Invasive Species Management: Importers, Border Enforcement, and Risk

Invasive species are a negative externality associated with imported goods. Policies aimed at excluding pests associated with imports include pre-shipment treatment requirements, varied inspection schemes, treatment at the border, penalties, and import bans or restrictions. Existing policies are based on the reasoning that increased enforcement effort will result in higher detection levels, or more specifically, that increased inspection will result in a higher number of interceptions and in turn, higher compliance. In addition to a deterrence effect, however, under which importers respond to increased enforcement with increased due care with respect to pest control, importers may respond in ways that regulators do not intend. For example, importers may choose to not bring goods into the country, may ship a reduced amount, or may switch ports-of-entry. Moreover, different types of firms are likely to respond to enforcement in different ways. In this paper, we present a framework to analyze invasive species border enforcement given heterogeneous importers and ports. We develop a theoretical model of firm response to border enforcement, analyze both the intended and unintended effects of this enforcement for different types of firms, and evaluate the tradeoffs associated with location. Firms not only consider the changes in the levels of enforcement and other conditions at a single port, they consider the cost and benefit tradeoffs associated with location e.g., differences in inspection intensity or port-entry fees versus distance to port-of-entry and final market across ports and may switch ports. The result is that increased inspection intensity may not result the overall damages from invasive species introductions