Should China burn its ivory?

Post was last updated: January 10, 2017

China’s promise to shut down its commercial ivory trade by the end of the year is good news for Africa’s elephants. For the Chinese government, though, it creates a strange problem: what to do with its 40-tonne stockpile of ivory, worth about $150 million. Although that may not sound like a lot, how China approaches that hoard may be almost as consequential for conservation as the ban on trade.

Nowhere is demand for ivory higher than in China, where it’s been used in handicrafts for thousands of years. Much of the trade is regulated, with the government occasionally allowing imports of seized and stockpiled ivory that is sold through a network of authorized workshops and dealers.

Collectively, government and legal private stockpiles are now estimated to be worth about $600 million. Black-market supplies, which are sometimes laundered through the official system, may be much larger.

With the ban on trade imminent, though, China is left with two imperfect choices for its ivory.

One is to follow the example of several other governments: Burn it. Since the late 1980s, hundreds of tonnes of seized and stockpiled ivory have been incinerated or crushed worldwide, often in highly publicized events designed to get the attention of consumers, poachers and conservation groups. Despite the visceral appeal, though, 30 years of burning hasn’t appreciably reduced elephant kills or ivory consumption.

In fact, it may be worsening the problem. Since 2011, there have been at least 25 public cases of ivory destruction, yet prices and poaching have both surged. One 2015 analysis found that of the 2,600 tons of ivory that were illegally exported from Africa between 2002 and 2014, roughly 1,000 tons remains in raw form in private stockpiles, suggesting that buyers were engaged in speculation. “Investors were hoarding raw tusks, betting prices would rise,” according to one of the researchers.

The high-profile destruction of ivory, in other words, may well act as a marketing campaign for black-market investors hoping to sell high. When Hong Kong destroyed a huge trove of ivory in 2014, it led to an initial price spike of about 10 percent. Similar spikes have been reported elsewhere.

Longer term, unless demand is reduced, destroying supply in spectacular fashion seems likely to let dealers set higher prices in an opaque market — and to give poachers a greater incentive to kill.

Those perverse incentives are starting to dawn on activists. Last year, parties to a major treaty on protecting endangered species backed off a proposal that would’ve called for destruction of stockpiles. Even major wildlife advocates — such as the World Wildlife Fund — are calling for stockpiles to be “put beyond use” while encouraging studies into the “perverse impacts” of stockpile destruction on consumer behavior.

That leaves China with a second option: Keep the legal stockpile, and maintain a studied ambiguity about its future. That might send a conflicting message when the government is otherwise trying to stand tall for elephants. But in leaving open the possibility that legal trade might resume at some point, it puts black-market traders in a bind: Their stockpiles could be devalued at any moment, making speculation far riskier.

A 2000 analysis in the American Economic Review recommended a similar strategy for governments that would otherwise struggle to stem poaching. It’s a particularly potent threat in China, where government policy has been known to change — or even reverse — without warning.

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