America's natural gas revolution has led to increased coal exports. What are the implications for climate change? We asked Stanford University Professor Frank Wolak, director of the Program on Energy and Sustainable Development.
Marti Hoffer, founder of lumenomics, Inc. and 2014 Enviropreneur Institute alum, has a passion for harnessing natural light to improve lives. She will represent PERC at SXSW Eco 2014.
Meet Danielle Fisher, 2013 Enviropreneur Institute alumni. In a video and Q&A, she introduces herself and her product and proposes to producers and consumers alike that variability is no longer a liability, it is an asset.
Enviropreneur Danielle Fisher (Alumni 2013) is the owner and founder of Crazy Mountain Grass Fed Beef, LLC in Bozeman, Montana. She came to PERC with the aim to market grass fed beef as the sum of all its parts with the concept: "terroir of beef." In this video she introduces herself and her product and proposes to producers and consumers alike that variability is no longer a liability, it is an asset.
What's ahead for global energy markets? How will the U.S. shale revolution affect our energy future? To find out, we asked Stephen Arbogast, an expert with more than thirty years of experience in finance working with the energy sector. As Prof. Arbogast explains, when it comes to global energy markets, the next decade will look very different from the last four decades. Stephen Arbogast is an Executive Professor of Finance at the C.T. Bauer College of Business, University of Houston. In that capacity, he has authored more than 70 case studies on technical and economic aspects of the energy business. He is also the author of the book Resisting Corporate Corruption, now in its second edition. Prof. Arbogast has taught in graduate MBA programs since 1987 and was awarded the Bauer College Payne Teaching Excellence Award in 2008.We thank Prof. Arbogast for taking the time to answer our questions. For more PERC Q&As, visit the series archive.Q: You’ve said that when it comes to the geopolitics of energy, the next decade could look quite different than the last four decades. What do you mean by that?A: The last four decades have been dominated by the operations of the OPEC cartel. With only occasional exceptions, this cartel has determined the general price level for crude oil. This price represents roughly two-thirds of the price of final products to consumers, so it is most consequential for the cost of energy in developed economies. The next decade could be different for two reasons. The first is the shale revolution. Right now, that revolution—unlocking oil and gas from tight rock formations—is catapulting the U.S. back to a position of world’s leading oil producer. What is not known is the extent to which this will spread to other lands. Many non-OPEC countries, including China, have vast shale resources. To the extent production surges outside of OPEC, the cartel’s dominance will certainly decline.The second issue is more ominous and concerns a key OPEC member, Saudi Arabia. For decades the Saudis have operated as OPEC’s flywheel, absorbing production cuts in times of glut and expanding production to combat scarcity. Will Saudi Arabia remain much as it has been in the years ahead? Will it still be ruled by the extensive Royal House of Saud? One looks at Syria, Egypt, Iraq, Libya, and Iran and wonders.Q: How has OPEC shaped oil politics in the past, and where are we headed?A: In 1973, OPEC discovered it could dictate the short-term price of crude oil. The cartel saw that developed nation oil demand is quite inelastic over the near term. This means the cartel could and did dictate price to its customers. The result then was a 400% price increase that brought to the OECD nations. Over time, the cartel also learned that abrupt price hikes sow seeds of reversion. Price hikes to $40/b in 1980 led to a demand bust and price collapse below $10/b in 1986.These experiences led OPEC, under Saudi leadership, to a price targeting strategy. The cartel seeks prices which balance several objectives. First, they must be high enough to generate current revenue to fund the political models in these states. These political models concentrate wealth in the state and purchase political support with generous handouts and subsidies. Second, the prices should not be so high that they trigger demand destruction undermining the price level’s foundation. Finally, they also should not encourage sustained efforts to replace petroleum with alternative fuels.Surveying the history of price levels since 1973, it must be conceded that OPEC largely achieved these objectives. No alternative fuels “silver bullet” has emerged. Demand for petroleum has grown and most forecasts show it growing for decades to come. Only the shale revolution and regional political stability raise the possibility of shaking the cartel’s grip on the energy price.Q: What role does Saudi Arabia play?A: Saudi Arabia plays the role of “swing producer” within the cartel. This means the Saudi’s reduce production in times of glut and increase it during moments of peak demand. Cartels generally require some member willing to play this role—otherwise supply and demand excesses will drive prices to cyclical peaks and troughs.The Saudis have unique characteristics that, alone among OPEC members, allow them to play this role. First, they possess huge oil reserves, estimated to exceed 200 billion barrels. This allows the Saudis to add production capability and maintain the spare capacity needed to cushion demand peaks. Second, the Saudi have a small population. Until recently that population did not exceed 20 million. This meant that the Kingdom could amass large financial reserves during periods of peak demand and prices. These reserves could then be drawn upon to fund domestic spending when slack demand required the Kingdom to cut production.It is not as clear going forward that the Saudis will be able to play this same role. Despite their ample reserves, the Saudis seem to be having difficulty increasing production capacity beyond 12 million barrels per day. Much of their “spare” is less desirable medium and heavy crude that encounters refining bottlenecks during demand peaks. Meanwhile, a larger, more subsidized population has raised the cost of preserving social peace. Indeed, one can detect elements of domestic concern in the current Saudi hard line towards Syria and Iran.All this said, the graveyards are full of people who prematurely forecast the demise of the House of Saud. The shale revolution, ironically, could pose more of a threat than disturbances among their neighbors if it undermines the crude price and pinches the Saudi paternalistic ruling model.
