Published in September 2019
This module is a resource for lecturers
Supply and demand
The supply-demand cycle
The diverse demand for wild animals, animal parts and products, plants and plant material is met by supply from areas where species are endemic that cannot be found elsewhere or where species exist that are extinct in other places. Wildlife trafficking involves both intra-country and inter-country trafficking. Much of the trade is transnational, crossing one or more borders on its way from the source, via transit points, to the destination. The trafficking in ivory and rhino horn from Africa, where most elephants and rhinoceros are poached, to Asia, where most of the demand exists, illustrate the complexity of intercontinental trafficking particularly well. Trafficking in tiger parts, by contrast, mostly occurs between countries in Asia (see the illustrations in Patel et al, 2015, p. 7949).
Traditionally, much of the literature has described the trafficking of wildlife and plants as a south-north flow, noting that developing nations in 'the global south' tend to be suppliers while the demand for wildlife, wildlife products, and plants stems from developed nations in 'the global north'. Wildlife has been described as a significant resource of many developing countries in Africa, Asia, and Latin America where it plays a major and often critical role in people's livelihoods. It is often the poorest people and households that are most dependent on these resources (Broad et al, 2012). In addition, the economies of many countries rely on wildlife to promote tourism or as a natural resource for export or for local industries.
On the supply side, widespread poverty can drive people to engage in or support behaviour that degrades the environment upon which they depend, so much so that livelihoods cannot be maintained. On the demand side, wealth often fuels consumption patterns that undervalue and drive the over-exploitation and depletion of natural resources in source countries (Broad et al, 2012). Supply and demand thus seem to be caught in a cycle where demand fuels supply and supply creates demand, much to the detriment of the wildlife, environments, and people in some of the least developed countries.
A closer look at the supply and consumption patterns, and the characteristics of the wildlife trafficking, however, challenges this narrative. A 2018 study, for instance, shows that high volumes of wildlife products come from and destined for developed nations. Similarly, some commodities are trafficked within and among developing nations. Furthermore, some emerging economies have among the highest consumption of illegal wildlife products (Symes et al, 2018). A 2015 study 'identifying the key nodes in the illegal wildlife trade network' illustrates the complexity of trafficking in elephant ivory and tiger products and reveals the net that connects source, transit, and destination countries (Patel et al, 2015).
Put simply, the connections between source and destination countries, between supply and demand are complex, and do not fit in simple dichotomies. The web that connects points of origin for wildlife to consumer countries is indicative of the multistage journeys that many of these goods take before reaching their intended destination (Symes et al, 2018). Moreover, the dividing line between pure subsistence use of wildlife and commercial wildlife trafficking for profit is often blurred (Broad et al, 2012).
Impact on pricing
Statements about the scale and value of the wildlife trafficking vary greatly and are highly speculative. Many analyses support the view that the rarer and more endangered a species is, the higher its price on the illicit market. An increasingly scarce supply of many protected species, combined with strong demand, is said to cause prices of wildlife, their parts, and derivatives to rise markedly, a phenomenon known as the 'anthropogenic allee effect': as an item becomes scarcer, consumers will be willing to pay more money to acquire it (see further, Courchamp et al, 2006; Holden & McDonald-Madden, 2017). Some endangered wildlife products are worth more than their weight in gold, with profits increasing substantially as wildlife contraband moves further along the chain toward destination markets. These circumstances create significant financial incentives to become involved in illicit wildlife markets (Sundari & Allen, November 2012).
The demand and price of wildlife frequently increases with rarity associated with morphology, life-history traits, origin, and conservation and trade regulation status. Consumers may prefer rare species and pay disproportionally high prices for them, leading to increased hunting efforts. The more endangered a species becomes, the greater is the commercial value that is put on the remaining specimens, thereby increasing the price and the incentive for trafficking (United Nations ECOSOC, 2003). This results in a positive feedback loop: consumers pay disproportionally high prices for rare species, making it worthwhile for a hunter to dedicate more time and effort to find the animal and for traffickers to go to great length to conceal their contraband, which in turn makes the species rarer and more expensive (Sung & Fong, 2018). For these reasons, the listing and classification of species according to their level of vulnerability to extinction (i.e. vulnerable, endangered, or critically endangered) in the CITES appendices or other 'red lists' has been criticized by some experts because it may promote - as opposed to curb - wildlife trafficking by inadvertently advertising the rarity of certain species (Alacs & Georges, 2008).
Supply-side economists point out that the cost of items traded on the illicit wildlife market are extremely high and that, despite the fact that international trade in those items is illegal, demand appears insatiable. To reduce the scale and value of the illicit market, some sources argue that the illicit wildlife market should be legalized; supply can then be increased, and prices will go down. Once the price goes down, the incentives for poachers will be removed and poachers and those involved in wildlife trafficking will move out of the market (Wiersema, 2016; Bulte & Damania, 2005).
Others are sceptical about the supply-side model, arguing that proponents of legalization assume that wildlife trafficking takes place in a perfectly competitive market. They argue that markets for endangered species are more appropriately considered to be run as oligopolies where small numbers of large traders compete. In these markets, it is not clear that creating a legal supply will result in traders leaving the market. Instead, traders may increase their activity to try to compensate for the lower per-unit profit made for each specimen due to the newly flooded market (Wiersema, 2016), which in turn will place even greater strain on species already threatened by extinction.
A further assumption made by proponents of legalization is that the legal product will substitute perfectly for the illegal product or will be in higher demand. Yet, this is highly context- and species-specific. There is evidence that some buyers prefer wild-caught over captive-bred species or their parts, so if legal supply is to come from ranched or captive-bred species, the legal product may not be substitutable (Wiersema, 2016).
A 2016 study examined the conditions in which commercial breeding (or 'wildlife farming') can keep the pressure off wild populations (Tensen, 2016). This research found that 'wildlife farming can have a negative impact on wild populations of certain species, if the following criteria are not met:
- farmed products must provide a substitute for wild products,
- the demand for wildlife products does not increase;
- legalized farming is more cost-efficient than illegal poaching;
- wildlife farms do not rely on wild population for re-stocking; and
- laundering of illegal products into the wildlife farming industry is prohibited (Tensen, 2016).
The research further concluded: 'When none of the criteria are violated, wildlife farming can be considered a possible conservation tool as it may help to take the pressure off wild populations. For the species that do not meet the criteria to benefit from wildlife farming, a trade ban can be considered to suppress the demand, depress the market and eliminate export opportunities. Trade bans can, however, only work in the absence of corruption' (Tensen, 2016, p. 298).