Betting on Extinction: Endangered Species and Speculation

Land Economics, Vol. 79, No. 4, pp. 460-471, November 2003

Posted: 29 Sep 2006

See all articles by Erwin H. Bulte

Erwin H. Bulte

Tilburg University - Department of Economics; Wageningen University

Charles F. Mason

University of Wyoming - College of Business - Department of Economics

Richard D. Horan

Michigan State University - Department of Agricultural Economics

Abstract

For a number of animal species, speculators are betting on future price increases by holding large stockpiles of commodities from the animal. We develop a model to explain this behavior. We derive conditions where it can be optimal for a speculator to induce poachers to harvest so rapidly as to make extinction of the species inevitable. Results from a simulation based on the black rhino indicate that betting on extinction may be profitable for reasonable parameter values. We also find that extinction is favored by low discount rates or high growth rates.

JEL Classification: Q22

Suggested Citation

Bulte, Erwin H. and Mason, Charles F. and Horan, Richard D., Betting on Extinction: Endangered Species and Speculation. Land Economics, Vol. 79, No. 4, pp. 460-471, November 2003, Available at SSRN: https://ssrn.com/abstract=933169

Erwin H. Bulte (Contact Author)

Tilburg University - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 9111 (Phone)

Wageningen University

Hollandseweg 1
6706 KN
Wageningen
Netherlands

Charles F. Mason

University of Wyoming - College of Business - Department of Economics ( email )

P.O. Box 3985
Laramie, WY 82071-3985
United States
307-766-5336 (Phone)
307-766-5090 (Fax)

Richard D. Horan

Michigan State University - Department of Agricultural Economics ( email )

303A Agriculture Hall
East Lansing, MI 48824
United States
517-355-1301 (Phone)
517-432-1800 (Fax)

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