Fires have been a hot topic this summer, especi
This summer PERC welcomed 14 entrepreneurs from all over the world for its 13th annual Enviropreneur Institute. One of our enviropreneurs, David Hoffman, is an avid outdoorsman with a particular interest in air quality.
It’s a conservation debate that’s as fiery as it gets: Will a legal rhino horn trade save rhinos? Michael 't Sas-Rolfes believes a well-regulated trade is the right answer, and here's why.
Kate Fitzpatrick is a PERC enviropreneur and program manager at the Deschutes River Conservancy developing market-based strategies for water conservation.
Jeremy Gingerich, ranch manager of Banded Peak Ranch, discusses his experience at PERC's Enviropreneur Institute and how creative conservation strategies are protecting open landscapes in the west.
Shawn Regan, Brennan Jorgensen
As part of PERC’s recent Lone Mountain Forum, “Reconciling Economics and Ecology: The Foundation of Environmental Optimism,” PERC board member Gerry Ohrstrom sat down with science writer Matt Ridley to discuss what these two disciplines might learn from one another. Watch a short video of the interview above, read the full interview below (lightly edited for clarity), or listen to the podcast [approx. 7 mins]. For more PERC Q&As, visit the series archive.Q: Ecology is about preserving resources while economics is about exploiting them. How does one reconcile these two disciplines? A: In a way, I think they are both about emergent properties. Ecology is about the spontaneous order that appears in the world through the interaction of different species — the pattern that you see. And economics is about the same thing in society. So they are both bottom-up fields for me. They’re both about how order emerges from the interaction of individuals.Q: Are you suggesting economics could learn something from Charles Darwin and ecology could learn something from Adam Smith? A: This is one of my crusades, actually. As someone who was an ecologist and nowadays writes a lot about economics, I am fascinated by the parallels. Charles Darwin read Adam Smith, so there is sort of an ancestral connection between the two fields. And there is a lot going on in evolutionary biology and ecology that is very parallel to what is occurring in economics and vice versa. People like F.A. Hayek knew this and went across to evolution to pinch ideas, so I think there is a very fruitful dialogue between ecology and economics.Q: You are the author most recently of a book, The Rational Optimist: How Prosperity Evolved. If prosperity continues to evolve aren’t we ultimately going to run out of resources? A: I don’t think so because I think that the amount of resources we have depends upon our ingenuity. In other words, the more prosperous we get, the more frugal we get in our use of resources. Land is a good example: We use less and less land to produce the same amount of food because we’re getting better at it. We’re applying fertilizer or irrigation or whatever it is. The same is true for the amount of steel in a bridge; it is a lot lower than it was 20 years ago, etc.So actually we are shrinking the amount of resources we need to run society at the same time that we are growing them, because there are more of us and we’re becoming more prosperous. I actually think the richer we get in this century, the more comfortable the resource position is going to be because we’re going to be better at recycling, better at finding resources, and better at using them frugally.Q: That is somewhat counterintuitive. The more we use, the more we’re going to have, the more frugal we’re going to be, and the wealthier we are going to be. A: Until now, the problem has been called the Jevons Paradox, which says that the cheaper you make energy, the more people will use it. And that’s true with a lot of resources. But there is evidence that the Jevons Paradox is reaching its limits with some resources. Land is a good example, again. We are actually reforesting land all over the world, we’re taking land out of farming all over the world, because even though there are more of us every year, and even though more of us want to eat chickens and pigs and all these land intensive forms of food, we still, even with this profligacy, can’t keep up with our increasing efficiency, our productivity. So actually we taking land out of agriculture and turning it back to nature reserves. And as the population growth rate falls in this century, I think that process will accelerate.
