The African Lion Coalition, a coalition of animal protection organizations with an interest in lion conservation, has asked Economists at Large to review the article by Lindsey et al.
We contest the central conclusion of this article, that "If lion hunting was effectively precluded, trophy hunting could potentially become financially unviable across at least 59,538 km2 that could result in a concomitant loss of habitat."(p1)
Our key points are below, others will be posted as notes and our full review will be published on our website shortly - www.ecolarge.com.

Presentation of results
Lindsey et al.’s results suggest that existing hunting areas are already largely financially unviable and that comparatively small changes in financial viability occur under different hunting scenarios. That is, 44% of hunting areas considered are financially unviable without any changes in lion hunting, and only an additional 2% would be unviable if lion hunting were reduced. In the article, particularly the abstract, these changes are presented in total area rather than percentage terms, leading readers to believe the changes would be large, rather than the actual 16% total area changed under the most extreme scenario.

Emphasis on a lion hunting ban
The article highlights the differences in financially viable trophy hunting areas under the lion hunting ban scenario and the current scenario, and then links animal protection campaigns with a lion hunting ban. However, there are no campaigns advocating for an Africa-wide lion hunting ban, indeed no practical way of introducing or enforcing one. While a theoretical ban on lion hunting may be interesting to consider, should the existing campaigns to reduce pressure on lion populations from trophy hunting and trade be successful, the likely outcome will be closer to scenario 2, reduced lion hunting and its minor 2% change in financial viability.

Omissions and underestimates
Lindsey et al. make no consideration of trophy hunting businesses’ marketing costs. Other authors point out that marketing costs for trophy hunting businesses are considerable and important. Lindsey et al. used data from surveys at trophy hunting conventions, but failed to include the costs of attending such conventions in their model.

The authors overestimate businesses’ ability to access credit and underestimate interest rates. The model assumes that trophy hunting start-up businesses with considerable risks—operations in Africa, high security risks, exposure of high-end hunting market to economic fluctuations—can easily access credit at close to prime rates of interest.

These flaws serve to overstate the number of businesses that are viable to begin with, thus ensuring that numbers that become unviable with any change are also overstated.


Lack of substitution
The model the article is based on assumes that reduced lion hunting revenues are lost from the trophy hunting industry all together. This assumes that hunters who would hunt lions do not substitute their lion hunt with hunting another species, but desist from hunting entirely. This seems unlikely as lion hunters routinely hunt other animals whilst hunting lions. If hunters decide to hunt another species instead of giving up hunting altogether, changes to the financial viability of trophy hunting areas with reduced or no lion hunting are likely to be minimal.

No consideration of opportunity cost
From an economic perspective, land use change is driven less by fluctuations in the financial viability of one particular land use, but in the relative returns offered by all competing land uses. Assessing the opportunity cost of hunting tourism and how it compares to land uses such as photographic tourism, or agriculture and livestock raising is more important in understanding land use change. While other authors have discussed trophy hunting’s inferior rates of return, Lindsey et al. do not analyze these opportunity costs.. Moreover, since most hunting areas in most countries studied by Lindsey et al. are not financially viable, clearly financial viability is not a requirement of hunting businesses. There must be other non-financial benefits, such as lifestyle, to owning those businesses.


Unsubstantiated Wider Conclusions
Lindsey et al.’s results relate to changes in trophy hunting area viability under modeled scenarios. However, many prominently stated conclusions of the paper do not relate to these topics:

“Restrictions on lion hunting may also reduce tolerance for the species among communities where local people benefit from trophy hunting, and may reduce funds available for anti-poaching.” (p1)

“Blanket trade restrictions would unfairly punish countries where lion hunting is well managed and could be negative for lions by undermining the competitiveness of wildlife-based land uses….” (p9)

This paper does not relate to changes in human-animal conflict, ability of communities to benefit from trophy hunting, trophy hunting’s ability to produce conservation improvement, etc. These are complex topics with considerable literature. Lindsey et al.’s results do not add to our understanding of these topics.

In conclusion, Economists at Large disagree with the conclusions of Lindsey et al., that reductions in lion hunting will significantly reduce the financial viability of hunting areas and that this reduction could lead to loss of habitat that would not otherwise occur. Lindsey et al.’s model needs to more accurately reflect the existing conditions of the industry and incorporate the wider factors influencing land use before it can be of use to conservation discussions.


Introduction
Background

While the romanticized African safaris of the colonial era are gone, trophy hunting still exists in Africa today. Trophy hunting operates to differing degrees in around 14 African nations, major countries being South Africa, Tanzania, Botswana and Zimbabwe (Booth 2010). Revenue from hunting, considered as part of the tourism sector by these countries, typically accounts for 1-5% of their tourism revenue (IUCN 2009; Booth 2010).

