NBER WORKING PAPER SERIES BUFFALO HUNT INTERNATIONAL TRADE AND THE VIRTUAL EXTINCTION OF THE NORTH AMERICAN BISON M Scott Taylor Working Paper 12969 http www nber org papers w12969 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge MA 02138 March 2007 I 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 meetings of the NBER ITI group and participants at the SURED II conference in Ascona Switzerland Thanks also 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 to Michael 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 Investra Ltd for research assistance Funding for this research was provided by the SSHRC The views expressed herein are those of the author s and do not necessarily reflect the views of the National Bureau of Economic 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 to the source Buffalo Hunt International Trade and the Virtual Extinction of the North American Bison M Scott Taylor NBER Working Paper No 12969 March 2007 JEL No F1 Q2 Q5 Q56 ABSTRACT In the 16th century North America contained 25 30 million buffalo by the late 19th century less than 100 remained While removing the buffalo east of the Mississippi took settlers over 100 years the remaining 10 to 15 million buffalo on the Great Plains were killed in a punctuated slaughter in a little more than 10 years I employ theory data from international trade statistics and first person accounts to argue that the slaughter on the plains was initiated by a foreign made innovation and fueled by a foreign demand for industrial leather Ironically the ultimate cause of this sad chapter in American environmental history was of European and not American origin M Scott Taylor IEE Canada Research Chair Department of Economics The University of Calgary 2500 University Drive N W Calgary Alberta Canada T2N 1N4 and NBER mstaylor ucalgary ca 1 Introduction 200 YEARS AGO Meriwether Lewis and William Clark completed their epic voyage of Western discovery Their vivid account of the West s natural beauty and its limitless wealth spurred on thousands of Americans to carve out a new life and new nation west of the Mississippi Westward expansion with its stories of frontier hardship have shaped much of American national identity by showing how self reliance risk taking and hard work could tame a wild frontier While the 19th century is surely one of the most inspirational periods in American history it also bears witness to a less attering record with regard to the environment most signi cantly the slaughter of the plains bison or bu alo 1 This paper examines the slaughter using theory empirics and rst person accounts from diaries and other historical documents It argues that the story of the bu alo slaughter is surprisingly not at bottom an American one Instead I argue that the slaughter on the plains was initiated by a tanning innovation created in Europe and maintained by a robust European demand for bu alo hides These market forces overwhelmed the ability of a young and still expanding nation just out of a bloody civil war to carefully steward 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 the nineteenth century These are 1 a price for bu alo products that was largely invariant to changes in supply 2 open access conditions with no regulation of the bu alo kill and 3 a newly invented tanning process that made bu alo hides into valuable commercial leather In the 16th century North America contained 25 30 million bu alo by the late 1880s less than 100 remained wild in the Great Plains states 2 While removing bu alo east of the Mississippi took settlers over a 100 years the remaining 10 to 15 million were killed in a punctuated slaughter in a little 1 The term bu alo is a misnomer but I will use it throughout since this is common usage The description of the kill as a slaughter is also conventional It is perhaps wise to inform the reader at the outset that this paper is concerned exclusively with positive questions I leave it to the reader to determine for themselves whether the slaughter was unfortunate or inevitable 2 The species Bison bison comes with two distinct varieties the common Plains bison Bison bison bison and the less common Woods bison Bison bison athabascae found exclusively 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 1 over 10 years Standard explanations hold some combination of U S Army policy 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 novel model of bu alo hunting It assumes potential bu alo hunters di er in their hunting skill and allows for easy entry and exit Entry and exit from hunting was common and skill di erences across hunters is an important part of the historical record 3 For the most part I take world prices as given and assume throughout that there are no controls over hunting The model is made general equilibrium by the addition of a numeraire good sector which serves as the outside option for potential bu alo hunters The general equilibrium structure is helpful to our discussion of export ows and necessary for our construction of an autarky counterfactual The theory delivers two key results First it shows how the combination of an innovation in tanning xed world prices for hides and open access to the herds proved fatal to the bu alo The innovation in tanning creates frenzied entry into hunting the bu alo herds decline rapidly and the harvest of bu alo hides for export booms 4 Fixed prices ensure the new supply of bu alo hides cannot dampen the incentive to hunt open access ensures that regulations limiting the kill are not forthcoming and the tanning innovation plus hunter heterogeneity delivers a punctuated