Does Land Titling Matter? The Role of Land Property Rights in the War on Illicit Crops in Colombia

Abstract

This paper analyzes the role of formalization of land property rights in the war against illicit crops in Colombia. We argue that as a consequence of the increase of state presence and visibility during the period of 2000 and 2009, municipalities with a higher level of formalization of their land property rights saw a greater reduction in the area allocated to illicit crops. We hypothesize that this is due to the increased cost of growing illicit crops on formal land compared to informal, and due to the possibility of obtaining more benefits in the newly installed institutional environment when land is formalized. We exploit the variation in the level of formalization of land property rights in a set of municipalities that had their first cadastral census collected in the period of 1994-2000; this selection procedure guarantees reliable data and an unbiased source of variation. Using fixed effects estimators, we found a signicant negative relationship between the level of formalization of land property rights and the number of hectares allocated to coca crops per municipality. These results remain robust through a number of sensitivity analyses. Our findings contribute to the growing body of evidence on the positive effects of formal land property rights, and effective policies in the war on drugs in Colombia.