The analysis of the relationship between natural resources and violent conflicts has shown how positive shocks in agricultural commodities are usually linked with reductions in violence (opportunity cost effect), while positive shocks to minerals or extractive commodities seem to increase conflict (rapacity effect). In this paper we examine the case of palm oil expansion in Colombia and find that our results differ from previous studies. We use changes in international prices of palm oil to show how positive income shocks increased forced displacement in palm producing municipalities.
We found that a 1% increase in the price of palm oil raises the forced internal displacement rate in palm municipalities by 0.42 standard deviations. We also show evidence that the negative effect of palm oil income shock was stronger in areas with paramilitary armies, weak contract institutions and better land distribution. In addition, increases in palm prices increase rural violence but not urban violence. Our results support the hypothesis that the violence linked with the palm expansion was the result of the search for new lands for palm trees in a framework of weak institutions. Therefore, one can argue that in the case of the palm expansion the rapacity effect over new lands was stronger than possible labor market effects.