PERC's workshop, "Tackling the Global Fisheries Challenge," took place last week. Fisheries specialist for the World Bank, Michael Arbuckle, discusses rights-based fisheries reform in developing countries.
What are the ethical foundations of free market environmentalism? This week we sat down with Kate Blanchard and Kevin O'Brein, two of this year's PERC Lone Mountain Fellows, to explore these questions and others. Blanchard is Associate Professor of Religious Studies at Alma College and O'Brien is Associate Professor of Christian Ethics at Pacific Lutheran University. They are currently working on a book about the connections and tensions of ethics, environmentalism, and economics.Thanks to Blanchard and O'Brein for taking time to answer our questions. For more PERC Q&As, visit the series archive. What does Christian ecological ethics have to say about the environment?Christian ecological ethics includes a diverse group of scholars from many denominations and across the world, and while we cannot speak for all Christians, we do believe that traditional Christian teachings have significant environmental implications. Most generally, we argue that human beings have a responsibility to God and all of God’s creation, which includes not just other human beings but also the entirety of the nonhuman world. So, just as Christians are called to treat our human neighbors with respect and love, we must also learn to respect and love the animals, the plants, the ecosystem, and the earth God made. Some Christians would call this stewardship, emphasizing that humans have a special responsibility to be the caretakers of other creatures. Others resist even that anthropocentric division, and would say that human beings should try not to manage other creatures, but instead work toward a more egalitarian community with them. The common theme is that Christian faith calls for loving care for all of creation. Where, if at all, do free market environmentalism and Christian ecological ethics have common ground?There is more common ground than it might first seem! There are disagreements, of course, the most important being that Christian ecological ethics tends to emphasize the intrinsic or God-given value of the nonhuman world, and to be suspicious of the corrupting influence that markets can have on things we would consider priceless. However, we share with FME a profound appreciation for human freedom, a celebration of diversity in human communities, a suspicion of the ways power can corrupt human relationships, and a preference for local solutions. And obviously we share a concern for the conservation and well-being of the earth.How are markets useful for protecting earth’s long-term health? How does this relate to Christian ecological ethics?We appreciate the ways markets provide clear and quick feedback mechanisms: property owners see the results of their management decisions and have the flexibility to adapt as they learn. They are also held accountable for their own imprudent behaviors, and if markets are structured fairly they can’t pass the costs of their mistakes on to someone else. Christian ethicists have thought long and hard about the importance of love and respect for the nonhuman world, but we are always looking for ways to actually put that love and respect into action. We suspect that markets may be more useful for smaller, local problems than for global questions or crises, but we see that markets can be one path to the goal of environmental integrity, and no environmental proposal is complete unless market mechanisms have been carefully considered.
Laura Huggins, Shawn Regan
The science writer who is "turning the conservation movement upside down" calls for an end to notions of pristine nature.
