The lionfish effect: when markets might not be the best idea
In May, 2018, I led 17 students to Costa Rica where we immersed ourselves in the Costa Rican economy. We visited banana and pineapple plantations, coffee farms, a consulting company in a free trade zone, and even a major shipping port for the region. We talked with business owners about the trade-offs a company faced if it produced organic products. We learned retail strategy and the importance of location for customer acquisition. In short, we saw first-hand the power of markets to transform an economy.
A study abroad program should be more than just visiting companies and passively absorbing information. In this program, we partnered with a nonprofit organization, ASOPACS, or the Asociacion de Pescadores del Caribe Sur. This group of fishermen formed itself several years ago in response to the lionfish’s growing threat to the fishing industry and the environment in general in Costa Rica. The lionfish is native to Indo-Pacific waters, but was likely released in the Caribbean by individuals owning home aquariums. Because the lionfish has no known natural predators, it is spreading rapidly and destroying fish and other aquatic wildlife.
We spent a day on the water observing fishermen going trap to trap to retrieve the caught red snapper to sell in the market. Unfortunately, we saw how once a lionfish entered the fishing trap, no other fish would enter the trap — resulting in lower income for the fishermen. ASOPACS asked UC’s business students to address the lionfish problem, and at the same time, generate income from the lionfish caught in the traps.
During the semester, a local Cincinnati chef, Jaime Carmody, prepared dishes for students to try during the class period. Students developed a marketing research survey to analyze consumer demand for lionfish. The original goal was to understand the potential supply chain for the lionfish and propose recommendations for reducing the negative environmental impact of the lionfish by selling lionfish to consumers. Students discovered that in 2016, Whole Foods Market began offering lionfish in its stores and created “a market for this tasty predator and hopefully <made> a dent in the growing population.” Students even proposed creative solutions like using the lionfish in fish sticks to be exported to the United States. Markets can be a powerful tool to solve environmental and business challenges.
However, after further discussion with the group’s in-country leader, Maikol Cruz, a biology tour-guide, we realized the unintended consequences from creating a market for lionfish. A freakeconomics podcast provides more insight into the unintended consequences that may occur with monetary rewards. The “Cobra Effect” refers to the anecdotal time when
“the British governor, or whoever, the person in charge in Delhi, wanted to rid Delhi of cobras. Apparently in his opinion there were too many cobras in Delhi. So he had the bounty placed on cobras. And he expected this would solve the problem. But the population in Delhi, at least some of it, responded by farming cobras. And all of a sudden the administration was getting too many cobra skins. And they decided the scheme wasn’t as smart as initially it appeared and they rescinded the scheme. But by then the cobra farmers had this little population of cobras to deal with. And what do you do if there’s no market? You just release them. And so this significantly, by a few orders of magnitude, worsened the cobra menace in Delhi.
By creating a market for lionfish, we quickly realized that an entrepreneurial Costa Rican now had the incentive to breed larger and more lionfish to satisfy consumer demand. Economics teaches us that the quantity supplied will respond to increased demand. If we proposed stimulating consumer demand and building out the supply chain for the lionfish, then we might only make the problem worse. It was a powerful lesson that if all you have is a hammer (i.e. using markets to solve a problem), then everything looks like a nail. It was also a reminder of the importance of a diversity of opinions and academic backgrounds to tackle challenges.
So what can be done? ASOPACS is aware of groups that are working on technical solutions to the lionfish problem. One possibility may include sterilizing the male or female lionfish to slow or eliminate the fish breeding. Another group is trying to reproduce the pheromones secreted by the female lionfish to attract and kill the male lionfish. There is no silver bullet, but hopefully by discouraging the creation of a lionfish market, there won’t be a Wikipedia entry on the “lionfish effect” in the near future.
