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Abandoning Coffee under the Threat of Violence and the Presence of Illicit Crops. Evidence from Colombia

Listed author(s):
  • Ana María Ibañez Londoño

    ()

    (Universidad de los Andes- Colombia)

  • Juan Carlos Muñoz Mora

    ()

    (ECARES - Université Libre de Bruxelles)

  • Philip Verwimp

    ()

    (ECARES - Université Libre de Bruxelles)

This paper explores the importance of the risk of violence on the decision making of rural households, using a unique panel data set for Colombian coffee-growers. We identify two channels. First, we examine the direct impact of conflict on agricultural production through the change in the percentage of the farm allocated to coffee. Second, we explore how conflict generates incentives to substitute from legal agricultural production to illegal crops. Following Dercon and Christiaensen (2011), we develop a dynamic consumption model where economic risk and the risk of violence are explicitly included. Theoretical results are tested using a parametric and semi-parametric approach. We find a significant negative effect of the risk of violence and the presence of illegal crops on the decision to continue coffee production and on the percentage of the farm allocated to coffee. Results are robust after controlling for endogeneity bias and after relaxing the normality assumption.

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Paper provided by Households in Conflict Network in its series HiCN Working Papers with number 150.

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Length: 44 pages
Date of creation: Jun 2013
Handle: RePEc:hic:wpaper:150
Contact details of provider: Web page: http://www.hicn.org

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