This week's installment in our Q&A series hits close to home. As we write, a 10,000-acre wildfire burns less than twenty miles from our office in Bozeman, Montana, a humbling reminder of the reality of large and destructive wildfires in the west.Dean Lueck knows wildfires better than most. Before becoming an economist he was a smokejumper with the U.S. Forest Service in McCall, Idaho. Recently, Lueck combined his hands-on experience fighting fires with his impressive academic career studying property rights and natural resource economics. The result was Wildfire Policy: Law and Economics Perspectives, a volume he co-edited with Karen Bradshaw. This summer, Lueck is continuing his research on wildfire policy at PERC, along with Jonathan Yoder, as a 2012 PERC Lone Mountain Fellow.Q: Can you highlight a few examples of major wildfires and what efforts were taken toward suppression?A: First, there is the famous 1910 “Big Burn” in northern Idaho and western Montana. That fire, or actually a collection of fires, burned about 3 million acres, killed over 80 people, and devastated the town of Wallace, Idaho. It was fought in a disorganized manner by unskilled firefighters including convicts, vagrants, U.S. Army soldiers, timber land owners with only hand tools. Because the fire took place predominantly on national forest lands, it led to dramatic changes in federal fire policy. Also during the period between 1880-1920, there were many fires as large or larger than the Great 1910 Burn. Many of these took place in the northeast and the Great Lakes region where private timber land dominated.In general organized wildfire suppression efforts were very limited prior to 1900 and efforts focused primarily on protecting homes, buildings, and towns, but not on putting out the fire itself. By the late 20th century fire suppression had become organized within a large centralized, coordinated and hierarchical system heavily dominated by the U.S. Forest Service. Crews had become specialized and highly mobile. The use of aircraft in transport and direct suppression with water and retardant had become routine.More recently, the Biscuit Fire in Oregon burned nearly a half a million acres in 2002. It began on July 13, and at its zenith on July 31 there were over 2,000 firefighting personnel, 21 helicopters and 40 bulldozers assigned to the fire. The fire was not completely suppressed until December and cost more than $150 million. The fire destroyed four homes and ten other structures, forced the evacuation of 15,000 people, and destroyed or damaged thousands of acres of valuable timber. No one was killed during the suppression effort.By contrast consider the Black Dragon Fire in 1987, which burned 18 million acres along the Amur River, which is the border between China and Russia. The fire started in China and burned 3 million acres there. The Chinese fielded over 60,000 unskilled fire fighters and hundreds died. The Russians did essentially nothing to suppress the fire, and it grew an additional 15 million acres. The disparate approaches resulted from a lack of cooperation between Russia and China and extreme differences in the relative value of timber in the two countries.Since 1999 there have been 134 fires of more than 100,000 acres in the United States. For the last 10 years, average annual federal suppression expenditures have been over $1 billion.Q: What does your project (with Jonathan Yoder) seek to add to the economics of wildfire policy?A: The main goal of our project is to gain an economic understanding of the organization of wildfire suppression. Fire suppression organization today seems complex, administratively cumbersome, and often inefficient. We want to understand the causes and consequences of the current system both theoretically and empirically. We want to understand the economic foundations that have driven how fire suppression institutions developed into those that we see today, and understand how they vary across environmental, demographic, and political jurisdictions. We will then have a better foundation for understanding where inefficiencies lie, and how suppression institutions might be improved.So, for example, we are examining the emergence of wildfire suppression among timber landowners in the northwestern and northeastern United States during the late 1800s. These private organizations pre-date the Forest Service fire crews, and this type of timberland owner association, to our knowledge, is pre-dated only by urban firefighting organizations. The federal government’s involvement in fire suppression emerged with the accumulation of federal forest lands and even stimulated expansion of the national forest system.Q: What are some of the criticisms of modern wildfire institutions? Do the resource values justify the suppression costs?A: Many critical observers feel there is an excessive amount of suppression and too little fuel management or prescribed burning, especially on federal lands. There is also the concern that suppression costs may often outweigh benefits (damage reduction). We certainly know of specific cases in which suppression costs exceeded the resource value at risk. There is also a concern that suppression effectiveness is often low so that suppression expenditures have little payoff. At the same time there is strong political pressure to put out all fires so there has been a recent reversion back to the so-called “10am rule” in which fire crews and land managers are directed to put all effort into suppression even where suppression costs would be high relative to potential damages. The long-term effects of continued fire suppression are also likely to lead to fuel buildups that can result in larger, more devastating fires in the future.
Matthew Turner is a 2012 PERC Julian Simon Fellow and professor of economics at the University of Toronto. His research focuses on the economics of land use and transportation.
