Originally published at NationalGeographic.com on September 15, 2014
Corruption, speculation and the high price of ivory make the ivory ban unworkable.
By Daniel Stiles
PART ONE: Here I respond to Christina Russo’s in-depth examination, published in National Geographic News, of one of the more incendiary questions discussed in wildlife conservation circles: Should there be a legal trade in elephant ivory? I discuss some inaccuracies and misconceptions commonly held by ivory trade ban proponents that were quoted in Russo’s article. Following (PART TWO), I lay out for the first time elements that would be included in a legal trade. The outcome, I believe, will be a significant reduction of elephant killing for ivory.
I live much of the time in a grass-thatched cottage on a wildlife conservancy in Kenya. I have a view of Mount Kenya out front and the Abedares in back. Just off my large compound is a clearing in the bush that used to be a water reservoir, before the earth dam broke. Now dry, except for a small stream that runs through it, the grass, water, and minerals in the patches of bare soil attract almost daily visits from elephants, white and black rhinos, and all manner of other wildlife.
When I watch the elephant families frolic in the clearing, and see their tusks, I find it hard to imagine that anyone could be so cold-blooded as to kill these magnificent creatures for what are simply long teeth. The elephants use them to good effect as they dig out a wallow in the deeply incised stream.
I care a lot about elephants. It makes me extremely angry that people kill them for their ivory. But it also frustrates me when I see apparently well-meaning campaigns aimed at policies and actions that will only increase elephant poaching for ivory.
I am convinced that attempts to completely restrict all ivory sales, both domestic and international, and the campaign to destroy all ivory stockpiles—even the historical collection kept by the British royal family—are backfiring tragically on elephants. Already these restrictions have resulted in skyrocketing ivory prices, which along with other factors has spurred an elephant-killing spree. Sadly, as long as these factors remain in place, this will continue.
What Does Empirical Evidence Say?
I believe in empirical evidence to test policies and actions. The policy to test since 1990 is the ban on the international trade in ivory.
Elephant poaching did decrease in some places after the ban, but it carried on as usual in others, and in parts of Southeast Asia it actually increased, with Vietnam, Laos, and Myanmar losing two-thirds of their elephant populations in the decade after the ban.
In the early years after the ban, ivory market activity and raw ivory prices dropped almost everywhere data are available. It appeared that the ban was initially successful in reducing illegal ivory trading. I thought myself that this was the case until I analyzed what had actually occurred leading up to and following the 1990 ban implementation.
Hong Kong and Japan in the 1980s were the biggest importers and manufacturers of raw ivory. They were probably also the biggest buyers of poached tusks. As calls for more controls on ivory trade escalated in the 1980s, and CITES imposed a quota system on raw ivory exports, elephant poaching increased. With increased poaching, calls began for a total ban on ivory trade from Africa, which could be achieved by listing the African elephant on CITES Appendix I.
No one, to my knowledge, has ever truly determined the drivers of the increased poaching. Not enough research was conducted on ivory markets in the 1980s to be certain, but reports of hugeraw ivory stockpiles in Hong Kong in 1989 (665 tons) and Japan (unquantified, but in the 1980s more than 2,500 tons were imported) lead to one conclusion: They were stockpiling. Why? Because a future supply of ivory was uncertain, and increasingly it looked like a ban was on the way.
If high consumer demand had been the cause of the increased poaching, the stockpiles would not have existed. The raw ivory would have been processed.
Tragically, the rising calls for an ivory trade ban increased poaching because East Asian dealers and factories decided to stockpile for future use. The two fed each other in a positive feedback loop—increased poaching, increased calls for control, leading to more poaching to stockpile, ad infinitum until the ban.
After the CITES ban, demand fell in the West owing to all the negative publicity related to buying ivory that accompanied the run-up to the ban. East Asia’s largest ivory export market withered. East Asia was left with huge ivory stockpiles and falling demand. Prices fell, ivory market activity slumped. The ban seemed to be working.
Lack of Foresight
The period 1990-92 was critical for planning for future predictable occurrences. One: As the stockpiles dwindled, East Asian ivory factories would eventually begin looking for new raw ivory. Two: By 1990, the economic reforms made by China’s “paramount leader” Deng Xiaoping were well apparent. China would become an important part of the ivory demand equation. Three: With the trade ban in place, the ivory could only be obtained from poaching.
