When Do Property Rights Reduce Illicit Crops?

Eduard F. Martínez-González, María del Pilar López-Uribe and Juan Carlos Muñoz-Mora
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Eduard F. Martínez-González: Director of the Center for Research in Economics and Finance. ICESI
María del Pilar López-Uribe: Secretaría de Desarrollo Económico Bogotá, Colombia.
Juan Carlos Muñoz-Mora: Universidad EAFIT

No 2026-37, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: This paper estimates the effect of land property rights on illicit crop cultivation under weak institutions. We study Formalizar para Sustituir (FxS), a Colombian program that allocated land titles to farmers in coca-producing areas as part of the 2016 peace agreement with the FARC. Matching administrative titling records to annual high-resolution satellite imagery of coca fields at the 1 km × 1 km grid level, we compare titled grids to neighboring non-titled grids over 2011–2021 using a difference-in-differences design. Land titling reduces coca cultivation by 42–64% immediately, but the effect fades within two years. In the short term, titled households increase credit demand and investment in productive activities, and report incomes above what coca farming generates. These changes are consistent with property rights operating through the channels theory predicts, yet they are insufficient to sustain substitution on their own. The FxS×Placa-Huella interaction coefficient ( ˆ ψ) implies an additional sustained reduction of 33–38% relative to the pre-treatment coca mean in grids that combine land titling with tertiary road construction, suggesting that connectivity to local markets is the binding constraint for long-run transition away from illicit crops. Roads alone, by contrast, are associated with more coca — a result consistent with prior evidence that infrastructure without institutional preconditions benefits illegal as much as legal activity.

Keywords: Illicit Crops; Alternative Development; Land Titling; Rural Roads (search for similar items in EconPapers)
JEL-codes: K11 O17 Q15 Q18 R5 (search for similar items in EconPapers)
Date: 2026-07
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Published in Documentos CEDE - Universidad de los Andes

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Persistent link: https://EconPapers.repec.org/RePEc:col:000089:023138

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