There has been plenty of confusion surrounding
Our Q&A series continues this week with Bruce Pardy, a professor in the Faculty of Law at Queen’s University in Kingston, Ontario, Canada. Pardy has written extensively on matters of environmental law and governance, including ecosystem management, environmental assessment, civil and regulatory liability, climate change, and water law. He has taught at law schools around the common-law world, including Canada, the United States, and New Zealand.Professor Pardy is a 2011 PERC Julian Simon Fellow. He is currently writing a book called A Natural Law of Systems: Ecosystems, Markets, and the Meaning of Liberty.Q: What is legal instrumentalism? How does it differ from the rule of law?A: Legal instrumentalism is based upon the premise that the role of government is to solve specific problems by specific means. It is a “hands-on” way to govern. As the label suggests, legal instrumentalism says that law is important only as an instrument to achieve the “right” result. In other words, law is a means to an end, or a tool for the social good. The problem, of course, is that, like beauty, the right result lies in the eyes of beholder, and differs from person to person. Down that route lies the tyranny of the arbitrary rule of persons. The premise of the rule of law is that government decision-makers are not free to do as they think best because they are bound by generally applicable, abstract rules that bind governments as well as citizens. Brian Tamanaha of Washington University Law School has aptly pointed out that instrumentalism and the rule of law are the two core ideas of the American legal system, but in certain crucial respects they conflict. Although governments today widely claim to believe in the rule of law, their behavior is predominantly instrumentalist in nature.Q: Thomas Aquinas proposed another category: natural law. What is natural law and what are some difficulties that arise in its application? Conversely, what occurs in the absence of natural law?A: The premise of natural law is that there are objective moral truths that apply to all human beings upon which laws should be based. Natural law purports to contain inherent, substantive limits on what legislatures and judges can do, because it is a “higher” law, based upon universal and immutable moral principles, whose purpose is to reflect what is good for human beings. The problem is that the many volumes of moral reasoning produced by philosophers and legal theorists over the centuries illustrate the opposite truth: moral standards are personal, arbitrary, subjective, and cannot be proven to be otherwise. Since natural law claims to be based upon moral absolutes rather than public opinion, it is not sufficient to establish their validity by pointing to majority opinion or public consensus. The agreement of a majority of people about moral absolutes simply means that they agree, not that the moral absolutes that they believe in are, in fact, absolute. Twenty years hence public opinion may have shifted, but by definition moral absolutes never do. If the real criterion is majority opinion, then the principle of basing laws upon universal morality is a fiction. But in the absence of natural law, law is a vacuum, able to be filled by whomever is powerful enough to take the reins. What is needed is an objective, non-arbitrary set of principles on which law can be based.Q: What do ecosystems and markets have in common?A: Markets and ecosystems run themselves. These systems are not just collections of things, like widgets or frogs, but consist of elements interacting in a complex web of relationships and patterns that together amount to phenomena different from the sum of their parts. They operate according to their own immutable characteristics and rules, and share important features. They are organic and evolutionary, changing through time, rather than existing in a fixed or static state. They arise spontaneously, and their fundamental rules have not been created or invented by human beings, and cannot be changed by government design. All participants are equally subject to their forces; systems do not play favorites.Q: In your paper, “The Hand is Invisible, Nature Knows Best, and Justice is Blind” [PDF], you write that, “Human action can affect the outcome of system processes, but it cannot change the nature of those processes.” Does this eliminate the need for laws that apply to markets and ecosystems?A: The immutability of ecosystems and markets does not mean that there cannot or should not be laws that apply to them. Calling these systems “immutable” does not mean that they are impervious to external forces, but only that their internal principles are independent of state regulation, moral argument, or personal preference. Their protection is not a mandate to be performed “in the public interest.” It is not because someone has deemed them to be socially valuable that the law should provide for their operation. These systems exist. People live within them, because they cannot do otherwise, and depend on them for survival. They follow their own rules, because they can do nothing else. They cannot be manipulated or changed to behave differently, and efforts to do so are misguided. Instead, legal rules and principles need to account for the manner in which they operate.