If conservationists had been proactive, they would have planned for these three predictable occurrences, but they did not. Esmond Martin and I carried out a series of ivory investigations in Africa and Asia between 1999 and 2003. We noted, “… in parts of Central and West Africa there appears to have been a slow revival since the mid-1990s.” In South East Asia we found, in part, “Unfortunately, it appears that demand for ivory has remained steady or increased in some places in Asia since the mid-1990s, stimulating elephant poaching.”
However, after the CITES-authorized 1999 sales from southern Africa to Japan, the ivory market decline continued in China, Taiwan, and Japan. All the indicators—ivory prices, numbers of factories, craftsmen, outlets, etc.—had dropped from pre-1989 levels.
“These statistics illustrate very well indeed that the ivory industry of Japan since the late 1980s has experienced a massive decline,” and “probably the most surprising finding of this survey was the unexpectedly small size of the local market in China,” said Martin and Stiles in 2003: The Ivory Markets of East Asia report.
In spite of hard evidence to the contrary, the Environmental Investigation Agency (EIA) continues to claim that the 1999 sale stimulated demand and “substantially compromised its [the ban’s] integrity, effectiveness, and enforceability,” according to Allan Thornton in Russo’s essay.
Esmond Martin and I could find no signs of this. We wrote: “Ivory industry business personnel in China, Hong Kong and Taiwan did not believe that the 1999 southern African ivory auctions had a significant effect on either internal or external ivory demand.”
If CITES Parties and conservationists had seized the opportunity to establish a well-designed legal raw ivory trade regime in the early 1990s when demand was low, the poaching rise we have witnessed over the past 20 years could have been avoided.
The Real Cause of Rising Demand in China
The credo of the ivory ban proponents has been that the 2008 CITES-approved ivory sale to Japan and China was the cause of the spike in consumer demand, which set off the current elephant poaching crisis. The insinuation was that a regular legal ivory trade would be even more disastrous.
Esmond Martin and Lucy Vigne assessed Japan’s ivory market in late 2009 and concluded that“The golden days of ivory carving in Japan have ended.” The market had continued its precipitous downward spiral seen in 2002. There were fewer carvers, outlets, and items seen for sale.
These findings did not prevent EIA’s Allan Thornton proclaiming falsely in Russo’s article that “Japan is back in the ivory business,” implying it had been reinvigorated because of the 2008 sales.
However, consumer demand for ivory did rise in China, beginning in about 2004 and surging in 2006. It took a Chinese student researcher from Yale University to discover what prompted the rise in ivory interest in China. Yufang Gao spent two days visiting with me in Kenya and explaining his ideas, which I found original and stimulating.
Gao was not satisfied with the common explanation that the rise in ivory demand was driven by the CITES approved one-off sale in 2008. He learned that in 2002 the Chinese government started to put traditional culture preservation on the agenda, and in 2005 the government launched a number of initiatives in association with UNESCO’s Convention for the Safeguarding of Intangible Cultural Heritage.
In 2006 ivory carving was designated as a national intangible cultural heritage. This State recognition enhanced the cultural value of ivory carving, raising its value in the eyes of consumers.
The second and the most important driver of worked ivory demand was a boom in arts investment, especially after the global economic crisis that began in 2007. As real estate and stock markets tumbled, a large amount of capital from individuals and professional investment companies started to enter the art market. Along with ancient Chinese paintings, jades, and porcelains, carved ivory was touted as a profitable investment. Media coverage about the astronomical prices of auctioned ivory greatly boosted the perceived economic value of ivory products, new or old, which led to an explosion of ivory demand.
Ivory art for investment took off in 2009 and peaked at the end of 2011, mirroring elephantpoaching data produced by the Monitoring the Illegal Killing of Elephants (MIKE) program.
It was these cultural and investment factors, and not the 2008 one-off ivory sale, which stimulated consumer interest in worked ivory in China.
“The 2008 CITES one-off sale stimulating demand in China is a myth created by Westerners,” Gao told me.
Consumer Demand Falls—Elephant Poaching Rates Go Up?
Recent information suggests that consumer demand has been falling since 2012, supported by research carried out in China by Kirsten Conrad and Brendan Moyle in 2013 and 2014. “The factories are actually using up tusks slower than the total allocations (13.78 tons out of 18). If demand had taken off in the way many are claiming, then we’d expect to see these numbers trending up to match,” said Brendan Moyle. Some factories were even selling raw ivory because they didn’t need it.
