TED Case Studies

Coca, Trade and Environment

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          CASE NUMBER:          16 
          CASE MNEMONIC:      COCA 
          CASE NAME:          Coca Trade and Land Use Changes


1.        The Issue

     The production of cocaine in South America, especially the
Andean region, has had a devastating impact on the environment. 
The environmental destruction can be seen throughout the
product's life cycle effects.  The effects cover a wide range of
environmental problems including pesticide use, chemical dumping,
deforestation, soil erosion, water pollution, a shift to mono-
agriculture, bio-diversity loss, and a potential loss of cultural
eco-knowledge.  In an attempt to assist the Andean region, and to
lessen the international drug trade, the United States has
attempted to set up economic alternatives, such as the Andean
Trade Preference (ATP) Act of 1991, in hopes of shifting the
economies of Colombia, Peru, Bolivia, and Ecuador away from this
highly profitable market.

2.        Description

     Coca has a nearly 4,000 year tradition in South America, and
it is an important element of Andean culture.  Traditionally,
community and political solidarity were maintained through
production and exchange between the highland and lowland areas of
the Andean region.  Coca has been used to relieve fatigue and
hunger and also for medicinal and health purposes.  However, due
to the relatively recent high-profit motive, a new tradition of
coca production as a cash crop has emerged.  The shift in coca
production from traditional use to a cash-crop is beginning to
have detrimental effects on the Andean culture, the region's
economy, and the environment. 

     There are several ways that increased coca production is
harmful to Andean culture.  For example, the coca eradication and
substitution programs, promoted by the U.S. and Andean
governments, may serve to limit the production of coca, which
will deprive poor people of their most profitable income.  Also,
the increased availability of coca, especially more potent and
less pure coca related products, is hurting both the coca users
and society's ability to cope with the growing number of addicts.

     The source of capital investment in the coca industry comes
mainly from the United States in two forms, legal and illegal. 
Legal capital flows are represented by the drug law enforcement,
interdiction, education, substitution programs, and development
aid.  These capital flows are changing the traditional economic
activities, particularly agricultural production, by placing
emphasis on eradicating coca production, transport, and sales. 
Migrant laborers flock to these areas, growing raw coca on
unterraced plots with no attempt to avoid soil loss.   In the
1980s and 1980s it is estimated that 2,700 square miles of Amazon
rain forest were deforested as a result of coca cultivation.

     Cultural and economic effects of coca production are having
a combined effect on the environment as well.  Due to the high
demand for coca, the agricultural sector is shifting to single
crop production, or mono-cropping.  If the shift toward mono-
cropping becomes a long-term phenomenon, the potential for eco-
knowledge loss is great since eco-knowledge in the region, and
elsewhere, is often transferred from one generation to another
through word of mouth and experience.  The emphasis on coca
production may cause the loss of specialized, sustainable
agricultural techniques.

     The coca production process leads to a number of additional
environmental problems throughout its life-cycle.  For example,
in order to keep up with the increased demand for coca, producers
expand coca fields through deforestation and clearing out other
plant species which leads to bio-diversity loss.  Due to these
actions, plants and trees which are essential for preventing soil
erosion are lost, further exacerbating the problem of poor soil
fertility in the region.  As soil fertility decreases, "growers
often must abandon their parcels to prepare new plots."  An
additional environmental problem due to expansion of coca fields
includes air pollution in September and August as producers slash
and burn forests to open up new lands for production.

     A different kind of environmental problem occurs during the
growth process of the coca crop.  To maximize profits, producers
often use large quantities of pesticides, weed killers, and
fertilizers on their crops.  For example, "Peruvian
environmentalists estimate that coca growers use 1.5 million
liters of paraquat each year in the Upper Huallaga Valley alone"
(this does not include the paraquat sprayed by the government to
control coca and marijuana production).  These chemicals affect
the soil, and contaminate waterways, which, in turn affect the
plant and animal species in the immediate and surrounding areas.

