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2005-2006 Essay Contest Advanced Economics Second Place Essay

The Social Herbicide: The Use of Subsidies to Reduce Supply of Coca

Joshua Mollner
Saint Thomas Academy
Mendota Heights, Minnesota

Jose and Fabiola Alarcona are owners of a small family farm in Colombia. They stopped growing coca (an illegal crop used in the manufacture of cocaine) in 1994, and have encouraged their neighbors to do the same. Nevertheless, on December 8, 2002, three spray-planes covered their fields with herbicide, destroying their food crops and the pasture of their livestock. Six months later, after having replanted, more planes returned to spray a neighbor's field, but the wind shifted and the chemicals again destroyed their farm (Marsh 1).

There are numerous negative externalities associated with the consumption of illegal drugs. In order to reduce these externalities and achieve a better situation for society, the government of the United States has adopted policies aimed at decreasing the quantity of illegal drugs bought and sold in the United States with both programs that reduce supply and those that reduce demand. In 2000, the United States gave $1.3 billion in aid to finance Plan Colombia, (“Plan Colombia") an operation that would seek to reduce the supply of cocaine at its source by curbing the production of the coca plant. Two main strategies have been employed: spraying herbicides on coca fields and giving subsidies to coca farmers who voluntarily replace their coca with other crops. The opening story is just one illustration of the many negative externalities associated with the former strategy. The latter strategy, on the other hand, is superior because it does not produce these negative externalities; rather, it produces some positive externalities and is more cost effective. These subsidies have proven to be the most economically efficient strategy for reducing the supply of illegal drugs through action in South America.

One way in which authorities have tried to reduce supply of cocaine is through spraying a glyphosate-based herbicide over areas where coca is grown (Marsh 2). In 2001 and 2002, Colombian authorities and American contractors sprayed herbicides on 254,586 hectares of coca. However, this strategy is inefficient and not cost effective. Growing coca is a very profitable enterprise. It is four times more profitable than even the most profitable legal crops, oranges and avocados. Additionally, coca thrives in the poor soil found in much of Colombia, while many legal crops flounder under those conditions. Therefore, although their fields and crops may be destroyed once, there is a high incentive for coca farmers to move elsewhere and replant the illicit crop there. This “hydra effect" (Bertram and Sharpe) only exacerbates the problem as it becomes increasingly difficult for governments to track the locations of the coca farmers. For example, many coca growers who were forced out of Colombia by the herbicides merely moved to countries such as Peru to begin again (Remon).

Aerial fumigation of illicit plants is an unwise strategy not only because of its costineffectiveness, but also because it produces many negative externalities, including damage to food crops, displacement of farmers, health problems, and other environmental (Marsh 2-3). This aerial fumigation is toxic not only to the illicit coca, but also to food crops, pasture, and livestock. As was the case for the Alarcona family, collateral damage is caused not only by a lack of adequate information about where this illegal coca is grown, but also by the drift of the spray due to wind. This destruction of crops has also caused the displacement of farmers to regions unaffected by the herbicides. By causing Colombians to leave their established farms, the herbicide spraying produces an increased poverty rate, deserted towns, and a diminished labor force. In addition, the chemicals used in these sprays can cause such health problems as skin and eye irritation, as well as respiratory and digestive ailments. Furthermore, the herbicides are destructive to the environment because they threaten biodiversity while increasing water pollution and deforestation.

Another strategy used in Colombia to combat coca production is giving subsidies for crop substitutions. Under this program, the Colombian government (with American aid) provides up to $2,000 in subsidies, technical assistance, and seeds to each family who voluntarily destroys its illicit crops and substitutes legal crops such as rice, corn, and fruit. As discussed earlier, the coca farming industry is extremely lucrative, and consequently a transition from this illicit crop to less-profitable, legal crops involves significant opportunity costs. To be effective, a subsidy program must compensate farmers for a large portion of the potential income that would be lost by switching to legal crops. Nevertheless, a subsidy program would be more likely to succeed than a fumigation policy because it provides an incentive for farmers to cooperate by making the growing of legal crops a more profitable business, whereas fumigation does nothing to assist those farmers growing legal crops. A successful subsidy program would also be more efficient than a successful crop-spraying program because it encompasses none of the negative externalities caused by the herbicides, but would have several positive externalities instead; it would lessen the violence and turbulence in Colombia by reducing the presence of drug-based organizations such as paramilitaries and guerillas. Additionally, it would foster goodwill between the farmers and the government; many Colombian farmers have indicated a dislike for the crop-dusting program but have supported the subsidies (Forero).

Currently, the United States and Colombia spend half as much on subsidies as on fumigation. This policy should be altered to give preference to subsidies because they are the better strategy: they encompass fewer negative externalities, have more positive externalities, and would be more effective. Increased funding of the subsidy program would reduce the supply of drugs in the United States, thereby reducing the quantity consumed and the negative externalities caused by these drugs in the United States.

Works Cited

Bertram, Eva, and Kenneth Sharpe. “The Unwinnable Drug War."
World Policy Journal
13.4 (Winter 1997): 41-51.

Colombia. National Anti-Narcotics Agency. “Colombia's War Against Drugs: Actions and Results 2002." Bogota: n.p., 2003.

“Drugs in Colombia: The Weedkiller War." The Economist 5 Sept. 2002. 9 Mar. 2006.

Forero, Juan. “In Twist, Rebels Help Drug Effort in Colombia."
New York Times [New York] 2 May 2001, late ed.: A5.

Fraser, Ronald. “Bolivia's Catch-22 Drug War." The Minnesota Daily 23 Feb. 2006: Opinion.

Lama, Abraham. “Cash for Farmers Who Destroy Their Coca Crops." Tierramérica. 9 Mar. 2006.

Marsh, Betsy, and Latin American Working Group Education Fund. “Going to Extremes: The U.S. Funded Aerial Eradication Program in Colombia."

“Narcotics Affairs Section." United States Embassy: Bogota, Colombia. 17 Nov. 2005. 9 Mar. 2006.

“New Drug Solutions." Austin American Statesman [Austin] 24 Aug. 1989, final ed.: Al 6.

Padgett, Tim. “Taking the Side of the Coca Farmer."
5 Aug. 2002: 8.

“Plan Colombia." Embassy of Colombia: Washington. 9 Mar. 2006.

Remon, Cecilia. “Will Drug Crop Eradication Spark Conflict in Peru? Colombia Journal (Nov. 2002).

Wellstone, Paul. U.S. Senate. Speech 24 Oct. 2001. Center for International Policy: Colombia Program. 25 Oct. 2001. 9 Mar. 2006.

Wilson, James. “Colombian Coca Growers Turn Over New Leaf."
Financial Times [London] 16 Jan. 2001, USA ed.:5.