If the investment craze for carved ivory was tapering off, why was elephant poaching still going full speed ahead?
It was not only Chinese consumer interest in carved ivory that sparked the poaching crisis beginning in 2008-09. Investors, a.k.a. speculators, also became interested in raw ivory—tusks. After anti-trade NGOs succeeded in forcing a nine-year moratorium on proposals for future legal ivory sales from southern Africa at the CITES Conference of the Parties in 2007, unscrupulous ivory dealers saw that there was even more money to be made from poached tusks, because uncertainty of supply fuels speculation.
CITES, thanks to anti-trade NGOs, had provided traffickers with a windfall. Just as China ivory factories thought that they would be receiving a continued supply of legal tusks through repeated CITES-approved sales, their hopes were dashed.
We are now back to a situation somewhat like the 1980s, where East Asian dealers and factories are buying all of the poached ivory they can. The positive feedback loop, with calls for more restrictions leading to more stockpiling and more poaching are once again feeding one another. But instead of Hong Kong and Japan, now it’s China that is buying most of the poached ivory. And instead of stockpiling ivory for future use, some of the biggest buyers are hoarding tusks for future sale, when they expect to make a killing as increasing tusk scarcity continues to force prices ever higher.
The “Stop Ivory” campaign, which aims to close all ivory markets and destroy all stockpiles, is creating a perception of ivory scarcity. The well-publicized new round of ivory stockpile destructions beginning in Kenya in 2011 and running up to the present in the Philippines, the USA, China, Hong Kong, and other places has turned perception into reality. Close to 70 tons of ivory has been destroyed, equaling the legal annual quota in China over 12 years.
The Price of Illegal Raw Ivory in China Has Skyrocketed
Martin and Vigne went to China in late 2010, and again in May 2014, and found that “The average price paid by craftsmen or factory owners, for good quality, privately-owned 1-4 kg elephant tusks in Beijing in early 2014 was $2,100 per kilogram [$955 per pound]. The average price for similar tusks in 2010 was $750 per kg [$341 per pound].”
Speculators are attracted to a 280 percent return on investment in less than four years. If the ivory is purchased in Africa, profits are much higher. Chinese ivory traffickers are flocking to the Zambian countryside, Dar es-Salaam, Kinshasa, and dozens of other places in Africa where tusks can be bought from poachers and middlemen for as little as $50 per kilogram. What speculator can resist buying a commodity at $50 a kilogram and selling it for $2,100 a kilogram? That’s a 4,200 percent profit! In reality, of course, with all of the expenses and an average buying price of about $150 a kilogram, profit might be “only” 1,000 percent.
The opportunity for enormous profits has prompted high-level African politicians, military officers, and police commanders to muscle into the trafficking networks. Corruption of the kind described by Liz Bennett in her recent essay in Conservation Biology is now common. The corruption is a result of the CITES ivory trade ban and is strengthened by the campaign to “Stop Ivory.”
We need to appreciate that the high poaching rates and corrupt ivory trafficking networks described by Bennett were created under an ivory ban regime. The two one-off sales were blips that had little effect, as both the Elephant Trade Information (ETIS) and MIKE concluded after extensive analysis. I concluded the same when analyzing the 1999 one-off sale.
Even with the downturn in consumer demand for carved ivory in China, the increased speculator demand for raw ivory is driving horrifying rates of elephant poaching.
Tom Milliken, who manages ETIS, was recently quoted as saying, “Just looking at large-scale ivory seizures, 2013 represents the highest quantity of ivory seized in 25 years of data going back to 1989.” More than 51 metric tons (57 U.S. tons) of ivory were seized in 2013! This is empirical evidence that the CITES ivory ban and stockpile destruction are bad policy.
What Is the Solution?
Empirical evidence does not suggest that more of the same would be successful in reducing poaching. I agree with Albert Einstein, “Insanity is doing the same thing over and over again and expecting different results.”
If China could receive 40-50 tons and Japan 10-15 tons of legal raw ivory annually, the speculators would be put out of business, most ivory factory owners would cease buying poached tusks, raw ivory prices would plummet, and elephant poaching would become much less profitable, greatly reducing the incentive to poach. Uncertainty and speculation would cease.