     Additional deforestation takes place during the
transportation phase of the product.  Since the cocaine industry
is illegal, producers must set up obscure air strips in the
Amazon jungle to not only fly in the raw coca to processing
plants, which are scattered throughout the Amazon region, but to
fly out the final product. 

     The processing of the raw coca into cocaine also has
detrimental effects on the environment.  Coca laboratories, or
processing plants, use huge amounts of toxic chemicals to produce
the final product.  After the chemicals are used, the waste is
simply dumped onto the ground, or directly into rivers.  Chemical
wastes include kerosene, sulfuric acid, lime, calcium carbide,
acetone, toluene, and ethyl ether.  Another waste product is
hydrochloric acid, which can increase water pH, reduce oxygen
availability, and lead to acute and chronic poisoning of fish. 

     Similar environmental concerns relate to some coca
eradication policies as well.  For example, the use of herbicides
to fight the growth of coca has been criticized for environmental
reasons.  Some of the herbicides found to be effective in
eradicating coca species are also highly toxic chemicals that
harm other plant species and find their way into surface and
ground water.  In Peru, opposition has resulted in cessation of
U.S.-sponsored herbicide testing and data gathering.  As an
alternative to chemical control, biological control (bio-control)
has been identified as a possible eradication method by The
United Nations International Drug Control Programme.  Though
controversial, bio-control may provide an "environmentally
benign" way to reduce coca production.

     Other attempts to prevent or stop coca production use
instruments such as development assistance or preferential trade
agreements.  "Development assistance seeks to create and extend
alternative livelihoods, build local institutions, provide
education and training, promote infrastructure improvements, and
provide social services."  The goal of development projects is
to provide alternatives through coca substitution programs.  Many
of these programs focus on the agricultural sector by
incorporating high-value or multipurpose crops.  However, Andean
national policies do not promote small land holders.  Thus, other
development programs have focused mainly on areas of high
population density.  For example, "in September 1989, President
Bush approved an Andean counter-drug initiative to expand
narcotics-related military, economic, law enforcement, and
intelligence cooperation for selected Andean countries for the
purpose of strengthening their counter-narcotics efforts." 

     Another attempt to shift demand away from coca production is
through the Andean Trade Pact (ATP).  In February 1990 President
Bush and the presidents of Colombia, Bolivia, and Peru met to
discuss the expansion of economic alternatives to coca growers. 
In July 1990, Bush introduced to the U.S. Congress the Andean
Trade Preference Act (ATPA), a proposal opening U.S. markets to
eligible products from Colombia, Bolivia, Peru, and Ecuador.  The
Act was signed into law on December 4, 1991.

3.        Related Cases

     BOLCOCA case
     COLCOCA case
     PLANT case

     Keyword Clusters         

     (1): Trade Product            = Cocaine [COCA]
     (2): Bio-geography            = TROPical
     (3): Domain                   = South America [SAMER]

4.        Draft Author:  Carl Scott and Deborah M. Ullmer

B.        LEGAL Clusters

5.        Discourse and Status:  AGReement and INPROGress

6.        Forum and Scope:  USA and REGION

     The United Nations International Drug Control Programme has
used biological control techniques for more than a decade. 
However, spraying the agents requires identification of plots. 
The United Nations Environmental Programme is also pursuing
agreements on international drug production control.

7.        Decision Breadth: 5 (USA, Colombia, Bolivia, Peru,
                                   and Ecuador)

8.        Legal Standing:  TREATY (Memorandum of Understanding)

C.        GEOGRAPHIC Clusters

9.        Geographic Locations

     a.   Geographic Domain : Souther America [SAMER]
     b.   Geographic Site   : ANDES
     c.   Geographic Impact : ANDES

10.       Sub-National Factors:  NO

11.       Type of Habitat:  TROPical

D.        TRADE Clusters

12.       Type of Measure:  ENFORCement 

     The ATPA was signed into law on December 4, 1991 and was
designed to provide additional economic alternatives for the
Andean countries that had been fighting to eliminate production,
processing, and shipment of illegal drugs.  The essence of the
Act was to grant duty-free status to eligible imports from the
Andean countries and was closely patterned after the Caribbean
Basin Economic Recovery Expansion Act of 1990, which implemented
the Caribbean Basin Initiative (CBI).  The ATP is to remain in
effect for ten years.

