Conservation tech: A new biotech will produce fake rhino horns indistinguishable from real ones, and will flood Chinese market at 1/8 the price

A San Francisco biotech startup has managed to 3D print fake rhino horns that carry the same genetic fingerprint as the actual horn. It plans to flood Chinese market with these cheap horns to curb poaching.

Article. And AMA with the startup Pembient.

Apparently the critique from conservation groups:

Selling synthetic horn does not reduce the demand for rhino horn [and] could lead to more poaching because it increases the demand for “the real thing.” In addition, production of synthetic horn encourages its purported medicinal value, even though science does not support any medical benefits.

A good reminder why public policy professionals could benefit from introductory economics. Consumption of rhino horn will increase as the price falls, but high cost suppliers (i.e. poachers) should be driven out. Probably their production cost is higher at lower quantities, so assuming consumers can actually distinguish the real thing, that minority will pay higher prices. I think the conservationist is saying that people will develop a taste for rhino horn, but even then it’s hard to see why they would purchase poached rhino horns.

I did not sit down and draw my supply and demand curves, but if I am wrong I trust my commenters to tell me so.

8 thoughts on “Conservation tech: A new biotech will produce fake rhino horns indistinguishable from real ones, and will flood Chinese market at 1/8 the price

  1. A number of issues are raised in the comments that you linked to. The elasticity of substitution between synthetic and real is crucial to the shape and slope of the demand curve. The response of government — will they step up enforcement of the ban on the real horns, will they publicly sup
    port the importation of synthetic horns, etc.? And the response of the suppliers of real horns? If your analysis is correct, I would suggest that those involved in producing and distributing synthetic horns should beef up their security. Overall, a fascinating case. I hope it works.

  2. Could this do for rhinos what farmed pearls did for shelled mollusks? In Dubai the pearling industry died, and they started making their money in other ways…

  3. I can think of one easy way to tell the difference between fake and real, if they do what they say. The fake ones will be 1/8 the price.

    I’m not, in general, impressed with the smarts of Bay Area startup guys (the ones with blinders on do seem to be guys), but maybe even they will eventually figure out they should make their fakes just a teensy bit cheaper. And even then in the context of, “Okay, okay. For you, a special price.”

  4. I imagine this depends a bit too on how much legitimacy rhino horn salesmen have in China — if the answer is not very much, then this could completely crush real rhino horn demand to nearly zero, since it’s possible that no one will believe that even the horns sold at (or near) the original prices are real. If these salesmen have legitimacy, then…well, yeah, I guess it becomes a pretty difficult elasticities question?

  5. Another problem with your analysis: is the current price of rhino horn driven by cost of procurement or high demand in relation to limited supply? I suspect that profits from smuggling rhino horn are pretty darn high, so the price would have to decline a lot before really hurting the criminals. (The costs of actually poaching the rhinos are sadly comparatively very low in $ terms, although not in wrecked lives, both rhino and human.)

    In fact it may be that the actual cost of production is less of a constraint than the opportunity cost: if you have a functioning international criminal network then you would expect lucrative returns. So if the rhino horn price drops significantly then maybe better to switch to drugs, and other endangered animals, whose value may increase due to the rarity effect when rhino horn becomes relatively commonplace. (Say hello to the law of unintended consequences!)

    Overall I think this is problematic as a solution. But the current strategies are blatantly failing, and failing badly, so this seems worth a shot.