Post 9 — The Poppy Problem

Every week I take one real case — a company, a government program, a league — and show how the reward shaped the behavior. Welcome to Behavior Follows Rewards.

The reward for destroying poppies had become a reason to plant more of them.

Britain paid Afghan farmers to destroy their poppy crops, which gave them a reason to plant more.

In the spring of 2002, Britain — then the lead nation on international counternarcotics efforts — offered Afghan farmers $700 an acre to destroy their poppy crops. The program was simple: destroy the crop, collect payment, plant something else.

Word spread fast. Farmers maximized their poppy acreage to collect the biggest possible payout.

Some harvested the opium sap before destroying their plants, collecting drug revenue and eradication payment in the same season. A U.S. diplomat who served in Kabul at the time described what happened: British officials would hand out money, farmers would promise to burn their crops immediately, the officials would leave, and “they would then get two sources of income from the same crop.” A British agricultural expert who worked in the region called the $30 million program “an appalling piece of complete raw naivete.”

By 2004, poppy cultivation had expanded by 64 percent. The crop kept growing, and so did the logic of the programs designed to stop it.

A second mechanism ran through development assistance. Reconstruction funds were directed at poppy-growing provinces and communities that committed to reducing cultivation. The intended structure was clear: give resources to places with the problem, in exchange for a commitment to phase it out.

The World Bank identified the flaw directly in a 2004 analysis of Afghanistan’s drug economy. Targeting aid at poppy areas created an incentive for localities not currently growing opium to start — so they could become eligible for the assistance being offered to places that had the problem.

“Providing development assistance in return for a locality’s commitment to stop opium production,” the Bank wrote, could “generate perverse incentives for others, not currently producing opium, to get into the business in order to become eligible for benefits.”

The strategy was designed to reward communities for giving up the crop. The structure that delivered the reward was built on the presence of the crop. Everyone responded to what the structure actually rewarded.

A third mechanism ran in the opposite direction, benefiting not farmers but the traffickers above them in the supply chain.

Eradication reduces supply. When supply falls, prices rise. Traffickers who had been holding opium inventories — as they routinely did across Afghanistan’s drug industry — captured the price increase as a capital gain. The same actions designed to destroy the trade were delivering windfalls to the actors the program was most trying to punish.

The World Bank noted this as well: effective eradication “may result in substantial capital gains accruing to drug traffickers holding inventories — inadvertently rewarding the actors that the counter-narcotics strategy should strive to punish.”

The reward for destroying the crop went to the people holding the crop in inventory.

Britain’s program had failed. The United States stepped in as primary counternarcotics funder and spent an estimated $782 million in fiscal year 2005 alone across five program pillars: alternative livelihoods, eradication, interdiction, law enforcement, and public information. By 2005, poppy was being grown in most of the country — more than three in four provinces had crops — and opium exports were worth nearly as much as everything else Afghanistan’s economy produced combined. In 2006, cultivation reached a record level, up 50 percent in a single year.

A November 2006 Government Accountability Office report found that even with more eradication and continued U.S. investment, the effort had not meaningfully reduced how much poppy was being grown. Worsening security was one factor. Corruption was another: GAO documented eradicators who were paid to look past certain fields, and a later SIGAR review found at least one provincial governor — in Helmand, in 2002–2003 — who directed eradication funds toward political opponents’ fields rather than the areas with the worst cultivation.

The program designed to eliminate the poppy trade had become one of the forces sustaining it.

If you build a system where having the problem makes you eligible for the solution, people will acquire the problem.

Let's look at this from a different angle for a moment. Three separate reward structures, three separate sets of rational actors, one shared result: nobody in this story needed to be corrupt or careless. They needed only to notice, correctly, what the program was actually willing to pay for -- and respond accordingly.

You have seen a version of this — a policy, a bonus, a program that produced a result no one intended, because the reward pointed somewhere other than the stated goal. The scale here was different. The mechanism was not.

Three reward structures ran backward simultaneously. One turned a destruction payment into a reason to plant more. Another gave aid to communities with the problem, inadvertently recruiting new entrants. The third reduced supply in ways that enriched the supply chain’s largest holders.

Everyone involved responded rationally to what was actually being offered. Farmers planted to collect the payment. Farmers planted to become eligible. Traffickers held inventory to capture the price spike. Local officials directed eradication toward political targets.

The gap between what the programs were designed to produce and what they actually rewarded is what produced the outcome nobody wanted.

Ask yourself: where in your organization are you paying to solve a problem that the payment itself is sustaining?

If you are working through an incentive design challenge in your organization — trying to understand why a policy, initiative, or team isn’t doing what you designed it to do — that is the work. Advisory Services →

Behavior Follows Rewards. The pattern shows up wherever people are measured and rewarded.

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—Wayne

Going Deeper

If you were a subsistence farmer in Helmand Province in 2002 — surviving on under $2 a day, with no alternative crop, and a foreign government offering $700 an acre to destroy what you grew — would you have planted less? Or more?

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Last time: Brazil paid poor families a cash transfer when their children attended school and visited health clinics. Enrollment rose. Health visits rose. The reward produced both.

Next: In 1986, Vietnam’s government let farmers profit from their own harvest instead of a collective quota. Production followed the incentive. The results surprised everyone.

In development — a corporation whose internal ranking system made employees compete against each other instead of the competition; a pro sports league that rewarded losing for four decades; a national health system whose treatment-time target changed what got counted, not how fast patients were treated. More on the way.

Sources

Special Inspector General for Afghanistan Reconstruction (SIGAR). ‘Counternarcotics: Lessons from the U.S. Experience in Afghanistan.’ SIGAR-18-52-LL. June 2018.

Byrd, William, and Christopher Ward. ‘Drugs and Development in Afghanistan.’ World Bank Social Development Papers No. 18. December 2004.

U.S. Government Accountability Office — GAO-07-78: “Afghanistan Drug Control: Despite Improved Efforts, Deteriorating Security Threatens Success of U.S. Goals.” November 15, 2006. Washington, D.C.

Whitlock, Craig. ‘Overwhelmed by Opium: The U.S. War on Drugs in Afghanistan Has Imploded at Nearly Every Turn.’ The Washington Post. December 9, 2019. Part 6 of The Afghanistan Papers.

United Nations Office on Drugs and Crime (UNODC) — Afghanistan Opium Survey, 2004, 2005, and 2006 annual editions. Cultivation data cited in GAO-07-78 and World Bank Paper No. 18.

Congressional Research Service — Blanchard, Christopher M. “Afghanistan: Narcotics and U.S. Policy.” RL32686, January 24, 2008. Washington, D.C. Available: everycrsreport.com.

Felbab-Brown, Vanda. "Shooting Up: Counterinsurgency and the War on Drugs." Brookings Institution Press, 2010. ISBN 978-0-8157-0328-0.

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