Abandoning Coffee under the Threat of Violence and the Presence of Illicit Crops. Evidence from Colombia

This paper explores the importance of the risk of violence on the decision making of rural households, using a unique panel data set for Colombian coffee-growers. We identify two channels. First, we examine the direct impact of conflict on agricultural production through the change in the percentage of the farm allocated to coffee. Second, we explore how conflict generates incentives to substitute from legal agricultural production to illegal crops. Following Dercon and Christiaensen (2011), we develop a dynamic consumption model where economic risk and the risk of violence are explicitly included. Theoretical results are tested using a parametric and semi-parametric approach. We find a significant negative effect of the risk of violence and the presence of illegal crops on the decision to continue coffee production and on the percentage of the farm allocated to coffee. Results are robust after controlling for endogeneity bias and after relaxing the normality assumption.


Issue Date:
Aug 08 2013
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/161356
Page range:
00-52
Total Pages:
52
JEL Codes:
C21; C34; D13; D74
Series Statement:
Documento CEDE
2013-35




 Record created 2017-04-01, last modified 2017-04-26

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