ANALYSIS The economics of wildlife farming and endangered species conservation Richard Damania a , Erwin H. Bulte b,c, ⁎ a World Bank, Washington DC, USA b Department of Economics, Tilburg University, P.O. Box 90153, 5000 LE Tilburg, Netherlands c Development Economics Group, Wageningen University, Netherlands ARTICLE INFO ABSTRACT Article history: Received 21 November 2005 Received in revised form 12 June 2006 Accepted 6 July 2006 Available online 28 August 2006 There is growing concern that the traditional “protectionist” approach to conservation is expensive and insufficient to deliver the desired environmental outcomes. “Supply side” policies to conserve endangered species have drawn support. By generating supplies from captive-bred animals, wildlife commodity prices are expected to fall, thereby lowering the incentive to poach species in the wild. Supply side policies, however, often neglect the institutional framework within which the wildlife trade takes place, and ignore the potential strategic responses of economic agents. Adopting a model that captures imperfect competition between traders and farmers, we analyze the effect of supply side policies and conclude that under some circumstances these policies may contribute to further devastation of wild stocks. We derive conditions under which captive breeding contributes to conservation, and discuss implications for policy makers. © 2006 Elsevier B.V. All rights reserved. Keywords: Poaching Preservation Storage Trade ban Laundering Smuggling Price competition Quantity competition Tiger farms Bear farms 1. Introduction Protecting endangered species is expensive. The opportunity cost of conserving habitat may be high (and could escalate further as the human population in the vicinity of protected areas increases), and protecting animals from poaching in- volves substantial additional costs. Estimates of the amounts required to prevent poaching range from US$200 to $500 per hectare in Africa (e.g., Parker and Graham, 1989; Burton, 1999), and often-times exceed actual expenditures on enforcement (e.g. Dublin et al., 1995). Since many of the world's threatened high-profile species are found in devel- oping countries with limited resources and tight budget constraints (e.g. tigers in Asia, elephants and rhinos in Africa and South Asia), it is no surprise that enforcement expen- ditures lag behind recommended rates. As a result, many species demanded on markets suffer from intense poaching pressure. Given these difficulties, conservationists have looked for alternative ways to conserve wildlife (e.g. Van Kooten and Bulte, ECOLOGICAL ECONOMICS 62 (2007) 461 – 472 ⁎ Corresponding author. Department of Economics, Tilburg University, P.O. Box 90153, 5000 LE Tilburg, Netherlands. E-mail address: rdamania@worldbank.org (R. Damania), e.h.bulte@uvt.nl (E.H. Bulte). 0921-8009/$ - see front matter © 2006 Elsevier B.V. All rights reserved. doi:10.1016/j.ecolecon.2006.07.007 available at www.sciencedirect.com www.elsevier.com/locate/ecolecon