Question

It is all about the The Black Rhino. The black rhino is one of the most endangered species on the planet In southern Africa in 1970 = 65000 Now 2500 Basic economics tells us why they are in trouble and what we can try to do about it Why do people kill the black rhino? Because they can make a lot of money relative to the risk of getting caught. Just like drug trafficking and lying on your taxes. In Asian communities the horn is viewed as an aphrodisiac and a power pain reliever. IN Yemen sabers are made from them As a result one horn can fetch $30K on the black market. The average yearly income in southern Africa is $1,000. And falling. The black rhino is worth more dead than alive. This is a market that does not correct itself Another piece of this that is common to many environmental challenges is Most black rhinos are communal property not private property. Imagine if all the black rhinos were in the hands of one rancher - would he let his herd fall from 65K to 2500? No he would maximize the value of his scarce resource ommunal resources problems: 1. The community derives no benefit from having the rhinos around 2. Millions of people not in southern Africa derive a utility from conserving the black rhino so it is easier to let someone else do the work of conservation. How much time and energy did anyone of us put into conserving rare animals? 3. Tour providers who make a lot of money showing wealthy people wild animals have a stake and spend a lot of money on conservation efforts but that gives some of them a free-rider disadvantage they are saving a communal resource and other companies that may not invest in conservation will be able to undercut their price -thus getting a free ride from their conservation efforts. So there is a role for gov't here? but govt's are low on resources and often very corrupt. The one party that has the most incentive is the poacher who hunts them down, kills them and takes the horn What to do? Please answer the following questions .Address the supply and demand issues - How does this situation relate to the laws of supply and demand? 2. What kind of incentives would help with the problem? 3. Address elasticity - Research what does elasticity mean. Is the horn elastic or inelastic? Why? 4. Research more on the topic and tell me what you would do to solve this problem.

Answer 1

1 clearly supply is less than demand. This will force price to rise

2 giving subsidy to those tour operates who invest in conservation

3 elasticity means how responsive is supply or demand to proportionate change in price.supply us here elastic-as price rises poachers kill more. Demand is inelastic-even at high price there is demand

4 I would increase punishment say by giving life sentence to poachers,check black marketing of produce, use video cameras and drones for surveillance etc