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Authors: Charles Wheelan
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sum in countries where per capita income is around $1,000 a year and falling. In other words, the black rhino is worth far more dead than alive to the people of impoverished southern Africa.
Sadly, this is a market that does not naturally correct itself. Unlike automobiles or personal computers, firms can’t produce new black rhinos as they see the supply dwindling. Indeed, quite the opposite force is at work; as the black rhino becomes more and more imperiled, the black market price for rhino horn rises, providing even more incentive for poachers to hunt down the remaining animals. This vicious circle is compounded by another aspect of the situation that is common to many environmental challenges: Most black rhinos are communal property rather than private property. That may sound wonderful. In fact, it creates more conservation problems than it solves. Imagine that all of the black rhinos were in the hands of a single avaricious rancher who had no qualms about making rhino horns into Yemenese daggers. This rancher has not a single environmental bone in his body. Indeed, he is so mean and selfish that sometimes he kicks his dog just because it gives him utility. Would this ogre of a rhino rancher have let his herd fall from 65,000 to 4,000 in thirty years? Never. He would have bred and protected the animals so that he would always have a large supply of horns to ship off to market—much as cattle ranchers manage their herds. This has nothing to do with altruism; it has everything to do with maximizing the value of a scarce resource.
Communal resources, on the other hand, present some unique problems. First, the villagers who live in close proximity to these majestic animals usually derive no benefit from having them around. To the contrary, large animals like rhinos and elephants can cause massive damage to crops. To put yourself in the shoes of local villagers, imagine that the people of Africa suddenly took a keen interest in the future of the North American brown rat and that a crucial piece of the conservation strategy involved letting these creatures live and breed in your house. Further imagine that a poacher came along and offered you cash to show him where the rats were nesting in your basement. Hmm. True, millions of people around the world derive utility from conserving species like the black rhino or the mountain gorilla. But that can actually be part of the problem; it is easy to be a “free rider” and let someone else, or some other organization, do the work. Last year, how much time and money did you contribute to preserving endangered species?
Tour and safari operators, who do make a lot of money by bringing wealthy tourists to see rare wildlife, face a similar “free rider” problem. If one tour company invests heavily in conservation, other tour companies that have made no such investment still enjoy all the benefits of the rhinos that have been saved. So the firm that spends money on conservation actually suffers a cost disadvantage in the market. Their tours will have to be more expensive (or they will have to accept a lower profit margin) in order to recoup their conservation investment. Obviously there is a role for government here. But the governments in sub-Saharan Africa are low on resources at best and corrupt and dysfunctional at worst. The one party who has a clear and powerful incentive is the poacher, who makes a king’s ransom by hunting down the remaining rhinos, killing them, and then sawing off their horns.
This is pretty depressing stuff. But economics also offers at least some insight into how the black rhino and other endangered species can be saved. An effective conservation strategy must properly align the incentives of the people who live in or near the black rhino’s natural habitat. Translation: Give local people some reason to want the animals alive rather than dead. This is the premise of the budding eco-tourism industry. If tourists are willing to pay great amounts of
Sadly, this is a market that does not naturally correct itself. Unlike automobiles or personal computers, firms can’t produce new black rhinos as they see the supply dwindling. Indeed, quite the opposite force is at work; as the black rhino becomes more and more imperiled, the black market price for rhino horn rises, providing even more incentive for poachers to hunt down the remaining animals. This vicious circle is compounded by another aspect of the situation that is common to many environmental challenges: Most black rhinos are communal property rather than private property. That may sound wonderful. In fact, it creates more conservation problems than it solves. Imagine that all of the black rhinos were in the hands of a single avaricious rancher who had no qualms about making rhino horns into Yemenese daggers. This rancher has not a single environmental bone in his body. Indeed, he is so mean and selfish that sometimes he kicks his dog just because it gives him utility. Would this ogre of a rhino rancher have let his herd fall from 65,000 to 4,000 in thirty years? Never. He would have bred and protected the animals so that he would always have a large supply of horns to ship off to market—much as cattle ranchers manage their herds. This has nothing to do with altruism; it has everything to do with maximizing the value of a scarce resource.
Communal resources, on the other hand, present some unique problems. First, the villagers who live in close proximity to these majestic animals usually derive no benefit from having them around. To the contrary, large animals like rhinos and elephants can cause massive damage to crops. To put yourself in the shoes of local villagers, imagine that the people of Africa suddenly took a keen interest in the future of the North American brown rat and that a crucial piece of the conservation strategy involved letting these creatures live and breed in your house. Further imagine that a poacher came along and offered you cash to show him where the rats were nesting in your basement. Hmm. True, millions of people around the world derive utility from conserving species like the black rhino or the mountain gorilla. But that can actually be part of the problem; it is easy to be a “free rider” and let someone else, or some other organization, do the work. Last year, how much time and money did you contribute to preserving endangered species?
Tour and safari operators, who do make a lot of money by bringing wealthy tourists to see rare wildlife, face a similar “free rider” problem. If one tour company invests heavily in conservation, other tour companies that have made no such investment still enjoy all the benefits of the rhinos that have been saved. So the firm that spends money on conservation actually suffers a cost disadvantage in the market. Their tours will have to be more expensive (or they will have to accept a lower profit margin) in order to recoup their conservation investment. Obviously there is a role for government here. But the governments in sub-Saharan Africa are low on resources at best and corrupt and dysfunctional at worst. The one party who has a clear and powerful incentive is the poacher, who makes a king’s ransom by hunting down the remaining rhinos, killing them, and then sawing off their horns.
This is pretty depressing stuff. But economics also offers at least some insight into how the black rhino and other endangered species can be saved. An effective conservation strategy must properly align the incentives of the people who live in or near the black rhino’s natural habitat. Translation: Give local people some reason to want the animals alive rather than dead. This is the premise of the budding eco-tourism industry. If tourists are willing to pay great amounts of
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