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Regulating Market Failure in the Ivory Market
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The ivory market is a market that exhibits considerable market failure. Market failure occurs where the price mechanism does not allocate goods in a socially efficient way. In the case of ivory there are a number of examples of market failure that are relevant.
- Non exclusivity and rivalry of common land
- Negative externalities from poaching e.g. destruction of a species and loss of bio-diversity.
- Ignorance of the effect of poaching
- The short term benefits of hunting outweighing the long-term costs.
How can these examples of market failure be addressed?
Market failure 1
By giving communities property rights i.e. land ownership or stewardship they have an incentive to manage the wildlife resources in their area in a way that ensures some degree of sustainability.
Market failure 2
Regulation of the ivory industry by banning the trade in ivory. By becoming a signatory of the CITES agreement elephants were classified as Appendix 1 animals and thus entitled the highest possible protection.
Creation of protected areas such as national parks. These could be considered merit goods as they provide a net social benefit to society in that the elephant populations are conserved.
Market Failure 3
The provision of environmental education programmes and improving general educational opportunities. Again this could be considered a merit good as an more educated rural population is going to be able to find alternative sources of income than poaching and hunting.
Market Failure 4
The advantages of conserving the elephants must become apparent to the communities. Conservation programmes that enable communities from gaining financially from conserving wildlife will reduce the incentive to poach. Programmes such as the CAMPFIRE schemes in Zimbabwe have been successful in certain areas. Here the value of elephants had risen enormously as communities were encouraged
to operate controlled safari hunting where tourists could hunt a small number of elephants and the revenue earned returning to the community. The more wildlife was worth, the more greater the incentive communities had to conserve it by ensuring the land was maintained for wildlife and not used solely for agriculture and reducing poaching.
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Related Glossary Items:
Property Rights
Sustainable Development
External Costs
Negative Externalities
Public Goods
Merit Goods
Related Issues:
Kafue National Park
Fighting Poaching in North Kafue
NGOs and Wildlife Management
Poaching in Luangwe
Local NGOs and Conservation
The Rhino Horn Market
The Ivory Market - Part 2
CAMPFIRE
Related Theories:
The Theory of Externalities
Sustainability
Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES)
Establishing Property Rights
Market Failure
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