Whenever one of the triennial CITES Conferences of Parties is around the corner, everyone starts talking about ivory. By this time next month, the CITES jamboree will be rocking, and you can be sure that journalists and organizations and NGOs will be buzzing about ivory - will it be sold again, what will happen with stockpiles, how will the delegates vote on the proposals, will all African elephants end up on Appendix I, who said what, who tried to make the headlines with their quotes, what do the analysts say and how is the “fight” against the illegal wildlife trade panning out?
So I’ll join in with some comments that few seem to want to consider in their headlong rush to stem the illegal ivory (and rhino horn) trade via prescribed and currently popular methods like better enforcement, demand reduction campaigns and empowering rural communities by providing alternate livelihoods (to poaching). After all, William Hague, former UK Foreign Secretary cautioned that “A false assumption or mistaken conclusion could lead us to focus on policy areas and capabilities which do not have the impact on the illegal ivory trade that we so urgently need”.
Let’s tackle the “better enforcement” angle first. The false assumption here is that source countries are unwilling players in the illegal ivory trade and are intimidated by well-armed poaching gangs equipped with the latest weapons, night vision and communications technology, helicopters, drones, you name it. These gangs are supposedly up against underpaid rangers armed with WWII rifles and without proper footwear. The other assumption is that with better funding, source countries would mobilize their police forces, make arrests and prosecute the poachers and their bosses. Kingpins would be rounded up and serve their just jail sentences.
The above scenario hardly tells a verifiable story. Ivory poaching is often state-sponsored in the sense that widespread corruption among police, rangers, customs officials and the judiciary greases the wheels (there are countless examples and reports, for just one of the latest see here . There is no way that 100,000 elephants in Tanzania could have been poached over the past six years without massive complicity by state institutions. Well-connected individuals in Kenya similarly ensure that illegal ivory passes seamlessly through Mombasa Port on the way to Asian destinations. These individuals cannot be arrested or prosecuted because of their high levels of impunity. Low-level poachers are sometimes caught, but very few are prosecuted. And none of the caught poachers carry night-vision equipment, sophisticated communications, or travel by helicopter.
Neither do poachers seem connected with terrorist groups like Al-Shabaab, the Lord’s Resistance Army, or Boko Haram. Despite the New York Times and organizations like the Clinton Foundation falling for this, there is no reputable evidence for such claims. In fact, the UN Office on Drugs and Crime and other respected analysts have largely rejected such connections. The only well-armed and equipped “gangs” engaged in ivory poaching seem to be recruited from within state security forces and the ranks of rangers.
In short, unless corruption in source countries can be effectively tackled, elephants will continue to be killed for their ivory. And corruption is so well ingrained, and has penetrated so many state institutions, that this will hardly happen in the near future.
So if corruption cannot be effectively tackled to reduce the illegal supply of elephant ivory (and rhino horn) at source, can demand reduction in the consumer countries come to the rescue? Well, yes and no, because after all these years it would seem that we still do not have a good handle on what drives demand to begin with. Economists like Alejandro Nadal and Francisco Aguayo showed that the economics of illegal trade are poorly understood, and that the simplistic concepts of “demand and supply” used by demand reductionists and pro-traders alike are wholly inappropriate.
We have a similar lack of understanding for what the illegal products are used. For example, we all “know” that illegal elephant ivory makes its way into the legal markets in Japan, Hong Kong, China, the Philippines, Thailand - and is then sold to lots of eager of consumers looking for hankos, bangles, chopsticks, figurines, statuettes, religious items and even intricate works of art created by master carvers costing tens if not hundreds of thousands of dollars. And that rhino horn is ground up into medicines to cure anything from cancers to hangovers, and used as gifts to facilitate business deals. We all “know” that, right? Wrong. It would appear that we are missing a lot of information of what drives the market for ivory and rhino horn.
The UNODC report quoted above, for example, mentions that there is a significant discrepancy between the numbers of elephants being poached yearly and the amount of ivory in markets. The report states “No charted ivory retail market, licit or illicit, can explain the scale of poaching and trafficking that has taken place in recent years. This suggests that there may be some additional reason, other than immediate use, to acquire ivory … “. It would appear that the discrepancy can be explained by speculation – buying raw ivory and just keeping it in possession until the price inevitably rises. Similar reports are coming out about the use of rhino horn . Concerningly, the UNODC report states that “… the value of certain wildlife products may be based more on what speculators will pay for them than on any real consumer demand” and that “[wildlife products] have taken on a role as value stores, hedges against the vagaries of interest and exchange rates in emerging markets”.
The reasons behind such speculative buys and investments are not difficult to decipher, and have been discussed time and again. The basic tenet is that rare products are always going to be rare, and that because they are rare, their value will increase over time. Comparisons have been made to the market for antiques and fine art – like paintings by deceased masters like Picasso, Rembrandt, Van Gogh and furniture made by Chippendale – their rarity and the fact that there will never be more increases their value year on year. Similar analyses have coined the term “banking on extinction” – if rhinos and elephants do go extinct, there will never be any further supply of ivory or horn, and those who have supplies can only see the value of their investments grow. This sort of speculation seems to be a more and more significant driver for purchases by Chinese and other buyers.
A corollary of this speculative buying is that every time an ivory or rhino horn stockpile is destroyed, what remains in circulation becomes more valuable.
Another corollary of speculative buying is that the entire “demand” scenario has to be revisited and re-evaluated. I have stated many times that until market forces that shape reasons behind demand are known, there can be no significant progress in demand reduction as currently practiced (focusing on closing down “retail” markets, attempting to persuade potential buyers not to buy “blood ivory”, education campaigns featuring pictures of dead, bloody and disfigured rhinos and elephants, etc). The spectre of speculation throws all such campaigns in disarray, as the more dead rhinos and elephants the better for the speculator.
Some have advocated that speculative buyers can be dissuaded by putting out the message that such speculation is just a temporary “bubble” – driving up prices based on a product with little intrinsic value. Some have compared this rhino horn and ivory buying to the 17th Century “tulip mania” in the Netherlands and the Florida real estate bubble in the 1920s. They would be wrong, as those bubbles burst because the “value” was based on a commodity that was in fact not rare. “Tulip mania” is now often used metaphorically to refer to any “bubble” where asset prices deviate from intrinsic values. But as I have shown, the intrinsic value of rhino horn and ivory can only have a strong and growing value. Interestingly, at the apex of “tulip mania” no actual tulip bulbs were traded and price was based on an informal futures market and paper “contracts to buy”. It would be instructive to determine whether there is such a “futures” market in ivory and rhino horn, and whether intending buyers are placing orders ahead of the actual poaching incidents and shipments. If the market for ivory and rhino horn has developed to that extent, the demand reduction campaigns could best be advised to revamp their operations …
I’ll conclude as I started. The CITES hype is about to take off, but will CITES be able to do anything about the illegal market? No. Will listing southern African rhinos and elephants on Appendix I make any difference to the illegal trade? No. Do we have the necessary understanding about the illegal ivory and rhino horn trade to seriously tackle this trade with the strategies proposed to date? No. So where to go from here? I would suggest unfortunately back to the drawing board in many aspects to design a solution that is going to have a better chance of working rather than to continue to gnaw at the edges as we are now doing.
Picture – philipgarrick.co.uk