Bushes and Bullets: Illegal Cocaine Markets and Violence in Colombia | 2014

 Joint with Daniel Mejia

This paper explores the effects of cocaine booms on violence in Colombia during the period of 1990 to 2011. We exploit variation across municipalities in their suitability for cocaine production and variation over time in the demand for Colombian cocaine. Our suitability, based on a survey of coca farmers, depends on the altitude, erosion, soil aptitude, and precipitation of a municipality. The measure of external demand combines proxies for consumption in the U.S. with other forces that shape the demand for Colombian cocaine, including changes in enforcement in transit countries and other source countries. We find that increases in the external demand for Colombian cocaine creates cocaine booms in municipalities that have a high suitability for coca cultivation. In these communities homicides increase significantly both in the short and the long run. We argue that, on the whole, these cocaine booms would not have caused violence if cocaine was legal. To support this claim, we show that cocaine booms bring violence independently of state presence; while booms in other commodities (cocoa, sugar cane and palm oil) typically reduce violence, except in a few communities where state institutions are too weak.