The High Costs of Illegal Poaching

August 10th, 2011

Illegal poaching and trade of wildlife is a massive problem for developing countries, particularly those in Asia. Often these

In Myanmar, at an illicit endangered wildlife market, tiger paw, teeth, and tallow are for sale | Soggydan/Flickr*

products find their way across boarders—stuffed into suitcases, packed into trucks, and occasionally carried. Protected and endangered species are killed and sold for their organs, flesh, bones, skin, and scales, which are turned into tonics, ornaments, meat, and traditional medicines. Many of these animals are endangered or protected. Of all the illegal wildlife product seizures in Australia last year, two-thirds were traditional medicines containing ingredients from endangered species. Global Financial Integrity has estimated that the illegal trade in wildlife among residents of developing countries generates about $US10 billion annually.

But the truth is these numbers drastically underestimate the true value of these assets and the illicit extraction’s true cost to development. Some resources have enormous value when they are extracted and then sold (for example, diamonds and oil). These resources, called natural resource products, often have an extractive value that far exceeds their non-extractive value. But other resources have value in situ that does exceed their extractive values. For example, forests yield timber through an extractive process, and that timber has monetary value on a market. But forests also have recreational value to backpackers and hikers and provide ecosystem protection, including flood control and carbon dioxide sequestration.

The same reasoning applies to wildlife and biodiversity. Wildlife—particularly endangered species—has a recreational value, particularly to the massive ecotourism industry. One study, for example, recently used expenditures on ecotourism to value protected areas in Costa Rica. It found the value of those protected areas to Costa Ricans were around US$68 million. Also, many people in developing countries use wild resources to diversify their livelihoods, including trading, handicrafts, or even formal employment. A study of Sekong Province, Laos, for example, found that local communities derived 71 percent of their total income from non-timber forest products. Declines in access to wildlife resources as a result of illegal poaching can cost those in developing countries income, livelihood diversification opportunities, and result in increased vulnerability.

Wildlife also has value in pharmaceutical research. Called genetic resources, many species of plants and animals have enormous, and largely unexplored, potential value in medical research and agricultural and industrial advances. The process of finding these resources is called bioprospecting. The aforementioned study in Laos found the annual benefit of bioprospecting in the Province is approximately $13,659-$68,289 per year.

While these values are sizeable, they represent only one section of the total value of wildlife, particularly endangered species. The values I described above are called use values, but economists also widely recognize another important category of value of natural resources, called non-use values. Non-use values are those values expressed by humans for the existence of natural resources alone. Humans need not to ever use or see something to value it.

This is a concept that is difficult for many to understand, so examples are helpful. Take theGrand Canyon. While there are many people who have never visited it and may never visit it, it is not difficult to imagine many of those individuals would be angry if theU.S.government decided to sell the Grand Canyon national park to a developer, who wanted to build a strip mall along the side of it. If it were a question of finances, many of these same people might even be willing to donate some of their own money to avoid this outcome.

This brings me to a key concept, fundamental to understanding non-use values: willingness-to-pay. Marginal willingness-to-pay (WTP) is the amount one individual would be willing to spend, in a hypothetical market, to preserve a certain resource. Because WTP is not observable, economists must use other techniques to measure its value. One option is called contingent valuation (CV), a survey technique based on the idea that people’s WTP can be measured by asking them what it is directly.

With CV, economists have estimated that the average American’s lump sum WTP ranges from $12.99 to $254 for sea turtle or bald eagle preservation. One study found the average American was willing to pay about $953 to protect 18 different species. When aggregated over millions of individuals, the value of total benefit rises very fast.

As Justin Gosling, a criminal intelligence officer with Interpol’s environmental crime program, has noted: “Until five years ago, wildlife crime was not considered a big deal by enforcement agencies. Drugs and terrorism are seen as more important, but environmental crime is a far greater danger to communities.” This is true. Between use values of livelihood, tourism, pharmaceutical research, agricultural advancements, and trade, and the high non-use values society places on endangered species—developing countries have a lot to lose when it comes to illegal poaching and the transnational trade of wildlife products.

While Global Financial Integrity’s estimate of an annual loss of US$10 billion is a good start—it does not come close to the full monetary loss developing countries experience as a result of the illicit trade in wildlife. There are two opportunities for advancement. On the research side, an investigative report into the full costs to developing countries as a result of the illicit trade in environmental products is urgently needed. Second, both domestic and international policy needs to recognize the severe harm environmental crime wreaks on local communities and prioritize policy and regulatory actions that will curb these damaging flows.

* Image license: some rights reserved by Soggydan

Written by Ann Hollingshead

Follow @FinTrCo