The Unintended Consequences of Anti-Drug Programs in Producing Countries

Abstract

This paper investigates the possible negative local economic effects and crime spillovers of the biggest anti-drug program ever applied within a producing country: aerial spraying with herbicides. It also investigates the correlation between local economic development and illegal drug production in drug-producing-areas, which was previously restricted by the unavailability of good quality micro data. To do this, I put together unique and rich georeferenced panel data from satellite images with information at the 1-square-kilometer cell level on coca cultivation, night light density, and deforestation in Colombia. By employing state-of-the-art spatial econometrics, I find no evidence of negative effects of aerial spraying on deforestation nor spillover effects on crime. However, I find sizable negative effects of aerial spraying on local economic activity (measured through night light density). I also find no evidence of a significant correlation between night light density and coca cultivation. However, there are strong negative effects of coca cultivation on deforestation. JEL Classification: K42, O12, O54.