The Economics of Rhino Horn Trade

The Economics of Rhino Horn Trade

– Steven Kiley 

Rhino poaching has become a sophisticated, underground market from poachers on the ground to middlemen transporting the horns out of the country, all the way up to the top lord distributing the product to an end user.  I have to continuously remind myself that this is happening every single day not far from where I am.  Where do these crimes take place, and who are the end users?

blog pictureThe majority of poaching incidents take place in South African game reserves.  Some have higher security than others.  Fortunately, high-volume game reserves including the Kruger National Park have established sophisticated anti-poaching teams who target poachers who trespass on restricted land.  The majority of these poachers are from the neighboring border of Mozambique who move in complete darkness, with a great familiarity to the bush, and fully armed.  The anti-poaching measures consist of approximately 650 SANParks game rangers, two donated drones, along with helicopters and automated movement sensors that relay intrusions along the Mozambican border.  When intrusions take place, they relay messages to a control center.   Many poachers have been caught, but the number of rhinos poached each day continues to rise.  So why is this happening, even with so many obstacles in place?

It is easy to blame only the poachers, but there are many more people involved in the rhino horn trade.  After reading and talking to people involved in conservation about the sequence of events that take place regarding rhino horns, I have concluded that a central problem lies with demand.  Demand comes from the false belief that rhino horn has medicinal values, including as a cancer cure, a hangover cure, and as an aphrodisiac.  The horn also is believed to bring high status value predominantly in Asian cultures.  Many believe that the bigger the horn, the more power and status that person has.  Why does the demand and supply not match up in rhino horn trade?

In a regular economy, supply and demand theories should work.  With rhino horn, however, they do not.  As long as there are rumors about purported medicinal properties and it continues to be a desirable status symbol in certain cultures, there will be demand for rhino horn. The demand for rhino horn is insatiable, but is reaching a limit simply because the rhino populations are rapidly decreasing and on the verge of extinction. Unfortunately the less rhino there are, the higher the horn’s value becomes because of the rarity factor.  Instead of shying people away from these expensive purchases, the demand has increased more and more.  In economics, demand explains how as the price of a good or service increases, consumer demand for the good or service will decrease and vice versa.  Rhino horn is unique and unfortunately doesn’t follow these consumer behaviors.  The law of supply is not compatible with rhino horn trade either.  In a regular economy, supply should function when as the price of a good or service increases, the quantity of goods or services offered by suppliers increases and vice versa.  This notion brings up the issue with rhino horns in that the higher the price, the higher the quantity supplied.  Not surprisingly, basic economics plots a rough forecast for rhino horn trade.  As less and less rhinos become available, the demand increases causing massive pressure for increased poaching.  With supply of rhino horn becoming extremely limited, demand will continue to rise and demanders will pay the consequences of endangering the rhinoceros.

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