The Kenyan president burns a fortune’s worth of ivory tusks and horns. His object is to discourage poaching on the national game preserve. He’s supported by “Renowned conservationist Richard Leakey”. The fire torched “105 tonnes of ivory”. Leakey said of nations that refuse to burn up the ivory: “They are speculators on an evil, illegal commodity. There are can be no justification for speculating price rises in ivory down the road.”
The ignorance displayed by these gentlemen is so great one might think they’ve taken leave of their senses.
At the current market value of about $1,000 a pound and 2,205 lb per tonne, they burned up about $232,000,000 worth of ivory. Without any economic analysis, merely common sense, this policy is immensely wasteful. However, the government had an objective that it (mistakenly) thought would be accomplished by this bonfire, which was to discourage poaching. It’s a very strange idea, perverse to the objective, because the ivory was already presumably seized from poachers; they are punished when caught; and a certain amount of policing against poaching goes on. If the ivory had been sold, a great deal more policing could have been bought.
Burning the ivory accomplishes the exact opposite of what their objective is. It raises the price of ivory because it reduces the supply and leaves the demand unchanged, ignoring psychological effects on buyers that may either discourage them from buying ivory or speeding up their demand for it. Selling the ivory would have depressed the price and discouraged the poaching.
Elephants are valuable animals that exist, like many species, when in the wild in a kind of commons. Unless property rights are established in these animals by some means and then protected and enforced, there will be excessive using up of the resource. Even when governments do establish such rights, and often they do not or do so badly, the policing can be very costly. This means that some poaching has to be accepted because of the imperfect assignment and protection of property rights.
But burning up valuable goods (or resources), even those seized as a result of law enforcement, makes no sense at all.
12:22 pm on April 30, 2016