     Other economic incentives programs that are under
consideration are the "debt-for-drug" swaps.  Recently, under the
Enterprise for the Americas Initiative (EAI), the United States
eliminated $371 million of Bolivian debt.  "The EAI debt
reduction component could serve as a model to develop 'debt-for-
nature' swaps."

13.       Direct vs. Indirect Impacts:  INDirect

14.       Relation of Measure to Environmental Impact

     a.  Directly Related     : YES  Cocaine [COCA]
     b.  Indirectly Related   : YES
     c.  Not Related          : NO
     d.  Process Related      : YES  HABITat Loss

15.       Trade Product Identification:  Cocaine [COCA]

16.       Economic Data

     As an example of the lucrative cocaine business, the Office
of Technology Assessment put Bolivian output at an estimated $600
million per year.

17.       Impact of Measure on Trade Competitiveness:  MEDIUM

18.       Industry Sector:  PHARMaceutical

19.       Exporter and Importer:  ANDES and USA

E.        ENVIRONMENT Clusters

20.       Environmental Problem Type:  HABITat Loss

     There are of course many indirect consequences of the
cocaine business.  In June, 1993 U.S. Customs agents in Miami
seized a shipment of boa constrictors from Colombia and found
that 312 snakes with cocaine filled condoms in their stomachs. 
The snake's rectums were sewn shut.

21.       Name, Type, and Diversity of Species 

     Name:          Coca
     Type:          Plant/Angiospermae/Dicots
     Diversity:     10,735 higher plants
                    per 10,000 km/sq

22.       Impact and Effect:  HIGH and PRODuct

23.       Urgency and Lifetime:  MEDIUm and 100s of years

24.       Substitutes:  TREATment and ALTER

     Alternative crops to coca have been proposed and supported
by several organizations.  The proposed replacement crops include
annuals such as maize, rice, beans and yucca and perennials such
as citrus trees, coffee, cocoa, and pepper.  Other possible crops
include essential oils, natural plant chemicals, tropical fruits
(especially pineapple, passion fruit, bananas, and carambola),
and macadamia nuts.

VI.       OTHER Factors

25.       Culture:  YES

     Chewing cocaine has been  part of many South American Indian
cultures for millennia and has some cultural significance. 
However, the use of cocaine in developed countries has little
cultural attachment and is generally regarded as an addiction.

26.       Trans-Border:  YES

     The prime coca growing areas spread across several South
American countries in the Andes.

27.       Rights:  NO

28.       Relevant Literature

Armstead, L.  Illicit Narcotics Cultivation and Processing: The
     Ignored Environmental Drama (United Nations
     International Drug Control Programme, 1992).
Dourojeanni, Marc J.  "The Environmental Impact of Coca
     Cultivation and Cocaine Production in the Peruvian
     Amazon Basin", in F.R. Leon and R. Castro de la Mata,
     eds., Pasta Basica de Cocaina: Un Estudio
     Multidisciplinario (Lima: Centro de Informacion y
     Educacion Para la Prencion del Abuso de Drogas, 1989).
U.S. Congress, Office of Technology Assessment.  "Alternative 
     Coca Reduction Strategies in the Andean Region."  July
U.S. Congress, Library of Congress, Congressional Research 
     Service.  "Cocaine Production, Eradication, and The
     Environment: Policy, Impact, and Options" (seminar held
     on February 14, 1990, Washington, DC).
U.S. State Department Dispatch.  "Fact Sheet: Coca Production 
     and the Environment" (March 2, 1992).
U.S. State Department Dispatch.  "Gist: Andean Trade Preference
     Act of 1991" (March 2, 1992).
World Resources Institute.  Environmental Almanac.
     Washington, DC: World Resources Institute, 1991.


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