Steve Irwin's way: Economics of wildlife conservation

At Australia Zoo (I had a lovely time there on the weekend, thanks for asking) there are numerous signs posted to encourage visitors not to buy native animal products – crocodile, emu, and kangaroo meat for example.  I found this very odd, as crocodile and emu are farmed, and most kangaroo species are not endangered – far from it.  So what kind of conservation message was this I wondered?

Steve Irwin expressed his conservation message more clearly on the website:

"Sustainable Use" of native wildlife in so-called modern nations like Australia and the U.S.A. has inadvertently created a multi-million dollar 'bushmeat' industry, where local people kill native wildlife for meat, skins and products. Please don't blame the local people; it's not their fault! They're simply hunting for much needed money. The greatest wildlife perpetrators of today's world are those behind the driving force of "Sustainable Use." 

How are the Tiger Farms in Taiwan and China helping to save Tigers in India, SE Asia or Siberia? They are perpetuating the market in Tiger products, which is the single greatest reason for the endangerment of Tigers.

…If we can destroy the market, we'll destroy the industry. Historically the only reason spotted cats, like Leopards and Cheetahs are still found in the wild, is because of peer pressure. It became 'uncool' and controversial to wear spotted cat fur coats, so the market was destroyed and the industry suffered. Slowly, less and less Leopards and Cheetahs were being shot for their skins, and just as well or they would've been extinct 20 years ago.

The principle behind this message is that if we eliminate demand for wildlife products, we will preserve species.  But there are alternative ways to protect wildlife and biodiversity (a side note: do we really care about an individual species, or do we use iconic mammals as the canary in the coal mine of biodiversity protection?)

In addition to the ‘demand destruction’ technique, economists propose other ways to preserve threatened species – promote domesticated supply (farm threatened species), the Coase solution (give rights to the species to a group who can profit from non-consumptive use of the animals such as eco-tourism and research), and simple land conservation.

Which of these measures work?  Should we try them all, or are they mutually exclusive?

Promoting alternative supplies of animal products may sound strange at first, but has merit.  If we began farming pandas, bears, tigers and elephants, we could essentially flood the market for these animals’ body parts, bringing down the price to make hunting these species in the wild uneconomical for the risks involved.  The logic appears sound, and I can think of crocodiles in Australia as an example of where farmed animals have almost completely replaced wild animals as a supply of meat and skins.

But caution should be taken if this method is to be the primary conservation measure.  Solid institutional arrangements, regulations, and enough participants to avoid collusion are necessary, or this measure can simply backfire.  Because the farming of a species legitimises consumption of its body parts (thus increasing demand), farmers may collude to reduce supply and maintain a high price which may not discourage hunting of the species in the wild, especially in countries where hunting bans or their enforcement are non-existent.

For example, if all the crocodile farmers colluded to reduce supply of skins and meat while demand for crocodile products increases now that it is the new must have item, the price may be high enough for wild hunting to be profitable.

One unusual extension of this philosophy is to encourage farming by promoting various endangered species as gourmet food.  No doubt this will encourage farming, but it won’t necessarily ensure that wild animals are preserved, which is the primary goal here.  We don’t see many wild chickens, cows, or pigs anymore (or the descendants of the wild species from which they were originally domesticated).  Tuna farming is developing, and we may see whether this has any impact on wild populations; however I worry about the push for farming tigers for Chinese medicine as an effective conservation measure.  

The Coase solution gives private rights to utilise a species for non-consumptive use (such as tourism or research) to a particular group.  Since that group now has an incentive to preserve the wild population, they will protect an area for poachers, promote tourism, and potentially play a role in demand destruction (easing their efforts to protect against poachers).  For example, some African countries have private rights for tourism operators who make money from shooting elephants with cameras rather than guns, thereby having a strong interest in preserving their habitat and protecting them from poachers.  In fact, in some of these areas the elephant population is now estimated to be at the carrying capacity of the conservation area.

Alongside the Coase solution, habitat protection is also needed.  If the group with rights over the species have no assurance that a minimum size habitat will be maintained, there is little incentive for any group to take up these right and develop the tourism industry.  A combination of land conservation and private rights can be a potent solution.

How do we go about optimising conservation with these options?

If our primary goal is to protect the species in their wild habitat, promoting domesticated supply is probably the least preferred option.  It legitimises consumption of the species and does not always ensure that farmed supplies completely replace wild supply.  It also hinders the introduction of other conservation measures.  Why would tourist pay top dollar to see wild elephants in Africa when there is an elephant farm just down the road?  If hides the plight of the species in the wild when it becomes common in captivity.

A combination of the other measures probably constitutes optimal conservation – destroy demand for consumptive use of the species, promote non-consumptive use and give a group rights to benefit from those uses, and ensure a minimum scale of habitat is preserved for our top of the food chain ‘canary’ species. 

Australia Zoo’s message at first struck me as very odd, but it may just be that the animals they cite are not endangered (kangaroos), or have been successfully farmed (crocodiles and emus).  But their logic is sound.  They may simply have needed a message accessible to children and foreigners, which is achieved by referring to common Australian animals.

You can also see the commitment to this optimal conservation strategy from the Irwin’s purchase of land in Cape York to preserve habitat and promote non-consumptive use of wild animals, which is now under threat from mining exploration (since the State still holds rights to minerals on private property).  You can read more here and sign a petition to protect this land from mining. 

The take home message is to be wary of ‘too good to be true’ solutions from economists when the outcomes are irreversible.