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Why are hunting area operators eager to continue ventures when financial analyses show it could be a failing business?
Friday 18th October 2013
Don’t forget to sell my skin
A recent paper by Lindsey and co-authors claimed that if lion trophy hunting would be banned, all “trophy hunting could potentially become financially unviable across at least 59,538 km2 that could result in a concomitant loss of habitat. However, the loss of lion hunting could have other potentially broader negative impacts including reduction of competitiveness of wildlife-based land uses relative to ecologically unfavourable alternatives”.
Lindsey et al’s methodology and conclusions were challenged by another paper by Campbell, pointing out some serious discrepancies in Lindsey et al’s models. In addition, Campbell pointed out that a cessation of lion trophy hunting would be very unlikely to cause such huge losses to hunting areas, as most trophy hunters come to Africa to hunt animals like buffalos, kudus, and leopards. Lions were only fourth on the list of most desired species by trophy hunters.
Campbell did not say this but I will – Lindsey et al’s paper, as usual funded by the Panthera Foundation, could be seen as both alarmist (60,000 km2 of wildlife area would go to livestock and agriculture, and would be poached out) and supportive of Panthera’s position against listing lions on the US Endangered Species Act (listing would mean that US hunters could no longer import their trophies).
We welcome the careful economic analysis of Lindsey et al’s paper by Campbell, but that is not the main reason behind this post.
Lindsey et al presented a table in their paper that examined the financial viability of a number of hunting areas, and came to the surprising conclusion that 44% of all hunting areas are currently financially unviable. The survey included five African hunting countries with the following results:
Mozambique – 92% unviable, Namibia – 67%, Tanzania – 19%, Zambia 67%, Zimbabwe 44%.
Lindsey et al use a Return on Investment rate of 6.96% to determine if a hunting area is financially viable or not (derived from what an un-named safari company uses as their yardstick), but this is already very interesting.
Further, Campbell suggests that Lindsey et al significantly underestimate the costs of operating as they do not factor in marketing costs of hunting operators (likely significant) and grossly underestimate the difficulties of obtaining credit from lending institutions. Both could render even more hunting areas as being financially unviable.
But even if only a minimum average of 44% of hunting blocks are financially unviable, why do the hunting operators want to maintain them? Campbell asks the same question, and comes up with some suggestions:
1)Lindsey et al do not fully understand the workings of the trophy hunting industry, or that there are non-financial reasons why these businesses continue.
2)Important motivations could be political – revenues generated from trophy hunting are important for wildlife bureaucracies and are often siphoned off to enrich corrupt and powerful individuals.
3)More work needs to be done to understand why operators persist in running businesses that are not financially viable.
Again, Campbell is being cautious. My suggestions would be:
1)Hunting operators have always been reluctant to reveal their true income, and Lindsey et al are naïve to think that they can get to the bottom of financial viability by making assessments based on declared income. Hunting operators are past masters at hiding profits in overseas bank accounts. This is not only because they work through hunting agents in Europe and the USA to provide them with clients, but also because they are eager to maintain their income as hard currencies. Operators falsely declare a lower income to local governments to decrease their tax payments, and there is not yet one hunting operator who has provided a transparent accounting of their profit margins.
2)Hunting concessions have “value” beyond what they earn from trophy hunters. A hunting area, for example, could be used to illegally provide bush meat and skins. There have also been a number of recent reports in the media to indicate that hunting operators could be significantly involved in elephant and rhino poaching as well as illegal live animal sales:
3)Hunting operators can increase their profits by selling, independently, a number of wildlife products derived from hunting trophies. For example, a hunter will pay to shoot an elephant but is unlikely to want to take more than the tusks home. By looking at the destinations of “trophy” and “tusk” destinations for Zimbabwe on CITES export records these products mainly flow to the acknowledged trophy hunting countries like USA, Germany and Spain. But if you look at the “skin” destinations the picture changes and while USA, Germany and Spain are still destinations for skins, other countries that have no trophy hunters, like Japan, Korea, Hong Kong and Singapore import significant numbers of elephant skins from Zimbabwe. Hunting operators could thus sell products from a single trophy animal to different consumers – in this case the elephant tusks to the hunter and skins to Asian dealers. Zimbabwe also exports significant quantities of elephant ears, feet, hair products, tails…
4)A report about the financial viability of trophy hunting of elephants versus cropping/culling operations indicates that the value of an elephant is about equal under both schemes. The report states: “Elephant are one of the few species for which the value-added benefits of sport hunting do not exceed the actual commodity values of the products from the hunted animals.” .A corrupt operator can thus significantly increase income by directly poaching elephants, or colluding with poachers for payments.
5)Hunting operators are notoriously corrupt and are often able to overshoot their quotas and export such excess trophies. This means that the communities and the government do not receive their trophy fees as they are not declared. Such excess offtake is obviously not considered as any reportable income, but can considerably increase hunting operator profits. Again there are many examples of this practice reported in the media and in published reports:
In summary, while Lindsey et al promote the trophy hunting of lions as a reason to keep “vast” areas of land available for wildlife, even their flawed analysis raises a significant number of questions about the operation of hunting concessions. We suggest that such operations could receive significant additional finances from onward sales of animal products not valued by the trophy hunters and could additionally receive further significant income from a variety of illegal activities. No wonder that even though Lindsey et al estimate that at the very least 44% of hunting areas are financially unviable, there is still a strong desire by operators to maintain such areas and to tender for other areas when these become available.
Picture credit: http://www.theguardian.com/environment/2009/sep/11/trophy-hunting-africa
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Posted by Pieter Kat at 15:59
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