What is the “Cobra Effect”?

During British Colonial rule of India, there was a widespread cobra infestation in Delhi. The British instituted a bounty for cobra skins. The logic was that by giving people an incentive to kill cobras, the public would cull the snakes and solve the issue. However, this backfired as people started breeding and farming cobras. When the British learned of this, they stopped paying the cobra bounty. Now with no incentive to farm the cobras, the farmers set the snakes free, and the infestation was worse than before the bounty was offered.
The Cobra Effect is also called perverse incentive. It described an incentive that has an unintended and undesirable result that is contrary to the intent of the designer of the incentive. The cobra effect typically means an incentive that rewards people for making the issue worse. We can use this example and term to understand how the incorrect economic or political incentive can make situations much worse through unintended consequences.