Though a small industry, trophy hunting attracts much attention due to the nature of the business – foreign tourists (aided by foreign hunting companies) killing wild animals, including endangered species, in low-income countries with limited governance. Animal protection groups denounce the killing of animals for sport, while hunting groups claim the “right” to hunt (Amrhein 2009). Conservationists express a range of opinions, sometimes condemning the pressure hunting puts on vulnerable populations and sometimes arguing that revenues from trophy hunting can provide incentives for conservation. Some local communities receive financial benefit from hunting tourism, but all-too-often they receive too little to compensate for hunting activities, which generally prevent them from using land under a hunting lease for other purposes (IUCN 2009).

Numbers of wild lions have been in rapid decline in recent years. Estimates of the current population, based on 10-year old data, are less than 40,000, with a range of 23,000 to 39,000, a decline of at least 48.5% from a 1980 estimate of 75,800 (Place et al. 2011). While the main causes of this decline are habitat encroachment and human-animal conflict between lions and farming communities, studies such as Packer et al. (2010) have shown that trophy hunting is also directly contributing to this decline. There is little debate, even from lion trophy hunting advocates such as Lindsey et al. (2012) that the survival of wild lion populations will be assisted by fewer lions being shot by trophy hunters.

Despite being listed by the IUCN as “vulnerable” with moves to increase protection through listing the species on Appendix I under the Convention on International Trade in Endangered Species (CITES), European Union import regulations, and Endangered listing under the U.S. Endangered Species Act, , trophy hunting of wild lions still occurs in at least 8 countries (Lindsey et al. 2012). Lion hunts typically last from 18-21 days, with hunters paying fees of $1800 to $3000 USD per day and an additional trophy fee of $5000 to $23000 if a lion is killed. These prices are similar to those for hunts of other dangerous species, and more expensive than for hunts of more common “plains game”.

Trophy hunters typically book their hunts through hunting “outfitters” who advertise online or at hunting conventions held in developed countries such as the U.S. and European countries. Fees paid from hunters to outfitters often include travel and accommodation expenses and fees related to the hunt. Trophy fees are also payable depending on which animals are actually killed.

It is important to note that the above figures and all discussion of trophy hunting of lions in this report refer to the hunting of wild lions, as opposed to “canned hunting” or “put-and-take” hunting. Canned hunting is the shooting of captive lions in enclosed spaces, while put-and-take involves releasing captive animals into small hunting areas just before the beginning of a hunt. Most lion hunting in South Africa is of this kind (Patterson and Khosa 2005), hence there is little reference to South Africa in many discussions of lion hunting, despite many lions being killed there.


Several animal protection organizations, including International Fund for Animal Welfare (IFAW), Humane Society International (HSI) and Born Free Foundation / Born Free USA have formed the African Lion Coalition to lobby for increased legal protection of wild lion populations. One initiative of the coalition is a petition to list the African lion as endangered under the Endangered Species Act (ESA) of the United States. The impact of such a listing would be to end the importation into the USA of lion parts, including hunting trophies. An ESA listing does not amount to a ban or moratorium on lion hunting; it is aimed at assisting a reduction of lion hunting by Americans alone.

This paper

The African Lion Coalition has asked Economists at Large to review The Significance of African Lions for the Financial Viability of Trophy Hunting and the Maintenance of Wild Land, written by P. Lindsey, G. Balme, V. Booth and N. Midlane, published on the PLoS ONE online journal on 11 January 2012. The article’s conclusions include:

If lion hunting was effectively precluded, trophy hunting could potentially become financially unviable across at least 59,538 km2 that could result in a concomitant loss of habitat. (p1)

The article suggests maintaining the practice of lion hunting, despite reports such as (Packer et al. 2009) finding that trophy hunting is directly leading to the decline of lion populations in the wild. Given the urgency of finding effective ways to address the declining wild populations of lions, the Coalition is keen to examine and understand Lindsey et al.’s(2102) findings.

The article by Lindsey et al. is based on a financial model using data from hunting operator websites, hunting client reports , government agencies and a survey of hunting operators attending a hunting convention in the U.S. Their model estimates the area over which trophy hunting is financially viable under three scenarios:

• SCENARIO 1: Current hunting practices.
• SCENARIO 2: A reduction in lion hunting, no reduction in hunting of other species.
• SCENARIO 3: A ban on lion hunting, no reduction in hunting of other species.