There has been plenty of bad news ab
This week's Q&A is with Matthew Kahn, a professor at the UCLA Institute of the Environment in the Departments of Economics and Public Policy, and the author of the recent
It is officially summer and that means PERC is welcoming dozens of visiting fellows ranging from scholars and students to journalists and entrepreneurs. Last week we welcomed Richard Rice, the co-founder and president of the Save Your World Foundation—a nonprofit whose mission is to protect globally significant areas through incentive-based conservation agreements.Richard has more than 25 years of experience in natural resource and public policy analysis, most recently at Conservation International where he served as chief economist. While at CI, he conducted extensive research on the costs and effectiveness of different approaches to biodiversity conservation in the tropics and supervised projects in Africa, Asia, and Latin America. He has published widely on the viability of sustainable forest management and has worked on the development and implementation of a unique approach to conservation.Richard is a 2011 Lone Mountain Fellow at PERC. We thank him for participating in our new Q&A series for The Percolator.Q: In 2010, you founded the Save Your World Foundation with Scott Cecil. What is Save Your World and how does it work?A: We are the only non-profit devoted exclusively to supporting conservation agreements in developing countries. We serve as a kind of “mother ship” for our projects, providing technical assistance as needed and connecting them to funding sources here in the U.S.One of the things we focus on is hosting project-level endowments. Endowments are a common approach to conservation funding here in the U.S. but are beyond the reach of many projects abroad. They can be an extremely useful tool for project finance. Our projects, for example, have very well-defined recurrent annual costs and matching those costs to an inevitably uneven flow of funding is much easier to accomplish with an endowment.Q: Save Your World advocates a unique approach to conservation—one that uses incentive-based agreements. How do these agreements work?A: Conservation agreements are just that, agreements negotiated with resource owners that define a concrete conservation outcome—usually the protection of a particular habitat or species—in exchange for benefits designed to give resource owners an ongoing incentive to conserve. The type of benefits provided vary but can include technical assistance, support for social services, employment in resource protection, or direct cash payments.How a particular agreement is structured, of course, depends on the setting. One of our projects compensates Maasai herdsman for livestock lost to predators in exchange for their commitment to not kill lions. In effect, it’s an insurance program for the Maasai and it has been tremendously successful in protecting lions. It now covers more than 1 million acres of communal grazing lands.Another agreement provides support for traditional landowners in the Solomon Islands, protecting the largest uninhabited island in the South Pacific. In that case, our benefits include employment as rangers and a scholarship program for school children.Q: What role do property rights play in these incentive-based agreements?A: The property rights involved are absolutely key. It’s really no different abroad than it is here in the U.S. in that respect. It’s all about devising the proper incentives to make conservation happen. The novelty is that until recently these kinds of agreements were not considered possible in developing countries. But in fact, they have proven to be very well suited to that context.It is a bit of a paradigm shift, though, since past efforts have typically sought to benefit resource owners indirectly through markets for so-called “green” products.With conservation agreements you’re paying for conservation directly rather than as a by-product of something else—say some activity that uses the resource you’re trying to protect but in a less damaging way. The problem is that markets for the kind of products that do that are pretty small, and pretty uncertain. And at the end of the day, they’re not really necessary.It is much better to devise agreements to give people things they need in exchange for exactly what you want in return, which in this case is straight-ahead conservation. That way conservation becomes the thing that stimulates local economies by competing with destructive development.All of this, of course, requires that you think about conservation as something that you pay for, just like everything else. That's important because people in developing countries support conservation for the same reasons we do, but as a practical matter they can’t afford to forgo development anymore than we can. They are happy, though, to accept compensation in exchange for conservation.Q: Prior to establishing Save Your World, you worked for more than 20 years as the chief economist at Conservation International. What did your time at CI teach you about conservation and how have you applied to your new position?A: Well, one thing I learned is that one person can make a big difference. That goes equally for people negotiating these kinds of agreements, as well as those helping to fund them. One medium-sized foundation or high net-worth individual, for example, could easily “own” saving the African lion in a large part of its remaining range.These are very affordable agreements and they can be put in place quite rapidly. Someone once called this “warp-speed conservation.” Put another way, the problem is not nearly as daunting as many believe. It is certainly a lot easier to fix than I once thought. That is a very hopeful and important lesson.
