SOURCE: The Conversation

DATE: January 13, 2020

SNIP: Every year humans buy and sell hundreds of millions of wild animals and plants around the world. Much of this commerce is legal, but illegal trade and over-harvesting have driven many species toward extinction.

One common response is to adopt bans on trading in threatened or endangered species. But research shows that this approach can backfire. Restricting high-value species can actually trigger market booms. On both the supply and demand sides, restricting international trade in high-value endangered species like rosewood can sometimes cause more harm than good.

The main global treaty governing wildlife trade is the Convention on International Trade in Endangered Species of Wild Fauna and Flora, or CITES. CITES members meet every two to three years to adjust trade restrictions on target species. In today’s speculative markets, CITES rulings can set off damaging market dynamics.

Since the early 2000s, markets for certain high-value endangered species – elephants, rhinoceros, tigers and rosewood – have fundamentally transformed. Consumer purchases no longer trigger market booms. Speculative investments do.

Investors are buying endangered species not to use and own, but in anticipation that their prices will rise. This shift explains why international trade restrictions often do not protect endangered species.

China is a big player in the illegal wildlife trade and the primary destination for many trafficked species. The Chinese economy is also subject to rampant speculation that manifests in erratic housing and stock market prices. Rosewood and many other endangered species, it turns out, are subject to these speculative dynamics as well.

Rosewood has been used for centuries to make traditional Chinese furniture that dates back to the Ming and Qing dynasties. Now, due to a revitalization of this style, the wood has become the world’s most trafficked group of wildlife, surpassing ivory, rhino horn and big cats combined. Some species of rosewood are valued at nearly their weight in gold.

Over the past decade, rosewood has become a type of stock exchange – “a playground for investors,” as one account described it. China Central Television has condemned rosewood market speculation as “more ferocious than real estate.”

Similar dynamics have been documented for ivory and rhino horn. As with rosewood, the speculative value of these resources comes more from their rarity than their cultural appeal.