The Market for Ivory
Ethics and economics
In 1989 Richard Leakey became the head of the Kenya Wildlife Service (KWS). At the time, the ivory trade represented a major threat to the world’s elephants. In Kenya alone, perhaps a thousand elephants a year were being killed by poachers, mainly for their ivory tusks. It was legal to sell ivory as long as it did not come from a poached animal. Of course there is no way to tell the difference between piano keys made from legal vs. illegal ivory, so the black market proliferated.
Leakey was faced with a tough decision. He needed money to fight back against poachers, but the Kenyan government had other spending priorities. So where to get the money? Well, the KWS did have at least one expensive asset that could be sold. They had about 12 tons of ivory that had been seized by government officials. That ivory was worth around $3 million. Now $3 million would go a long way in 1989 Kenya. Even today, the average Kenya only makes about $140 per month. And the ivory was just sitting in storerooms. The elephants that were used to procure it were already dead. People told Leakey to sell it and pump the money into anti-poaching efforts.
Instead, he burned it all.
The fire lasted for three days. Afterward, the price of ivory plummeted. The number of elephants being poached in Kenya dropped from 1,000 a year to 100. How is this possible? Classic economic theory says that if the supply of a good goes down, price should go up. If 12 tons of ivory are no longer available for sale, one would expect, all else equal, that the value of the remaining ivory would increase.
What Richard Leakey predicted was that by burning 12 tons of ivory, all else would not be equal. At the time, ivory was not viewed as a shameful product. It was true that the demand for ivory was driving the surge in poaching in the 1980s, but people honestly weren’t aware that their ivory jewelry and chess sets were coming from poached animals. If that sounds hard to believe, consider this. Even the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), the premier international group dedicated to the preservation of endangered wildlife, allowed international ivory trade.
That all changed with Leakey’s ivory burn. The world media descended on Kenya, and reporters from around the globe told viewers that poaching had become a crisis. So while the supply of ivory decreased by 12 tons that week, the demand plummeted by far more. People no longer wanted to buy ivory. CITES banned international ivory sales. Almost overnight and single-handedly, Leakey had created a moral stigma on ivory products.
This should serve as a useful lesson to people who want to ban certain behaviors or products. These efforts usually target the supply side of the market. Especially in the drug wars, almost all the money is used to decrease the supply. When successful, however, the main result is the decrease in supply causes the price to increase. Higher prices mean that new suppliers enter the market, and the carousel starts all over again. Only by successfully targeting the demand will most prohibitions destroy a market.
Unfortunately, not everyone understood this message. The South African government, along with several other countries, also had their own stockpiles of ivory. Several years after the CITES prohibition of the international ivory trade went into effect, these countries lobbied for and received an exemption. They began to sell off their ivory. The side-effect is predictable. The stigma of buying ivory sold by national governments with explicit permission from CITES led to more people wanting to buy ivory. This increased the price, which also made it more profitable for poachers to kill additional elephants and forge export documents.
Today the market for ivory is back. Leakey believed that it was the same problem as before but in new markets. Although most Americans might know that the ivory trade is decimating the elephant population in Africa, most Chinese might not. In order to raise awareness in China, the KWS performed an even bigger burn, this time of over 100 tons of ivory. Leakey passed away in 2022, and the battle against poachers continues.
There is a role for supply-side policies. Anti-poaching programs do have some success in saving animals. Customs officials should stay alert. Ultimately, however, it’s going to be demand-side policies that carry the day. Destroy the demand, destroy the market.