfire, the local authorities worked with outside experts to determine, for instance, that the area could maintain a sustainable elephant population by hunting two elephants a year. Residents would then contract with a safari operator and split the fee of around $25,000 an elephant paid by the hunter. In most cases, the villagers also got the meat from the elephant.

But even such innovative economic thinking has its limits. Both neoclassical and institutional conservation models share an underlying assumption: that the government respects the rule of law and the goal of conservation. In Zimbabwe, however, that assumption has become shaky. Robert Mugabe's increasingly authoritarian rule is destroying the nation's wildlife programs.

The national government is recentralizing wildlife management, and the Campfire programs are breaking down. "They're taking that authority away from the local community," Professor Kreuter said. "So the local communities feel, 'We're not getting anything out of this, so why should we tolerate this species? We need to get rid of it.' "