The Rise and Persistence of Illegal Crops: Evidence from a Naive Policy Announcement

Abstract

Policies based on prohibition and repression to fight the war on drugs have largely failed in a variety of contexts. However, incentive-based policies may also fail and have unintended negative consequences if policymakers do not properly anticipate behavioral reactions. This is a particularly important concern in the case of policies announced prior to their implementation. In this paper, we show that a naive and untimely policy announcement generated an unprecedented escalation in cocaine production in Colombia, offsetting almost 20 years and billions of dollars of U.S.-backed efforts to stop drug production and cartel action.