Using tradeable permits to improve efficiency, equity and animal protection in the commercial kangaroo harvest

- The commercial kangaroo industry operates like a regulated open access resource.
- Commercial processors extract all the rent from the kangaroo industry.
- Harvesting kangaroos imposes an external cost on animal protection advocates.
- Efficiency requires that animal protection advocates can purchase harvest permits.
- An open permit market ensures that landholders receive a return from kangaroos.

The utilisation of wildlife creates conflicts between commercial operators, landholders, traditional owners of the land, conservationists and animal protection advocates. Such conflicts are evident in Australia's utilisation of the iconic kangaroo (Macropus) species for their meat and hides. Like many wild animal industries, kangaroos are an open access resource, although restrictions built into the management regime ensure that rents are, approximately, maximised. However, resource allocation decisions and the distribution of rents reflect the values and objectives of the economically powerful stakeholders and particularly commercial processors. Thus, rents are not distributed equitably and the management regime excludes animal protection advocates from adequate participation. Thus, an external cost occurs when kangaroos are harvested that must be internalised for economic efficiency to be achieved. We propose a tradeable permit system where landholders, shooters and processors compete with ordinary citizens for the right to harvest kangaroos. This increases the private cost of harvest and internalises the external cost. It also improves the equity of rent distribution with landholders able to earn a return from kangaroos on their land. As similar issues arise in the utilisation of other wild animals, the research provides an important contribution to the literature on the economics of animal welfare.