The “cobra effect” occurs when an attempted solution to a problem ends up making the problem worse.  The original cobra effect problem concerned in colonial India when the British governor decided there were too many cobras in Delhi. To combat this problem he placed a bounty on cobras. Of course, people respond to incentives and many people in Delhi responded by breeding cobras in order to collect the bounty.  After being overwhelmed with cobra skins, the government shut down the cobra bounty program. At that point, the cobra breeders merely released the cobras when there was no longer a market for them. Thus, the result was a significant worsening of the cobra problem in Delhi the was caused by the solution.

Other examples:

A similar incident occurred in Hanoi under French colonial rule. The colonial regime created a bounty program that paid a reward for each rat killed. To obtain the bounty, people would provide the severed rat tail. Colonial officials, however, began noticing rats in Hanoi with no tails. The Vietnamese rat catchers would capture rats, lop off their tails, and then release them back into the sewers so that they could procreate and produce more rats, thereby increasing the rat catchers’ revenue.

In Fort Benning, Georgia, feral pigs were a problem so a bounty was offered for pig tails. People began buying pig tails from butchers and slaughterhouses at “wholesale” prices, then “reselling” the tails to the Army at the higher bounty price.

In Afghanistan about fifteen years ago, an aid program paid farmers to switch from growing opium poppies to other crops. More farmers than ever started to grow opium poppies, in order to get the payments for switching.

The cobra effect also occurred with carbon credits.  The UN set up an incentive program to compensate manufacturers for reducing the carbon they released into the atmosphere. The result: manufacturers actually increased the amount of carbon they admitted so they would be compensated for reducing their carbon emissions.