AN ECONOMIC ANALYSIS OF COCA ERADICATION POLICY IN COLOMBIA

We estimate an econometric model of coca production in Colombia. Our results indicate that coca eradication is an ineffective means of supply control as farmers compensate by cultivating the crop more extensively. The evidence further suggests that incentives to produce legal substitute crops may have greater supply-reducing potential than eradication.Political Economy,

Cocaine Production and Trafficking: What do we know?

The main purpose of this chapter is to summarize the information currently available on cocaine production and trafficking. The chapter starts by describing the available data on cocaine production and trade, the collection methodologies, (if available) used by different sources, the main biases in the data, and the accuracy of different data sources. Next, the chapter states some of the key empirical questions and hypotheses regarding cocaine production and trade and takes a first look at how well the data matches these hypotheses. Also, the chapter states some of the main puzzles in the cocaine market and studies some of the possible explanations. These puzzles and empirical questions should guide future research into our understanding of the key determinants of illicit drug production and trafficking. Finally, the chapter studies the different policies that producer countries have adopted to fight against cocaine production and the role consumer countries play in the implementation of anti-drug policies.Cocaine; Narcotraffic; War on Drugs. Classification JEL: K42; C81; H56.

Cocaine production and trafficking : what do we know ?

The main purpose of this paper is to summarize the information currently available on cocaine production and trafficking. The paper starts by describing the available data on cocaine production and trade, the collection methodologies (if available) used by different sources, the main biases in the data, and the accuracy of different data sources. Next, it states some of the key empirical questions and hypotheses regarding cocaine production and trade and takes a first look at how well the data match these hypotheses. The paper states some of the main puzzles in the cocaine market and studies some of the possible explanations. These puzzles and empirical questions should guide future research on the key determinants of illicit drug production and trafficking. Finally, the paper studies the different policies that producer countries have adopted to fight against cocaine production and the role consumer countries play in the implementation of anti-drug policies.Health Monitoring&Evaluation,Environmental Economics&Policies,Crime and Society,Crops&Crop Management Systems,Economic Theory&Research

Squeezing the balloon?: United States Air Interdiction and the Restructuring of the South American Drug Industry in the 1990s

Drug policy scholars generally agree that coercive attempts by the United States to reduce drug supplies from abroad have negative side effects. This article confirms that US coercion has made a bad situation worse. However, it also argues against oversimplified statements about the creation of side effects. The empirical focus is on the Air Bridge Denial Program, a US-sponsored attempt from the late 1980s to 2001 to reduce aerial drug trafficking in South America. A causal mechanism is developed that helps to understand and explain how air interdiction contributed to the displacement of coca cultivation from Peru to Colombia, an increase in Peruvian and Bolivian cocaine production, and a diversification of trafficking routes and methods. The analysis also examines contingent conditions, empirical black boxes, and alternative explanations. A complex empirical picture means that the popular metaphor of a balloon whose air, when squeezed, simply moves elsewhere is misleading. Although US-sponsored air interdiction has contributed to displacement, other factors have played a role as wel

Can production and trafficking of illicit drugs be reduced or merely shifted ?

The production of cocaine and heroin, the two most important drugs economically, has been concentrated in a small number of poor nations for 25 years. A slightly larger number of developing nations have been affected by large-scale trafficking in these two drugs. This paper reviews what is known about drug control programs and considers non-traditional options. The usual array of programs for suppressing drug problems, enforcement, treatment, harm reduction and prevention have been assessed almost exclusively in wealthy nations. Although treatment has been shown to be cost-effective, it is of minimal relevance for reducing the drug problems of nations such as Afghanistan, Colombia, Mexico or Tajikistan, which are primarily harmed by production and trafficking rather than consumption. Efforts to reduce drug production and trafficking have not been subject to systematic evaluation but the best interpretation of the available evidence is that they have had minimal effect on the quantities produced or trafficked. It is reasonable to conclude that international drug control efforts can do more to affect where these drugs are produced rather than the quantity. If that is the case, and given that spreading a specific level of production or trafficking to more rather than fewer nations probably decreases global welfare, it may be appropriate to consider a less aggressive stance to current producers and to make strategic decisions about the location of an industry producing a global bad.Crime and Society,Economic Theory&Research,Markets and Market Access,Alcohol and Substance Abuse,Post Conflict Reconstruction