This quantity of ivory could be supplied from a combination of existing African stockpiles, natural elephant mortality and “problem” animal control. Many people are unaware that large numbers of elephants are killed legally every year in human-elephant conflict situations. Not a single elephant life would have to be sacrificed for this legal, regulated trade.
Elephant killing would not cease entirely, because there are other drivers such as human-elephant conflict, meat, and African ivory markets. But even a 50 percent reduction in poaching rates would be worth it.
Is the goal to stop elephant killing, or stop ivory? I’m for the first one.
PART TWO: How would a legal trade system work?
With a legal raw ivory trade, elephants can thrive.
There are measures that can be taken to avoid corruption and laundering of the type described inElizabeth Bennett’s Conservation Biology essay. She described the problems associated with the current illegal system and applied them to an assumed legal ivory trade. Her assumptions were faulty.
The legal system would need to achieve three essential outcomes: (1) ivory factory owners no longer buy poached tusks, (2) ivory consumer demand is driven down to meet available legal supply, and (3) the current black market ivory factories and outlets in China are either brought into the legal system or put out of business.
I mention only China in outcome 3 because China is the elephant in the room, so to speak. With 1.4 billion people and an economy that will soon be the largest in the world, coupled with a cultural desire for ivory, the Chinese control the fate of elephants.
If these three outcomes can be achieved, all of the concerns about corruption and leakage of illegal ivory into the legal supply chain outlined in Bennett’s essay can be avoided. I will explain why.
(1) Ivory factory owners, whether they be a State Owned Enterprise (SOE) in China or privately owned, have the same basic objectives—make a profit and stay in business. If a legal business achieves those two objectives better than an illegal one, the rational owner or manager will choose the legal option. So if legal raw ivory can be provided in sufficient quantity at predictable times at an acceptable price, there will be no incentive to buy higher risk illegal ivory.
In addition, there are advantages that legal raw ivory in China offers: It is much cheaper than illegal, and legal supply is predictable, while illegal supply because of seizures is not. The only reason an illegal market operates at all is the lack of sufficient legal supply, which is controlled by the government at 5-6 tons a year.
If 40-50 tons of legal raw ivory could be supplied a year, all of the currently illegal factories could be drawn into the legal system by the offer of low-risk, high-gain legal ivory. They would not need to buy illegal ivory, eliminating the motivation to launder (i.e. buy illegal and mix with the legal).
The reduction in demand for illegal ivory would drive its price down to a level that would become unattractive for most traffickers, which would lower poaching and quash speculative buying and stockpiling. Who would stockpile a commodity whose price is falling?
Currently, the Chinese government is selling legal raw ivory at about $600 a kilogram on average to registered ivory factories, according to Moyle and Conrad. Illegal factories are paying an average of $2,100 a kilogram according to Martin and Vigne, and Gao found that secondary raw ivory dealing on the Internet reached prices up to $2,800 a kilogram.
What factory owner in his or her right mind would buy poached tusks at those prices if legal ones were available at $600 a kilogram?
(2) Consumer demand can be driven down in two ways, one of them already succeeding in China and Japan—price. The main reason consumer demand started falling in 2012 in China is that carved ivory prices reached a limit few consumers were willing to pay. I believe this was intentional in the legal market and coincidentally necessary in the illegal market.
Because of the very small quotas of raw ivory rationed to legal factories, they opted to produce low quantity, high quality, high price items—mainly elaborate figurines, carved or polished tusks, and extravagant composite pieces. Only the wealthy could afford to buy them. The huge profit per item compensated for the low volume.
The illegal market sector is forced to charge higher prices than in 2010 because the raw ivory they use has gone up in cost so much recently, currently to more than $2,000 a kilogram. Because they have to sell in high volume, they manufacture mostly the smaller, less expensive items such as diminutive, lower quality figurines, jewelry, name seal blanks, chopsticks, and other knick-knacks. They are not able to produce the high quality items the legal sector does because, with a few exceptions perhaps, the master craftsmen work in the legal sector.
It is Versace versus Wal-Mart applied to ivory.
To drive overall ivory consumption down, the entire ivory market must be shifted more toward the Versace model.
