Wednesday, November 28, 2007

Economics of Extinction, Chinese medicine and Tibetan caterpillars

The FT weekend magazine has an excellent article about a Caterpillar that turns into a fungus and is worth £19,000 a kilo. Why? Because it is highly valued in the booming Chinese medicine market.

Result - our old friend "tragedy of the commons" rears its ugly head and is driving the caterpillar to extinction taking with it the livelihoods of many locals from the Tibetan plateau.

Any article that has the term "sprouting through its forehead" in the first few paragraphs has to be worth reading. As this fungus cures all ills, including erectile dysfunction, there is likely to be a growing market with demand rising considerably.

The revelation that this fungus is also used to bribe officials may say something about the health of the said officials.

An interesting read. Some quotes are provided below:

Rich pickings [FT]

The fungus "Yartsa gunbu," or "Cordyceps" is a medicinal mushroom that grows parasitically on a moth caterpillar native to the Himalayas and Tibetan plateau, Cordyceps sinensis is a rare and expensive Chinese medicine.

Last winter, fungus spores landed on a caterpillar and began to consume its body, slowly killing it. As it died, the caterpillar burrowed underground. Eventually the fungus overtook the body, sprouting through its forehead and out of the ground – producing the growth Wang-yag spotted. The lifecycle is contained in the Tibetan name: yartsa gunbu means “summer grass winter worm”.

In Chinese medicine, caterpillar fungus is known as something of a wonder-drug. Boiled in soup or eaten whole, it is said to aid every ailment from immune deficiencies to erectile dysfunction.

Cordyceps is incorporated into several western products, such as Origins’ Mega-Mushroom skin creams and Steven Seagal’s Lightning Bolt energy drink. Demand is also rising in China, where chongcao, or “worm-grass”, is rolled into cigarettes, turned into elaborate dishes at special caterpillar fungus restaurants, and used to bribe officials. Prices, in turn, are skyrocketing. One kilo of prime Cordyceps now draws Rmb300,000 – more than £19,000.

It is clear that harvesting is a slow process. This may not give a good impression of the household work allocation in Tibet.
When Wang-yag returns to her tent after a day of picking, her husband, Sonam Rrichen, is there waiting. A loud man with darting eyes, he spends most of his free time polishing his motorcycle, which he bought this spring with Cordyceps money. Wang-yag hands him her bu, and he combines it with his own, collected in the hills surrounding a relative’s tent. He counts: 20 caterpillars in two days.

The collection of this fungus is also somewhat frowned upon:
Although Cordyceps was harvested in past centuries, Buddhism held that it disturbed earth spirits and its collection was taboo. Sonam Rrichen recalls an old saying: “Picking one bu is like killing 18 men.” Today, only monks and nuns abstain. In parts of the plateau where the harvest is less regulated, some people begin picking in early May, before the fungus is mature. Others don’t replace the soil they dislodge, exacerbating erosion, already a serious problem.

As with any valuable resource regulation and conflict go hand in hand. As the fungus becomes rarer the protection of "property rights" gets more intense.
Increasingly, the harvest also leads to conflict. In Sichuan, Tibetans clashed over picking rights in July, brandishing semi-automatic rifles and grenades in a conflict that killed six and left 100 wounded. Earlier in the season, in Nepal, 16 people died while trying to pick during a blizzard. And in 2005, when nomads from neighbouring Nangchen ventured on to Dzato land to search for the fungus, the government reacted by taxing the outsiders while the locals blockaded the county’s main road. Nangchen pickers broke through the barriers, prompting a two-week clash in which houses were razed, stores looted and at least one man died.

Whenever there are weak property rights there will be problems. The caterpillar it seems is disappering fast.
Caterpillar fungus, it seems, is disappearing. When Wang-yag started picking 24 years ago, she found 200 to 300 fungi a day (older relatives remember picking 1,000). Now she finds 10 on a good day. Last year, Indian zoologists documented a 30-50 per cent decline of the fungus over a two-year period in villages in the Indian Himalayas. This year, Chinese ecologist Yang Darong found that Cordyceps numbers in western China have fallen to between 3.5 and 10 per cent of their totals from 25 years ago.

Ah, the beauty of economics:
Tibetan pickers, meanwhile, are caught in a vicious cycle: as prices increase, collection becomes all the more irresistible.

Until they are all gone of course - boom and bust.

As with non-renewable resources, perhaps technology can save the day:
As worries about the sustainability of Cordyceps increase, finding a substitute has become a priority in China and abroad. Researchers have isolated polysaccharides that they believe are the active ingredients. Several companies have reproduced these by culturing the fungus in liquid or on grains of rice, wheat or barely, creating a caterpillar-free “cultivated” Cordyceps.

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