We believe there are many flaws in Lindsey et al.’s methodology which limits the validity of their findings and the usefulness of their conclusions. In this paper we:
• Present a detailed explanation of the Lindsey et al. model and all revenue and cost calculations. We point out where these calculations are not adequately explained in the text.
• Put the results of the Lindsey et al. model in context and discover that any impacts of reducing lion hunting are in fact relatively mild.
• Discuss the modeled scenarios, in particular a mistaken emphasis on a complete lion hunting ban.
• Discuss flaws and omissions in the model, such as marketing costs, access to credit and substitution.
• Explore the assumption of financial viability of trophy hunting contributing to habitat conservation.
• Discuss the need to consider opportunity cost and returns from other land uses in understanding land use change.
• Show that Lindsey et al.’s results demonstrate that financial viability is not required for the existence of trophy hunting areas.
• Examine how some conclusions of Lindsey et al. are not supported by their data and results.

The model
This section examines the model used by Lindsey et al.. The model estimates the financial performance of trophy hunting areas (or blocks) in five African countries, Mozambique, Zambia, Tanzania, Namibia and Zimbabwe. Trophy hunting businesses that have permission to bring client hunters to blocks of land, called “hunting concessions”, earn revenue by charging hunters fees per animal killed, and incur costs in setting up their businesses and operating tours. The model then compares the estimated performance of each operator with assessments of financial viability.

Note that our explanation is based on our understanding of the PLoS ONE article. We have requested clarification from the author on several points but this was not provided.

Revenue
Revenue for each hunting tourism business used in the Lindsey et al. (2012) model is generated from trophy fees and daily fees from clients.

Trophy revenue
Trophy revenue is the sum of fees paid for each animal killed. To estimate of how many animals are actually killed, or “off-take”, the hunting block’s quota is multiplied by a utilization rate, as quotas are often under-utilized. Quota data was obtained from government agencies. In many cases the official quota for each block, for each species – including lions – is available. Utilization rates were reported by groups of operators or government agencies.

Trophy hunting businesses, known as hunting operators, charge a trophy fee for each animal killed by clients. Lindsey et al. estimated this fee for each species in each country from a survey of operator websites. The businesses must in turn pay a trophy fee to the relevant government agency from whom they lease their hunting block. It is not clear from the Lindsey et al. article if this cost to operators has been removed from trophy revenue. Trophy revenue in the model should include only the operators’ mark-up and should not include the liability to the government agency. If this liability has not been removed then the model overstates the revenue of all hunting tourism businesses.


each





Client fee revenue
From the estimates of off-take of each species, Lindsey et al. calculate revenue from clients’ daily fees. Hunts are usually sold as packages, with set numbers of days required to be purchased and paid for depending on the key species targeted. For example, lion hunts typically last 21 days. Working backwards from the allowable off-take of each species, they were able to estimate the hunting days that needed to be bought to achieve that off-take. For example, if a hunting block had an allowable off-take of two lions, it would require at least 42 client days to hunt these lions.

A further consideration is the success rates of the hunting trips. As not all hunts are successful in killing their target species, it may take several more hunting trips to actually fulfill the allowable off-take. For example, in a block with allowable off-take of two lions and a success rate of 0.5, it would take four 21 day trips to secure that level of off-take. This would mean a total of 84 client days for an off-take of 2 lions. Lindsey et al. estimated daily fees from operator websites and success rates from client reports posted on a popular hunting website.

















Costs
The Lindsey et al. (2012) model uses data from surveys of hunting operators to estimate the start-up costs and operating costs of their businesses. Operators from main lion hunting countries were surveyed at hunting industry shows in the United States, specifically in Dallas, Houston and Atlanta.

Operators were asked to determine the length of lease of their hunting block(s), and provide an estimate of the total start-up and annual running costs (split into fixed and variable) associated with their hunting operation. (p3)

Start-up costs
Table 2 in Lindsey et al (2012) shows the maximum and minimum estimates of start-up costs in each country. Each operator was also asked the area of their hunting block to obtain start-up cost per km2. Each country’s mean start-up cost per km2 is then used to estimate the start-up costs of each hunting block included in the analysis.
Lindsey et al. 2012 assume that start-up costs consist of:
• 60% lease acquisition costs
• 30% vehicles and equipment
• 10% camp costs
Lease and camp costs are depreciated over the term of the lease while vehicles and equipment are depreciated over a 5-year period.

Lindsey et al 2012 assumes that operators will fund start-up costs with 50% equity and 50% debt. The debt attracts a 4.25% interest rate. It is not clear over what term this is compounded.








Running costs
Operators were asked to estimate their annual operating costs and what portion of these were fixed and what were variable.







While it is not clear from the article, we surmise that variable running costs are determined by dividing the variable running cost estimate of each operator in the survey by the number of client days reported. We surmise that a national average variable cost per client day is then applied to the number of days required to fulfill allowable off-take.








The article does not mention how fixed running costs are calculated for each block, but we surmise that fixed operating costs are applied on a per area basis, using a national average fixed running cost per square kilometer.








