Afghanistan: Economic Incentives to Reduce Opium Production
Feb 5, 2008 - This report discusses how to progressively reduce Afghanistan’s dependence on opium by development initiatives and shifting economic incentives toward sustainable legal livelihoods. It identifies responses that can counterbalance the economic advantages of opium.
Facts: - Afghanistan remains one of the poorest countries in the world and insecurity represents a major impediment to development. - Afghanistan produces and trades more than 90 percent of the world’s illicit opium. - The size of the opium economy is around 30 percent of licit GDP, and millions of Afghans benefit directly or indirectly from it. - Drug economy thrives in remote or insecure areas which lack markets for other crops and alternative livelihoods. - Production is concentrated in the South where the security situation is most acute.
This report discusses how to progressively reduce Afghanistan’s dependence on opium – currently the country’s leading economic activity – by development initiatives and shifting economic incentives toward sustainable legal livelihoods. It identifies investments and policy and institutional measures to support development responses that can counterbalance the economic advantages of opium.
This chapter gives a summary of Afghanistan’s development since the fall of the Taliban in 2001. The country has made real progress in re-establishing political institutions and economic growth has been high at an average of over 10 percent per year. However, Afghanistan remains one of the poorest countries in the world and insecurity represents a major impediment to development.
This chapter describes the scale and nature of the opium problem. Afghanistan produces and trades more than 90 percent of the world’s illicit opium. The size of the opium economy is around 30 percent of licit GDP, and millions of Afghans benefit directly or indirectly from it. The links and synergies between opium poppy and insecurity are becoming increasingly apparent; opium production is concentrated in five southern provinces where the security situation is most acute.
Chapter 3: Increasing Value Added, Competitiveness and Productivity in Agriculture
This chapter examines the characteristics and growth potential of the farming economy and of Afghan farmers. It looks at current development interventions in agriculture and at opportunities for further engagement that can impact on the opium economy. Constraints to further opium-reducing development in agriculture, and recommendations going forward, are also discussed.
This chapter looks at the role of private enterprise and its growth potential, and at ways of adding value to labor. It discusses current interventions to support business and human resource development and the scope for scaling up and for new initiatives. Ways to overcome pressing doing business constraints, and further program interventions and related policy and institutional changes are also discussed.
This chapter looks at the role of access, safe water, and electricity in the rural economy. It reviews current programs and opportunities for scaling up. It also analyses constraints and needed actions, and gives a summary of expected growth, poverty reduction, and opium economy impacts.
This chapter discusses the importance of good governance to the phasing out of opium. It looks at the roles and responsibilities of the different institutions at the village, district, and provincial level, and how they fit in with the unitary state mandated by the Constitution. The chapter also analyses the current development interventions in the sector and provide suggested interventions for additional engagement.
This chapter looks at other policy and institutional aspects that cut across sectoral or sub-sectoral programs: Afghan leadership, aid effectiveness, “mainstreaming” of counter-narcotics objectives into development programs, and of long-term commitment versus short-term expediency. The chapter also looks at issues such as geographical balance, the security situation, the challenge of Helmand and the South, and the political economy constraints to counter-narcotics efforts.
The chapter sets out criteria for prioritizing proposals. Six priority sets of interventions are discussed in detail and subsequent sections look at how to add further value to key ongoing programs. Key cross-cutting policy and institutional issues for further dialogue are summarized and a final section provides a brief overview of expected impacts on the opium economy.