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Saving the Rhinos: an Addendum

Last week, we offered several different views on ideas to save the African rhino. Ray Fisman, one of the participants, has followed up with another take:

Pretty much any policy prescription that an economist will propose will have incentives at its core. In rhino conservation, economists’ mania for incentives would translate most directly into policy through programs that reward communities based on the rhino populations that survive in the areas under their control. So, effectively, we in the rich world would be paying rhino royalties to poor communities to encourage them to preserve the animal life that we value. This is analogous to proposals of the Coalition of Rainforest Nations that the global community compensate rainforest nations for abstaining from chopping down their forests. Not surprisingly, this is an organization with an advisory board largely composed of economists.

Another more subtle alternative has been proposed by the Harvard economist Michael Kremer. This approach to rhino conservation incorporates elements of both of the schemes you describe in your question.

Why do poachers kill rhinos? Because they get well-paid by middlemen. And why are middlemen able to offer handsome rewards to poachers? Because rhino horns sell for huge sums in the Far East, owing to the scarcity of available horns. So it is high prices that ultimately drive poaching activity.

Now, suppose the government were to announce the strict enforcement of anti-poaching laws and higher penalties rhino killers. Rhino middlemen would quickly realize that supply will grow even scarcer – and hence prices even higher – in the near future. So they’ll buy up as many rhino horns as they can in anticipation of this future of low supply and high prices. But this rush to poach before laws go into effect could itself drive rhinos into extinction.

Professor Kremer’s proposed solution is that the government put together its own stockpile of rhino horns, either from seized contraband or from, as you suggest, controlled harvesting. And at the same time that the government announces its anti-poaching efforts, it could make a parallel announcement that it would use its supply of stockpiled horns to flood the market if necessary to ensure that prices stay low. This gets us right back to incentives – in a future where the government has guaranteed low future prices, neither poachers nor their middlemen have an incentive to go on a rhino killing spree.