On the Effects of Enforcement on Illegal Markets | 2014
Joint with Daniel Mejia and Sandra Rozo
Forthcoming in the World Bank Economic Review
This paper examines the effects of enforcement on illegal behavior through a study of a large aerial spraying program designed to curb coca cultivation in Colombia. In 2006, the Colombian government pledged not to spray a 10 km band around the frontier with Ecuador because of diplomatic frictions that arose from concerns about the program’s possible negative collateral effects on the Ecuadorian side of the border. We exploit this variation to estimate the effect of spraying on coca cultivation by regression discontinuity around the 10 km threshold and by conditional differences in differences. Spraying one additional hectare reduces coca cultivation by 0.022 to 0.03 hectares. We conclude that, given these small effects, aerial spraying is not a cost-effective method of reducing cocaine production in Colombia.