Editor's Note: Summers are an exciting time at PERC as we welcome dozens of visiting scholars to our summer fellowships programs. Throughout the summer, The PERColator will be bringing you a new Q&A series with many of our outstanding visiting fellows. Michael 't Sas-RolfesMichael ‘t Sas-Rolfes is an environmental economist with a focus on the role of markets for biodiversity conservation. He has been actively involved in various private conservation initiatives for 25 years, starting as a financial manager of a private game reserve in South Africa and later conducting research on the role of private markets for wildlife conservation in Africa.Michael worked with Francis Vorhies to set up Eco Plus, an innovative consultancy on business, economics, and the environment. His consulting experience includes work on trans-frontier conservation areas, wildlife trade policy, and institutional reform in protected area management. He has written extensively on various conservation issues, especially relating to trade in endangered species.Michael is a 2011 PERC Lone Mountain Fellow researching international wildlife trade policy. Thanks to Michael for taking time to answer our questions.Q: In 1998, you authored a PERC Policy Series called “Who Will Save the Wild Tiger?” What has changed in the world of tigers since you wrote the paper?A: A lot has been done. There have been many conservation initiatives, much money spent, and many, many meetings. A wide range of conservation NGOs and even the World Bank established initiatives, culminating in last year’s grand “Tiger Summit” in St. Petersburg in Russia. Unfortunately, however, wild tiger numbers have continued to decline. When I wrote the PERC Policy Series paper, the most recent estimate of wild tiger numbers was between 4,800 and 7,300. Last year the official World Wildlife Fund estimate was 3,200. So in another sense, not much has changed at all – the wild tiger remains in trouble.Interestingly, during this time the Chinese government also announced plans to investigate the feasibility of using farmed tigers to provide a legal supply of tiger bone medicines to their domestic market, citing my PERC Policy Series as a partial justification for this. Conservation NGOs (and the World Bank) reacted in a very hostile way to these proposals and the Chinese have not pursued them any further.Q: In your paper you wrote, “Tiger conservation is, ultimately, an issue of incentives.” What are the incentives and who faces them?A: Conservation NGOs benefit from the tiger’s charismatic high profile as a means to raise funds, and conservation scientists like to study tigers, so one could argue that they have an incentive to prevent them from becoming extinct. By contrast, rural people living near tigers have to deal with threats to their livestock and children, and human-tiger conflict is a serious problem over most of the wild tiger’s range. Rural people have less of an incentive to conserve tigers, especially when offered large sums of money for tiger carcasses.I believe that the main challenge for tiger conservation is that people living next to wild tigers are the ones who actually control their destiny, and right now those people typically don’t benefit much from the presence of wild tigers. The people who do benefit are mostly far away and don’t have much real control over what happens to tigers. There is a mismatch between who pays the costs and who gets to benefit from tiger conservation.Q: How can tigers become assets instead of liabilities?A: For something to be an asset, it has to be owned by someone. Right now most wild tigers are typically ‘owned’ by governments, but that is a weak and dispersed form of ownership, which does not benefit or incentivize specific people who control the wild tiger’s destiny. Those people are typically rural subsistence farmers and poorly paid government employees. By creating stronger property rights – i.e. more direct ownership of tigers – one could create ways for more specific groups, communities or agencies to control and benefit directly from tigers. Ways to benefit could include genuine “adopt-a-tiger” schemes, contractual agreements with local people, tourist viewing, and possibly trophy hunting (although this is currently banned). This would give tigers much greater asset value.Q: Should conservationists look toward tiger farming as a viable solution to the decline in wild tiger populations? A: Tiger farming is one of a range of options to consider. It has the potential to satisfy some of the persisting demand for products such as tiger bone, thereby competing with the black market, which currently provides the only channel of supply. It is not a panacea, but it is also not the threat that some conservation groups claim it to be. The Chinese captive tiger population already exceeds the world’s wild tiger population, and conservation groups worry that some products are ‘leaking’ illegally into the marketplace. However, if market demand for these products persists, it would be a bad idea to try to stop this leakage, because it will simply drive up the value of poached tiger products and stimulate poaching even further.Q: You have also done similar work on protecting wild rhino populations in Africa. You recently launched a website called Rhino Economics. What is the purpose of the website?A: Rhino Economics provides an information source to a wide audience on all of the economic issues relating to rhino conservation, especially the rhino horn trade. The public tends to be poorly informed on this issue. Most people still think that rhino horn is used as an aphrodisiac and that the rhino horn trade ban is a good idea. My research over the past 22 years shows that the smartest way to protect rhinos is to create strong property rights and market incentives, and the example of the southern white rhino success story provides concrete proof. My research also suggests that the greatest threat to rhinos today is in fact the ban on rhino horn trade. The ban is causing an artificial supply shortage that is driving the price up to outrageous levels and thereby attracting highly-sophisticated organized crime syndicates into the trade.The website aims to provide information at three different levels: 1) a quick overview of the issues for the general public, 2) a more detailed explanation of the issues for those who are more interested or involved in rhino conservation and 3) a comprehensive listing of past academic and policy work I have done for students and practitioners of wildlife policy.