This is where the second way to drive consumer demand down comes in—campaigns of the type WildAid, Save the Elephants, African Wildlife Foundation, and others have launched. Create awareness about the harm buying ivory causes to elephants. Target especially jewelry and other items that are seen in public, create stigma associated with wearing or using ivory items, as was done with fur. Combined with high prices, stigma could lower demand considerably for ivory bracelets, necklaces, cigarette holders, and so on produced in the black market.
3) In a sustained, legal ivory trade system the Chinese government is crucial to achieve the outcome of doing away with the black market. The traditional carrot- and-stick approach can be used to entice the illegal factories to register and join the legal, regulated system. They can be offered a quota of legal ivory annually at relatively low cost. The owner and employees of any unregistered factories found operating after a certain date would suffer severe penalties. Why would a factory owner choose to take the risk of staying in the black market when low-cost, legal ivory was on offer?
Supply and Demand
For the system above to work, it depends on there being enough legal raw ivory available to bring a high proportion of illegal ivory factories on board the legal boat, and being able to satisfy consumer demand reasonably well. A small amount of residual illegal activity is to be expected, but the overall objective of significantly reducing elephant poaching can be achieved.
A document submitted at the 65th CITES Standing Committee meeting in July this year stated that the “current African ivory stockpiles contain at least 800 [metric tons] of ivory… The true figure, however, may be considerably higher than that.” There are many complications involving what quantity would be legal to trade and which countries would meet CITES criteria to enable them to trade, but it is apparent that there’s a lot of ivory sitting in storerooms in Africa that is being wasted. It could be used to save elephant lives.
Kathleen Gobush produced the results of a lengthy study carried out for Save the Elephants last year that included estimates of how much ivory accumulates annually from natural mortality. Her methodology would yield 38 tons annually at a 4 percent natural mortality rate from only 12 African countries, where data were good enough to run her model. If problem animal control (PAC) ivory were added, the quantity would be much larger. She found that 44-67 percent of the legal ivory sold by the four southern African countries in 2008 derived from PAC ivory, and the remainder from natural deaths.
While no exact figure can be put at present on how much ivory would be available from stockpiles, natural mortality and PAC combined, I am confident that a minimum of 60 tons of legal ivory could be exported from Africa annually for at least ten years, without a single poached tusk needed. During this ten-year period, intense demand-reduction campaigns can be mounted so that renewable resource ivory from natural deaths and PAC can supply demand sustainably.
The cheaper legal raw ivory should not translate to cheaper worked ivory, however. This could stimulate consumer demand. I would recommend that a “conservation tax” be applied to worked ivory to keep prices up, dampening demand. The revenues could be dedicated to conservation projects in Africa and awareness campaigns in China.
Preventing Leakage and Laundering
Legal ivory stockpile quantities would be reported annually to CITES, as currently required. A country not reporting would not be eligible to sell its ivory. Every eligible country would be subject to periodic independent monitoring of its stockpile in a manner to be determined by CITES.
CITES would supervise sales annually or semiannually following procedures established for the one-off sales. The significant difference being that now buyers would be confident that they’d know when, where, and how much ivory will be available in future. Uncertainty and speculation will be eliminated.
The ivory will be shipped in sealed containers directly from African government storerooms to Asian government receiving points in the purchasing countries for storage and distribution. This will cut out all of the points subject to corruption and laundering mentioned in the Bennett essay.
If this type of system can be established, I foresee that many African countries that currently export their ivory illegally, often with government involvement, will see the advantages of cleaning up their act so that they can qualify to enter the legal trade regime. Why take the risk of smuggling illegal ivory that is subject to confiscation when it can be sold legally, risk-free? The advantages will become increasingly apparent as poached ivory prices plummet with legal trade.
“No Good Reason Why Anyone Needs Ivory”
I agree completely with Beth Allgood’s sentiments expressed in Russo’s commentary: There’s no good reason why anyone needs ivory. But not everyone feels the way Beth and I do, and we have to face reality. Some people want ivory. I do not see the attempt to ban all ivory succeeding better than allowing the limited, legal raw ivory trade described here. Closing the legal ivory market in China will only drive the master carvers and others into the illegal sector. The black market is already illegal, how much more illegal can it become with a total ban? It will carry on and even expand, fostering crime, corruption, and continued elephant killing.
Elephants cannot survive the continued ivory trade ban and “Stop Ivory.” They can thrive with legal trade.
Daniel Stiles is a member of the IUCN/SSC African Elephant Specialist Group.