Posts Tagged ‘wildlife trade’

The South African government is considering the sell-off of 20 tonnes of stock piled Rhino horn. The destination for any sale of the horn would be markets in Asia, where horn has been seen as a cure for cancer and as traditional alternative to Viagra. Lets be clear, Rhino horn does absolutely nothing, aside from any potential placebo effects. Rhino horn is made from Keratin, so unless biting your nails, or chewing your hair banishes your cancer, it is worthless as a drug.  In fact Rhino horn has been found soaking in liquid Viagra to give it its purported impotence busting properties.  So a valid trade which cures people, it is not.

The economic rationale for selling off stock piles of Rhino horn is simple. The legal trade of stockpiles of Rhino horn would depress the market price resulting in reduced incentives to poach therefore protecting Rhinos in the wild. This chain of logic is based on a number of assumptions:

1)      The demand for horn is limited and static, therefore an increase in supply will satiate consumers.

2)      The demand curve for Rhino is such that the stockpiled quantities would reduce price by the desired extent

3)      Insufficient profit margins exist in poaching Rhinos, to allow illegal traders to compete with legal supplies at the new reduced price

Many of these assumptions are pretty shaky. Selling off Rhino horn through legal channels is likely only to legitimise the market, resulting in more people demanding more horn.  What happens when the legal supply runs out, then we are back to square one, legal harvesting (costly, ignoring the odious moral connotations) or poaching with greater demand.

Legal sell offs have been tried with elephant ivory , which were initially supported by Traffic and WWF. But prices rose after the sell offs, with the supply proving insufficient to depress prices and poaching increasingIn 2010 legal sell offs of ivory were banned for at least three years.

A stretched government agency sitting on a stock pile of Rhino horn, must be sorely  tempted to sell it. There is huge demand attracting high prices.  As economists we often weigh up the costs and benefits, we are supposed to be clinical observers of markets.  Do the ends justify the means? If a sell off supported conservation, unlikely but let’s suppose, should I hold my nose and support it. No. Supporting the trade in Rhino horn would be supporting quack medicine of the highest order. Just in this case the ingredients are not water and a sugar pill, but one of the most endangered species in the world.

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