Poaching Markets

This past week I heard some talk on the radio about the issue we are having with rhino poaching. These animals have a significant value on the black market, at least for some of their parts (such as their tusks). It is interesting to think of this issue in an economic sense, as it is illegal to hunt these animals. Even with the illegality of this market, the demand, and price of rhino tusks have been increasing as the number of rhinos decrease. It seems that people value the idea of owning such a scarce item. The growing market for these tusks has generated an environment that creates incentives for people to illegally hunt protected animals. The market value for these animals is clearly high enough that it offsets the potential cost of being caught for these poachers.

If you have taken some microeconomic theory, this problem can be assessed through a basic utility curve model. These models essentially look at the probability of a certain event occurring along side the potential costs of that event. For poachers, the two outcomes are either kill a rhino and sell it at the market price, or get caught and face the punishment. As you may have reasoned, the two methods for removing the incentive for criminal actions are to increase the probability of being caught, or to increase the punishment for the action. Both of these actions would make poaching less attractive, but the issue remains that individuals are still willing to poach. The reason that poachers still find it worth the risk is that the market value for the poached items is still extremely high. They still think that the risk of hunting endangered animals is worth the risk of being caught because the monetary value of the product is still so high on the market.

This issue could be solved in multiple ways. Two of them would directly address the actions of the poacher. These would be either to increase the probability that they are caught poaching, or to increase the punishment of this action. Both of these actions might lead to lower incentives to poaching endangered species. The issue is that both of these strategies have been implemented over the years to really no avail. The problem is that as these animals become more scarce, the demand continues to increase. This problem therefore might be solved with some demand side policy making. If the ownership of these items were made illegal, it might lead to less demand for these animals. If the demand decreases, the incentive to hunt them also decreases, potentially eliminating the desire to hunt endangered species. This is one simple suggestion, and although it has probably already been considered, it has some economic reasoning behind it. This article goes more in depth about this issue, and why it as become such a major economic problem.


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