Incentives war: the consequences of announcing a substitution policy on coca cultivation in Colombia

Juan D. Gelvez and Matilde Angarita Serrano

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: How do alternative development programs, designed to diminish the presence of illicit crops, might cause unexpected consequences? This article studies how the announcement about an alternative development program, following the signing of the peace agreement in Colombia, resulted in an increase in coca cultivation. Employing a difference-in-differences methodology, this document evaluates the impact of the National Comprehensive Plan for the Substitution of Illicit Crops (PNIS – for its acronyms in Spanish) on the incentives to cultivate coca crops. Our empirical findings show that the announcement of this program led to a substantial average increase of 791 ha of illicit crops per municipality. This increment equates to 40,341 additional hectares, constituting approximately 53% of the overall surge in illicit crop cultivation during the year following the program’s announcement. In our exploration of underlying mechanisms, we discuss the interplay of economic incentives for both coca and non-coca cultivators and the electoral motivations of the FARC political party.

Keywords: illicit crops; substitution of coca crops; FARC; difference-in-differences; Colombia (search for similar items in EconPapers)
JEL-codes: J01 R14 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2024-02-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published in Journal of Illicit Economies and Development, 6, February, 2024, 5(1), pp. 47 - 57. ISSN: 2516-7227

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:122160

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