Net revenue and viability
With the above variables, the authors calculate net revenue for each hunting block in their analysis. Trophy revenue and client fee revenue are combined for total revenue, from which the operating costs, interest on debt and depreciation of assets are deducted. The corporate tax rates of each country are then applied to blocks with positive net revenue to obtain net profit after tax.














Net profits after tax are divided by the total start-up costs for each block to give a return on investment (ROI), expressed as a percentage rate. Where this rate exceeds a rate of 6.96% the block is considered financially viable. If the ROI does not meet 6.96% it is considered unviable. The rate of 6.96% was selected by Lindsey et al. as an un-named tourism company uses this rate to evaluate tourism projects in sub-Saharan Africa.










Modeled scenarios

Lindsey et al compares the results of the above model across three scenarios:

• SCENARIO 1: Current hunting practices of all species, including lions.
• SCENARIO 2: A reduction in lion hunting to rates recommended by (Packer et al. 2010), no reduction in hunting of other species.
• SCENARIO 3: A ban on lion hunting, no reduction in hunting of other species.

The differences in viability between these scenarios are the key results of the Lindsey et al. article and are emphasized in the abstract:

If lion hunting was effectively precluded, trophy hunting could potentially become financially unviable across at least 59,538 km2 … If lion off-takes were reduced to recommended maximums (0.5/1000 km2), the loss of viability and reduction in profitability would be much lower than if lion hunting was stopped altogether (7,005 km2).


 
Criticisms of the Lindsey et al. article

Emphasis on a lion hunting ban

The authors compare viable hunting area over three different scenarios:
• current quotas for all species including lions,
• current quotas for all species but with lion off-take reduced to rates recommended by (Packer et al. 2010)
• current quotas for all species with zero lion off-take – a “ban” on lion hunting
While the paper focuses on the loss of hunting operation financial viability if lion hunting were to be banned, this provides little insight into existing regulatory proposals. There are no proposals for a continent-wide ban of lion hunting and no such ban seems practical or enforceable.

Proposals to increase protections for lions with domestic laws in the United States or EU do not equate to a ban on lion hunting. Hunters from other countries with a tradition of trophy hunting, such as Russia, Canada and Mexico, could and would still hunt lions and be able to import their trophies to their home country, and hunters from both the U.S. and EU countries could still legally hunt lions abroad but could not import the trophies.

Even a CITES Appendix I listing would not ban lion hunting although it would end international commercial trade in lions and their parts and products. Listing on CITES Appendix I imposes a requirement on the importing country to make a finding that the trade is not detrimental to the survival of the species. This may have the result of some countries may not allow the importation of lion hunting trophies, but it will not ban lion hunting. Species listed on CITES Appendix I are hunted and their trophies traded internationally for non-commercial purposes; the cheetah is an example. However, because the cheetah is listed as an endangered species under the U.S. Endangered Species Act, trophies cannot be imported to the U.S. Thus, the main result, highlighted in the abstract, that a lion hunting ban could result in a loss of habitat of nearly 60,000km2 is misleading and should not be connected with current campaigns for increased protection of lions.

Presentation of results

The change in financially viable area between the different modeling scenarios is presented without reference to the total area under consideration, both in the abstract and in Table 6. To understand the implications of Lindsey et al.’s model, it is helpful to understand the percentage change in area discussed, rather than absolute area. In the table below, the total hunting tourism area for each country included in Lindsey et al.’s analysis is presented, along with the financially viable hunting tourism area under each scenario.








Table 3: Lindsey et al. results summary
Total hunting area in analysis Viable area Scenario 1: current hunting levels Viable area Scenario 2: Reduced lion hunting Viable area Scenario 3: Lion hunting ban
Mozambique (Area - km2) 27,532 2,120 2,120 0
% of total area viable 7.7% 7.7% 0.0%
Namibia (Area - km2) 39,465 13,142 13,142 13,142
% of total area viable 33.3% 33.3% 33.3%
Tanzania (Area - km2) 180,006 146,165 141,960 102,337
% of total area viable 81.2% 78.9% 56.9%
Zambia (Area - km2) 100,387 33,429 33,429 23,149
% of total area viable 33.3% 33.3% 23.1%
Zimbabwe (Area - km2) 26,281 14,612 11,812 11,302
% of total area viable 55.6% 44.9% 43.0%
Total (Area - km2) 373,672 209,470 202,463 149,930
% of total area viable 56% 54% 40%

We see that 56% of hunting areas are financially viable under current hunting conditions, 54% under reduced lion hunting and 40% under a hunting ban. As pointed out in Lindsey et al.’s abstract, the change in area of viability between scenario 1 and scenario 3 is nearly 60,000km2, however here we see that this represents a change of only 16% of total area. Note again that the ban scenario is not reflective of any regulatory proposal. In the next section we will see that even this is likely to be an overestimate.