Treading the fine white line: cocaine trafficking

The illicit drug’s trade is a highly profitable business that grasps the interest of millions of people and equally affects millions of others. Cocaine is a highly addictive drug that plagues many countries. It is trafficked through various routes using a variety of methods by traffickers who adapt to the efforts of the authorities. This paper reviews all aspects of the cocaine trade: from how a market came to exist for cocaine to the well-established lucrative market that it is today. A thorough understanding of all aspects of the cocaine market is essential in order to be able to assess the effectiveness of the current methods that are being employed to combat the illicit cocaine trade. To discuss, seeking to reach a conclusion as to whether cocaine trafficking can be completely eradicated when such a lucrative market for cocaine exists

A geography of illicit crops (coca leaf) and armed conflict in Colombia

Colombia is currently the world’s largest producer of coca leaf and the principal producer of opium poppies in the Americas; the plants are the basic raw materials used to produce cocaine and heroin. This document analyses the current relationship between these crops and illegal armed groups in Colombia, using the hypothesis that the geographical intensification of the conflict is the principal cause of expanding illicit crop production. This relationship was analysed using a theoretical model, in which an interaction between illegal armed activity and strategic territorial control lead to cocaine production. Spatial analysis techniques were then applied, especially spatial association indicators; and a clear spatial dynamic was observed, related to the two aspects mentioned above. Non-parametric exercises were also carried out using matching estimators, to determine the effect illegal armed groups have on coca crops, and also to analyse the efficiency of aerial eradication policies. The results suggest that a large percentage of coca production in Colombia is due to the effects of illegal armed activity. We therefore conclude that the expansion of illegal crop growing is a consequence of the expanding conflict. In contrast, coca crops can only be used to explain a small part of the armed conflict in Colombia. In addition, we found that crop eradication via aerial spraying has not been an efficient tool in the fight against coca production in the country

The development impact of the illegality of drug trade

This paper reviews the unintended consequences of the war on drugs, particularly for developing countries, and weighs them against the evidence regarding the efficacy of prohibition to curb drug use and trade. It reviews the available evidence and presents new results that indicate that prohibition has limited effects on drug prevalence and prices, most likely indicating a combination of inelastic drug demand (due to its addictive properties) and elastic supply responses (due to black markets). This should turn the focus to the unintended consequences of drug prohibition. First, the large demand for drugs, particularly in developed countries, generates the possibility of massive profits to potential drug providers. This leads to the formation of organized crime groups, which use violence and corruption as their means of survival and expansion and which, in severe cases, challenge the state and seriously compromise public stability and safety. Second, prohibition and its derived illegal market impose greater costs on farmers than on drug traffickers. In many instances, this entails the transfer of wealth from poor peasants to rich (and ruthless) traders. Third, criminalization can exacerbate the net health effects of drug use. These consequences are so pernicious that they call for a fundamental review of drug policy around the world.Health Monitoring&Evaluation,Crime and Society,Economic Theory&Research,Post Conflict Reconstruction,Markets and Market Access

Identifying New Approaches for U.S. Drug Policy using Ownership, Location, and Internalization Factors

Abstract Dunning’s Eclectic Paradigm is used to assess the effectiveness and impact of U.S. drug prohibition policy on economic growth and political stability in Latin American countries as well as the decision making of Latin American Transnational Criminal Enterprises (TCE) in the cocaine-coca market. Results showed U.S. drug prohibition policy reduces the on-site supply but does not significantly reduce the transportation of cocaine and coca. U.S. drug prohibition policy also generated political instability for the region, and revealed policy externalities that facilitated TCE expansion. Tougher U.S. drug prohibition policy advances TCE by amplifying the impact that unemployment and local wages have on increases in cocaine-coca production, and by limiting the impact of control of corruption and economic freedom on coca eradication. Our results signal that a site-specific approach accompanied with policies that improve the farmers’ economic freedom, such as land formalization rights, and policies that lower unemployment rate facilitate effective U.S. drug prohibition policy

Essays on Socioeconomic Shocks and Policies in Agriculture

The three chapters of this doctoral dissertation estimate the responses of agricultural productivity, production value of agriculture, and crop supply to some external shocks and policies. Using unique panel datasets for Colombia and the United States, this research provides new insights regarding the responsiveness of agriculture to some socioeconomic effects and related market policies. Chapter 1 studies the impact of armed conflicts in rural areas on legal agricultural productivity in Colombia by using a production function that includes violence shocks such as the forced intra-national displacement of the rural population from 1995 to 2017. Chapter 2 investigates the effect of anti-drug strategies implemented under a joint US-Colombia policy on the value of agricultural production of Colombian regions with coca crops. Chapter 3 examines the impact of a policy in the ethanol market on the supply of biomass from corn production at the extensive and intensive margins. Advisors: Lilyan E. Fulginiti and Richard K. Perri