Ending Profits and Perverse Incentives to Save the Planet

Ashley Dieste HB

“According to the Wildlife Conservation Society, the African elephant population has dropped from 1.2 million in 1980 to just 420,000 in 2012.”[1] This is just one of many wildlife and ecological exploitation issues around the globe. There is extreme poverty, political instability, and lack of education in ecologically rich zones around the world. Disadvantaged individuals in these areas have turned to the exploitation of forests, wildlife, and other ecological treasures for profit. And in doing so, have caused great harm to mother earth.

The global markets for Ivory, Brazilian hardwoods, and exotic wildlife furs are booming. There is a great demand for these goods due to the scarcity of the resource and the perceived luxury they provide. Moreover, there has also been a population explosion in many global urban centers. This has been compounded by the growing middle–class with increased buying power, as well as a significant increase in wealthy individuals in China, India, Russia, Southeast Asia, and the Americas. The combination of these factors, along with a strong and recovering global economy, has created the perfect environment for increased supply and demand.

Markets for exotic Amazon woods, furs, and pelts are full of free riders. “It’s easy to be a “free rider” and let someone else, or some other organization, do the work.”[2] Many times the end consumer for these goods are not aware or simply do not care that they are enabling an illegal black market. For example, many homeowners in developing counties, place a premium on high end wood flooring that originate from Brazilian old growth trees because of its perceived utility. The wood is much harder wood with beautiful natural grain. It gives them a sense of luxury while providing a product with increased durability.

One might think that in situations such as these incentives like cash or trade for stopping a behavior for the illegal profiting of ecological treasures would make sense, however, it could also have a serious negative consequence and become a perverse incentive. For example, if a local government were to incentive the poor in a country like Brazil to stop the logging of old-growth ancient Amazon trees or the deforestation of the Amazon for increasing cattle grassland, it could potentially have the opposite effect. The participants would take the incentive like cash or trade, but still engage in the illegal activity.  Another perverse incentive example is, “many range state governments subsidize development projects and activities such as clear-cutting and conventional agriculture…. Another problem is the high value of dead tigers. In some countries the prices paid to poachers for a single tiger skeleton may be as much as ten times the average annual per capita gross national product.”[3]

This activity is unsustainable, our planet is in trouble and the fate of our environment and wildlife is in jeopardy. Local governments are overburdened and corrupt, penalties are light, and ecological and wildlife crime is low on their list of priorities. Unless we provide more creative solutions for the world’s poor and developing countries, I fear that we might be heading towards a real global ecological disaster.


[1]How We Can End The Elephant Poaching Crisis, “Clinton Foundation, June 13, 2016, https://www.clintonfoundation.org/main/clinton-foundation-blog.html/2013/08/19/how-we-can-end-the-elephant-poaching-crisis.

[2]  Charles Wheelan, Naked Economics Underdressing the Dismal Science  (New York: W.W. & Norton Company,Inc., 2010), 31

[3] “Is There Hope for the Tiger?” PERC – The Property and Environment Research Center. June 13, 2016. http://www.perc.org/blog/there-hope-tiger.

Image: Deforestation and Lungs. January 30, 2013. WWF Campaign. http://persuasion-and-influence.blogspot.com/2013/01/wwf-campaign-deforestation-and-lungs.html.





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