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- • <" Digitized by the Internet Archive in 2011 with funding from Boston Library Consortium Member Libraries http://www.archive.org/details/elephantsOOkrem (Otv HB31 j .M415 working paper department economics of ELEPHANTS Michael Kremer Charles Morcom 96-17 June 1996 massachusetts institute of technology 50 memorial drive Cambridge, mass. 02139 ELEPHANTS Michael Kremer Charles Morcom 96-17 June 1996 MASSACHUSETTS INSTITUTE OFTrr' lJULlS 1996 UBttnn;u.~ 96-17 Elephants' By Michael Kremer2 and Charles Morcom3 Massachusetts Institute ofTechnology MA Cambridge, 02139 (617)253-3504 [email protected] [email protected] June 25, 1996 Existing models ofopen-access resources are applicable to non-storable resources, such asfish. Many open-access resources, however, are used toproduce storable goods. Elephants, rhinos, and tigers are threeprominent examples. Anticipatedfuture scarcity ofthese resources will increase currentprices, andcurrentpoaching. This implies that,forgiven initial conditions, there may be rational expectations equilibria leading both to extinction and to survival. Governments may be able to eliminate extinction equilibria bypromising to implement tough anti-poaching measures ifthepopulationfalls below a threshold. Alternatively, they, orprivate agents, may be able to eliminate extinction equilibria by accumulating a sufficient stockpile of the storable good. 'We thankMartyWeitzman,AndrewMerrick,John Geanakoplos, and participants atseminarsat theJFKSchool of GovernmentatHarvardUniversity, theHooverInstitution, Princeton, and Yale forcomments, andTed Miguel for research assistance. This research wassupported by theCenterforEnergy and Environmental Policy Researchat MIT. Massachusetts Institute ofTechnology, National BureauofEconomic Research, and Harvard Instituteof International Development. MassachusettsInstituteofTechnology. Introduction I. Twenty-nine percent ofthreatened birds worldwide and more than halfthe threatened mammals in Australasia and the Americas are subject to over-harvesting [Goombridge, 1992]. Most models ofopen-access resources assume that the good is non-storable [Clark, 1976; Gordon, 1954; Schaefer, 1957]. While this may be a reasonable assumption for fish, it is inappropriate for many other species threatened by over-harvesting, as illustrated in Table I. Although 30% ofthreatened mammals are hunted for presumably non-storable meat, 20% are hunted for fur or hides, which are presumably storable, and approximately 10% are threatened by the live trade [Goombridge, 1992]. African elephants are a prime example ofa resource which is technologically difficult to protect as private property, and is used to produce a storable good. From 1981 to 1989, Africa's elephant population fell from approximately 1.2 million tojust over 600,000 [Barbier, et al., 1990]. Dealers in Hong Kong stockpiled large amounts ofivory [New York Times Magazine, 1990]. As the elephant population decreased, the constant-dollar price ofuncarved elephant tusks rose from $7.00 a pound in 1969 to $52.00 perpound in 1978, and $66.00 a pound in 1989 [Simmons and Freuteo., 1989]. The higher prices increased incentives for poaching. Recently, governments have toughened enforcement efforts with a ban on the ivory trade, shooting ofpoachers on sight, strengthened measures against corruption, and the highly publicized destruction ofconfiscated ivory.4 This crackdown on poaching has been accompanied by decreases in the price ofelephant tusks [Bonner, 1993]. Since these policy changes reduce short-run ivory supply as well as demand, it is not clear that the fall in price 4 In September 1988, Kenya's president ordered that poachers be shoton sight, and in April 1989 RichardLeakey took over Kenya's wildlifedepartment. 1