The International Fund for Animal Welfare (Ifaw) has commissioned a report by Economists at Large assessing the value world wide of whale watching to support their position of an outright ban on whale hunting at the current International Whaling Commission meeting.  The report estimates that whale watching generates $2.1 billion per year.

The director of Ifaw, Patrick Ramage, is quoted by the BBC as saying “Whale watching is clearly more environmentally sustainable and economically beneficial than hunting and whales are worth far more alive than dead.”

Mr Ramage is setting up the economic argument as an “either or” but various people (such as the Icelandic whaling commissioner) have suggested that you can have some of both.  We’re back to economics 1.1 as shown in the diagram below.  The curved line shows the marginal rate of substitution between eating whales and watching whales, and the straight budget line shows the relative price of the two goods.  The “optimal” point is (theoretically) where the gradient of the lines are equal.  At this combination the maximum value is extracted.


This piece of basic under-graduate economics probably gets us not very far to the answer of “how much hunting, how much watching?” but it does go some way to debunking the argument that if one good is more valuable than another you should only produce the first good.  People corporately probably want a bit of both.

And what of the recession? How does this affect the logic of maintaining whale populations as tourist attractions?  Again considering the properties of the two goods in the model above may be useful. Consuming whale watching is by its nature lumpy. To go whale watching I need to travel to the country in question, probably as part of a larger holiday and I will probably do various other touristy things while I’m there.  When money gets tight it is difficult for me to cut the cost of the combined single good of “holiday to a place where I can go whale watching.” As such I’m likely not to go at all, or to go to some place cheaper without whales.  My demand for whale watching is reduced by 100%.

The problem is that whales can only be watched whole and in their natural environment. However if I shoot the whale, cut it up and put in tins it becomes a lot more transportable and less lumpy (economically speaking, I’ve never eaten whale so can’t comment on its texture). If say I would usually consume ten cans of whale meat in a year and money gets tight, presuming whale meat to have a cheaper substitute, I can chose to consume only eight tins this year. My demand for this product has only reduced by 20%.

As with so many good and markets considered by Sustainable Slump the consumption is defined by the properties of the goods themselves but also there substitutes. Is whale watching a luxury good? Probably. Is global travel going to get more expensive in the future? Probably.  Will whale watching still be worth $2.1 billion if the recession continues? Possibly not.