Bans and perverse incentives
- Variable relationship:
This theory is described by Biggs et al. (2013) in regards to the banning of rhino horn by Convention on International Trade in Endangered Specise (CITES). The overall effect is that the ban (Policy Instrument) on a particular resource unit can in fact create perverse incentives (Perverse Incentives) to increase extraction of this unit via black markets (Black Markets) and increased market resource value (Resource Market Value) contributing to a decline in resource conditions (Commons Condition Trend). This all occurs despite (or because of) the presence of extensive enforcement (External Monitoring; External Sanctions; Compliance).
The presence of perverse incentives has been described as being of general concern when restrictions are placed on threatened species (such as via the endangered species act in the United States).
- Project
- SESMAD
- Sector(s)
- Scientific Field
- Component Type(s)
- Natural Resource Unit
- Status
- Public
Variables
| Variable | Role | Role Explanation | Value |
|---|---|---|---|
| External sanctions | Underlying independent variable | Rule-breakers incur heavy penalties to deter them and others from breaking future rules. | Yes |
| Policy instrument | Underlying independent variable | The narrative of the theory starts with a ban that is placed on the use of a resource unit or a good associated with this unit. | Ban |
| External monitoring | Underlying independent variable | Monitoring is conducting to ensure that targets comply with the ban. | Yes |
| Perverse incentives | Proximate independent variable | The increased market value of a resource unit creates perverse incentives to increase extraction and use of a resource unit. | Yes |
| Resource market value | Proximate independent variable | As a result of the ban, supply of a resource unit may decrease and as a consequence the market value of this unit will increase. | High |
| Compliance | Intermediate outcome | Enforcement efforts are predicted to actually lower compliance in this case. | Low |
| Black markets | Intermediate outcome | Suppliers are incentivized to undergo the risks of illegal trade because of the increased market value of the resource. | Yes |
| Commons condition trend | Final outcome | As a result of the functional black markets and rise in price, the resource suffers from over-extraction and declines. | Worsened |
Related Theories
| Theory | Relationship | Characterizing Variables |
|---|---|---|
| Crowding out from external sanctioning | related | |
| Subsidies and perverse incentives | related | |
| Critique of fortress conservation | related | |
| Enforcement | contradictory | |
| Market-driven resource decline | related | |
| Gilded traps | related |
Related Studies
| Study | Relationship |
|---|---|
Biggs, Duan, Franck Courchamp, Rowan Martin, and Hugh P Possingham. 2013. “Legal Trade of Africa’s Rhino Horns.” Science 339 (6123): 1038–1039. | support |