extent that supply-reduction operations deter new drug supply, how long do the deterrent effects last before new supply sources emerge?

With such a program in place, we envision a gradual process of model improvement as new findings on the nature of production, transport, and distribution accumulate.

Assessing Crop-Reduction Policy

Assessment of crop-reduction policy provides a ready illustration of the importance of substitution, deterrence, and adaptation. As this report was being written, an ongoing debate about the effectiveness of crop-reduction policy continued to evolve. The immediate issue was the wisdom of the Clinton administration’s request to Congress in spring 2000 for emergency funding to support Colombia in its efforts to suppress production of cocaine and heroin in southern Colombia. This emergency funding request followed the large increase in coca and poppy cultivation that appears to have occurred in Colombia in the latter 1990s.

Geographic substitution of cultivation looms large as an issue in assessing crop-reduction policy. The recent dramatic rise in coca cultivation in Colombia has coincided with equally dramatic falls in coca cultivation in Peru and Bolivia. These events have become inextricably linked in public discussions of crop-reduction policy as the “balloon effect,” described in a recent New York Times special report on “Cocaine War” (Larry Rohter, April 21, 2000):11

The rapid expansion of coca production in Colombia is in large part a consequence of two developments. One is what is known as the “balloon effect” —the reappearance of a problem in a new place after it has been squeezed in another—which followed successful American-led campaigns against coca growers in Peru and Bolivia.

The geographic substitution suggested by the balloon effect has potentially strong implications for the effectiveness of crop-reduction policy. The New York Times article contains this passage: “One additional concern, both in Andean capitals and in Washington, is that any success against coca cultivation in Colombia will inevitably lead to a resurgence of coca growing in Peru or Bolivia.” The article does not offer an explicit argument for this prediction, but the basis appears to be static competitive economic theory. This theory predicts that, in the absence of resource


The second development cited is miscalculations by Colombian President Pastrana in his efforts to negotiate with the F.A.R.C. guerillas.

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