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

Author

Listed:
  • Gelvez, Juan D.
  • Angarita Serrano, Matilde

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.

Suggested Citation

  • Gelvez, Juan D. & Angarita Serrano, Matilde, 2024. "Incentives war: the consequences of announcing a substitution policy on coca cultivation in Colombia," LSE Research Online Documents on Economics 122160, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:122160
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    File URL: https://researchonline.lse.ac.uk/id/eprint/122160/
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    References listed on IDEAS

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    1. repec:bla:devpol:v:22:y:2004:i::p:405-421 is not listed on IDEAS
    2. Mounu Prem & Juan F. Vargas & Daniel Mejía, 2023. "The Rise and Persistence of Illegal Crops: Evidence from a Naive Policy Announcement," The Review of Economics and Statistics, MIT Press, vol. 105(2), pages 344-358, March.
    3. Hernando Zuleta Gonz√°lez, 2019. "Coca, Cocaine and Drug Trafficking," Documentos CEDE 17175, Universidad de los Andes, Facultad de Economía, CEDE.
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    Cited by:

    1. Lucas Mar√≠n Llanes & Manuel Fern√°ndez Sierra & Mar√≠a Alejandra V√©lez Lesmes & Eduard Mart√≠nez Gonz√°lez & Paulo Murillo Sandoval, 2024. "Coca-Based Local Growth and Its Socio-Economic Impact in Colombia," Documentos CEDE 21186, Universidad de los Andes, Facultad de Economía, CEDE.
    2. repec:osf:osfxxx:yn9rz_v1 is not listed on IDEAS
    3. repec:osf:osfxxx:6ys2g_v1 is not listed on IDEAS
    4. Gelvez, Juan David, 2024. "Coca Politics: Electoral Accountability and Tough-on-Crime Policies in Colombia," OSF Preprints yn9rz, Center for Open Science.
    5. Gelvez, Juan David & Angulo, Juan Carlos, 2024. "Public Attitudes Toward Forced Eradication: Protest, Gender, and Politics in Colombia," OSF Preprints 6ys2g, Center for Open Science.

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    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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