Friday, December 08, 2006

Tiger Conservation Revisited



Can we save wild tigers by selling off the parts of their domesticated cousins? Aplia Econ Blog wrote about a New York Times op-ed by Barun Mitra several months ago (see archived link here). Citing the failure of poacher crackdowns and bans on traditional medicine products made from tiger parts, Mitra argued that legalizing trade in tiger parts would eliminate the strong black-market incentives to poach wild tigers. For example, Mitra wants to legalize the sale of body parts taken from farm-raised tigers in China after the tigers pass away. The Chinese tiger "farms" are zoos of sorts, where tourists pay to snap pictures during feeding time.

The basis for Mitra's controversial proposal? Supply and demand. Legalizing the sale of parts from domesticated tiger carcasses would lead to a sharp increase in the supply of such parts to the traditional medicine market, and a subsequent decrease in the prices of products containing tiger parts. The lower prices for tiger-based products, argues Mitra, could significantly weaken the incentive to poach wild tigers. Revenues from the legal market for tiger-based products could even go toward anti-poaching efforts and habitat conservation.

Not so fast, replies Australian economist Richard Damania.

In a recent NPR story on Mitra's proposal, Damania argues that Mitra forgot to consider the demand side of the market. Follow the link to read NPR reporter John Nielsen's write-up of Mitra's proposal and Damania's rebuttal.

Graph I shows the effect of legalizing the sale of body parts from tiger-farm carcasses in the absence of any demand-side effects. As Mitra suggests, the injection of legitimate supply would lower tiger-part prices and weaken the incentives to poach wild tigers. Damania, however, reminds us that the legalization of a formerly banned product would likely increase the demand for that product, since black-market consumption poses legal risks for buyers as well as sellers.

Graph II shows one possible outcome in the event that Mitra's legalization proposal affects both supply and demand in the tiger-parts market. Because more people demand the legal product, the demand shifts to the right and, in this case, wipes out any downward price pressure from the initial increase in supply.

Discussion Questions

1. Taking the demand-side effects of Mitra's proposal into consideration, how do the potential impacts on poacher incentives change? How would the proposal affect poacher incentives if the demand-side effects were stronger than the supply-side effects? That is, how would the incentive to poach change if the proposal caused a bigger shift in demand than in supply? What if the demand-side effects were relatively weak compared to the supply-side effects?

2. Mitra and Damania echo arguments made whenever policymakers consider legalizing a hitherto illegal good or service that many people view as distasteful, dangerous, or taboo. For example, proponents of legalizing drugs argue that the legal drug trade will be safer than the illegal trade. Opponents argue that legitimizing drug use will increase demand--wiping out potentially positive effects on safety.

How is the market for marijuana different from the market for tiger parts? Do you think the legalization of marijuana in the United States would have a greater impact on the supply side or the demand side of the marijuana market? How do penalties for marijuana consumption differ from those for distribution? How do the differences affect your analysis of legalization in the market for marijuana?

3. According to the NPR story, Damania claims that the cost of poaching wild tigers will always be lower than that of raising domesticated tigers on a farm. According to Damania: "That gap is so wide that it can never be closed, even if you factor in the cost of hunting down a tiger in the wild."

Recall that the tiger farms currently exist to attract camera-laden and somewhat bloodthirsty tourists hoping to see the animals feed on live prey. When the domesticated tigers die, their carcasses are destroyed, since the sale of parts is illegal. Is it accurate for Damania to count the entire expense of raising a domesticated tiger as the cost of providing tiger parts in the marketplace? How do you think the costs of poaching wild tigers compare to the marginal cost of providing tiger parts from a carcass on a tiger farm?

4. As the NPR story suggests, poaching is not the only thing threatening wild tiger populations. Habitat encroachment by humans puts pressure on wild tigers as well. Do you share Mitra's optimism about using proceeds from a legal market in tiger parts to finance habitat conservation? If not, what other types of incentive-based policies might help the tiger?

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