The Effect of Commodity Price Shocks on Public Lands Distribution: Evidence From Colombia

Abstract

How do income shocks impact the privatization of public lands? This paper examines this question through the lens of the establishment of private property rights over public lands in Colombia, which has had one of the largest public lands distribution programs in the Western Hemisphere during the last century. Using data on exogenous international coffee price shocks along with data on land suitability for coffee production and roughly 125,000 public land grants, I find that coffee price increases differentially spur public land grants in municipalities where coffee suitability is greater. Additional tests suggest that the findings are driven by the power of organized cultivators to steer the land grant process in their favor. Furthermore, commodity price shocks in other organized agricultural sectors similarly yield more public land grants in municipalities with land suitable to those sectors, whereas price shocks in less organized agricultural sectors do not. The findings shed light on the role of organized actors in the countryside extending private extension of control over public territory – a phenomenon that has drastically curtailed the frontier in a host of countries over the last two centuries.