NBER WORKING PAPER SERIESBUFFALO HUNT: INTERNATIONAL TRADE AND THE VIRTUAL EXTINCTIONOF THE NORTH AMERICAN BISONM. Scott TaylorWorking Paper 12969http://www.nber.org/papers/w12969NATIONAL BUREAU OF ECONOMIC RESEARCH1050 Massachusetts AvenueCambridge, MA 02138March 2007I am grateful to seminar participants at the University of British Columbia, the University of Calgary,the Environmental Economics workshop at the NBER Summer Institute 2006, the fall 2006 meetingsof the NBER ITI group, and participants at the SURED II conference in Ascona Switzerland. Thanksalso to Chris Auld, Ed Barbier, John Boyce, Ann Carlos, Charlie Kolstad, Herb Emery, Mukesh Eswaran,Francisco Gonzalez, Keith Head, Frank Lewis, Mike McKee, and Sjak Smulders for comments; toMichael Ferrantino for access to the International Trade Commission's library; and to Margarita Gres,Amanda McKee, Jeffrey Swartz, Judy Hasse of Buffalo Horn Ranch and Andy Strangeman of InvestraLtd. for research assistance. Funding for this research was provided by the SSHRC. The views expressedherein are those of the author(s) and do not necessarily reflect the views of the National Bureau ofEconomic Research.© 2007 by M. Scott Taylor. All rights reserved. Short sections of text, not to exceed two paragraphs,may be quoted without explicit permission provided that full credit, including © notice, is given tothe source.Buffalo Hunt: International Trade and the Virtual Extinction of the North American BisonM. Scott TaylorNBER Working Paper No. 12969March 2007JEL No. F1,Q2,Q5,Q56ABSTRACTIn the 16th century, North America contained 25-30 million buffalo; by the late 19th century less than100 remained. While removing the buffalo east of the Mississippi took settlers over 100 years, theremaining 10 to 15 million buffalo on the Great Plains were killed in a punctuated slaughter in a littlemore than 10 years. I employ theory, data from international trade statistics, and first person accountsto argue that the slaughter on the plains was initiated by a foreign-made innovation and fueled by aforeign demand for industrial leather. Ironically, the ultimate cause of this sad chapter in Americanenvironmental history was of European, and not American, origin.M. Scott TaylorIEE Canada Research ChairDepartment of EconomicsThe University of Calgary2500 University Drive, N.W.Calgary, Alberta CanadaT2N 1N4and [email protected] Introduction200 YEARS AGO, Meriwether Lewis and William Clark completed theirepic voyage of Western discovery. Their vivid account of the West’s naturalbeauty and its limitless wealth spurred on thousands of Americans to carveout a new life and new nation west of the Mississippi. Westward expansionwith its stories of frontier hardship have shaped much of American nationalidentity by showing how self-reliance, risk-taking and hard work could tame awild frontier. While the 19th century is surely one of the most inspirationalperiods in American history, it also bears witness to a less ‡attering recordwith regard to the environment: most signi…cantly, the slaughter of the plainsbison, or bu¤alo.1This paper examines the slaughter using theory, empirics, and …rst personaccounts from diaries and other historical documents. It argues that thestory of the bu¤alo slaughter is surprisingly not, at bottom, an Americanone. Instead I argue that the slaughter on the plains was initiated by atanning innovation created in Europe, and maintained by a robust Europeandemand for bu¤alo hides. These market forces overwhelmed the ability of ayoung and still expanding nation, just out of a bloody civil war, to carefullysteward its natural resources.Speci…cally, I argue that three conditions are jointly necessary and suf-…cient to explain the time pattern of bu¤alo destruction witnessed in thenineteenth century. These are: (1) a price for bu¤alo products that waslargely invariant to changes in supply; (2) open access conditions with noregulation of the bu¤alo kill; and (3), a newly invented tanning process thatmade bu¤alo hides into valuable commercial leather.In the 16th century, North America contained 25-30 million bu¤alo; bythe late 1880s less than 100 remained wild in the Great Plains states.2Whileremoving bu¤alo east of the Mississippi took settlers over a 100 years, theremaining 10 to 15 million were killed in a punctuated slaughter in a little1The term bu¤alo is a misnomer but I will use it throughout since this is commonusage. The description of the kill as a slaughter is also conventional. It is perhaps wiseto inform the reader at the outset that this paper is concerned exclusively with positivequestions. I leave it to the reader to determine for themselves whether the slaughter wasunfortunate or inevitable.2The species Bison bison comes with two distinct varieties: the common Plains bison(Bison, bison, bison ) and the less common Woods bison (Bison, bison, athabascae) foundexclusively in Canada. I focus on the extinction of the plains bison or bu¤alo in the U.S.,leaving an examination of the Canadian case for future work.1over 10 years. Standard explanations hold some combination of U.S. Armypolicy, the Railroads, and changes in native hunting practices responsible.My claim is that (1), (2) and (3) are both necessary and su¢ cient.The argument I develop proceeds in three steps. First I build a novelmodel of bu¤alo hunting. It assumes potential bu¤alo hunters di¤er in theirhunting skill, and allows for easy entry and exit. Entry and exit from huntingwas common, and skill di¤erences across hunters is an important part of thehistorical record.3For the most part, I take world prices as given and assumethroughout that there are no controls over hunting. The model is madegeneral equilibrium by the addition of a numeraire good sector which servesas the outside option for potential bu¤alo hunters. The general equilibriumstructure is helpful to our discussion of export ‡ows, and necessary for ourconstruction of an autarky counterfactual.The theory delivers two key results. First, it shows how the combinationof an innovation in tanning, …xed world prices for hides, and open access tothe herds proved fatal to the bu¤alo. The innovation in tanning creates fren-zied entry into hunting, the bu¤alo herds decline rapidly, and the "harvest"of bu¤alo hides for export booms.4Fixed prices ensure the new supply ofbu¤alo hides cannot dampen the incentive to hunt; open access ensures thatregulations limiting the kill are