Market Solutions, the Environment, and Morocco

Experiments with market_based mechanisms -- for example, eco-tourism or the trading of factory emissions -- have multiplied over the past decade. Across Africa, these approaches often aim for a "win_win" outcome: the poor benefit and resources are conserved. But the actual net effects of these programs are poorly understood.

The theory behind market_based conservation strategies is simple: create markets for derivative products in order to increase the value that local people place on the resource, thus inducing them to conserve it. With this logic in mind, several groups seeking to protect Morocco's unique argan forests enthusiastically embraced commercialization of argan oil. The results should make other Africans cautious about the potential of market_based approaches to their environmental/development problems.

The argan tree is a unique, ecologically important component of southwest Morocco's arid ecosystem. During the 20th century, nearly half the argan forest disappeared due to demand for high quality charcoal and conversion of land to agriculture. In recognition of persistent threats to the argan forest, as well as of its uniqueness, UNESCO inducted these forests into the World Biosphere Reserve Network in 1999.

Berber tribes have relied for centuries on argan oil, which is extracted from the nuts inside the argan fruit, as a key component of their diet and as an element of traditional medicine. In the early 1990s, chemical analyses confirmed the oil's valuable nutritional and dermatological properties -- including as a treatment for acne, wrinkles, and light wounds. This science attracted the attention of development, conservation groups, and entrepreneurs alike.

Since then, there has been a sharp expansion in demand for argan oil. Galénique, Yves Rocher, and Colgate Palmolive began marketing argan oil_based moisturizers. The demand for edible argan oil likewise expanded rapidly. It now graces the menus of upscale restaurants in New York, London, and Paris. Specialty shops and Internet vendors sell the oil for upwards of $200 per liter.

Yet, even when local people appear well-placed to benefit from commercializing a resource, this activity does not inevitably fuel local development and reduce poverty. Indeed, despite rising global demand for argan oil products, most local people continue to receive less than $5 per liter of the oil.

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What went wrong? Restrictions on market access due to poor roads, insufficient electricity, and limited access to investment financing excluded most locals from the new argan oil markets. Specifically, because product commercialization for new, high_end consumers required new processing methods and distribution channels, most gains went to Moroccans and others from beyond the argan forest area who overcame capital and infrastructure barriers to entering the mechanized, high_end market. The benefits to local people have been largely derivative, due to the higher prices mechanical processors pay for fruit.

But even these latter benefits have been distributed unequally. Due to their greater access to argan fruit markets, households in wealthier, low forest density regions sell relatively more fruit, illustrating how factors such as market structure determine which villages benefit. Poorer households also are more likely to purchase argan fruit, making them net losers as prices rise.

Moreover, commercialization of argan oil creates mixed conservation incentives. Locals who do benefit from commercialization invest some of their increased wealth in livestock, which bodes poorly for the forest. More troubling still, local people respond to increasing argan fruit prices with more aggressive harvesting techniques. During the harvest, nearly all of the fruit is now collected, leaving little hope for natural regeneration.

In the short_term, then, quasi_private tracts of the forest stand to benefit from commercialization, while communally exploited tracts will be degraded further. After all, locals are more apt to invest in enclosures to protect their mature trees, while ignoring the need to tend to trees in village commons.

Spontaneous reforestation by locals is also unlikely, because the tree grows too slowly to make the required investments remunerative. The paradox is obvious: the biology of the argan tree and the organization of markets for argan products may cause their commercialization to harm the forest in the long run.

Although Morocco's argan oil provides a cautionary tale about the efficacy of market_based conservation strategies, all hope for market approaches to conservation is not lost. Argan oil cooperatives, for example, have sprung up in some areas to allow local producers to participate more directly in high_value markets. While such cooperatives are difficult to organize, preliminary evidence suggests that they are probably worth the effort and could play a limited role in improving the efficacy of market_based strategies.

In short, only when their many practical limitations are appreciated and addressed will market_based approaches contribute to conservation and development objectives. There are no assurances that any resulting increase in the value of a natural resource will actually improve the welfare of poor host populations. Indeed, the process of commercialization can readily induce changes in production, processing, and distribution that exclude the poor.

Even where this is not the case, natural constraints may continue to impede local investments in conservation. Market values can motivate scientific research; they cannot directly alter the biology of a resource.