Balloon effect
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The balloon effect is an often cited criticism of United States drug policy. It describes the fact that when squeezing one part of a latex balloon, the balloon will bulge out elsewhere. This describes drug crops’ tendency to move to new areas in response to local eradication campaigns.
This effect happened:
- with fumigation of marijuana in Mexico, in which the drugs migrated to Colombia.
- with marijuana in the Sierra Nevada de Santa Marta, which migrated to Cauca.
- In the late 1980's coca was largely eradicated in Peru and Bolivia, only to be replaced by new crops in Colombia.
- Recently, with the intense spraying in the department of Putumayo, coca has been planted in other departments including Arauca, Cauca, Caquetá, Guaviare, Huila, Meta, Nariño, and Santander.
"The economic mechanism underlying the global effect is quite simple: the success of eradication in one area temporarily reduces the supply, and that translates into a price rise. Then, given that the supply function is fairly elastic, higher prices stimulate people to plant crops in other places." The costs to start planting are quite low "given that the majority of property rights on land planted with illicit crops are ill defined."[1]
This also describes the offsetting behavior in health care when costs shift from hospital care to home care.
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