How does drug policy affect the illicit drugs market? Franz Trautmann Trimbos Institute www.trimbos.nl

Based on Trimbos/RAND study on global illicit drugs markets 1998-2007 (ed. Reuter and Trautmann) Covering: Analysis of the operation of the global market for illicit drugs Cocaine, heroin, marijuana, Amphetamine Type Stimulants (ATS) Estimating seize of the market Estimating economic costs of drug use What has happened to the market 1998-2007 What were the policies of the period How did these policies affect the markets Analysing unintended consequences of drug policy

Outline Drug policy 1998-2007: Drug problems 1998-2007: Demand reduction Supply reduction Drug problems 1998-2007: Consumption Supply Unintended consequences Policy analysis

General policy trends Drug policy expenditures in many countries increased substantially The biggest share of expenditures for supply reduction Measures against production and trafficking intensified substantially Demand and harm reduction measures intensified and (the latter) spread to more nations

Drug policy expenditures in four countries Total drug policy expenditures Demand reduction Supply reduction Hungary 2000 €22million €4 million1 €16 million Hungary 2007 €40million €7million1 €30 million Czech Republic 2002 €7 million2 €6 million €1 million3 Czech Republic 2006 €13 million2 €7 million €6 million3 United States 20044 $13 billion $5 billion $7 million United States 20064 $12 billion $5 million $8 billion The Netherlands €2,185 million €540 million5 €1,646 million 1. Figure includes expenditures for treatment, harm reduction and other social care. 2. National/federal budget (i.e. not including local/state budgets). 3. Not including the expenditures for the national drug squad which increased from €3,395,000 in 2003 (2002 figures are not available) to €3,757,000. 4. These figures show the executed budget and only include federal expenditures and exclude some major items, in particular the costs of prosecution and imprisonment. It is usually assumed that state and local governments spend as much as the federal government. Total national expenditures, dominated by enforcement, are probably around $35 billion. 5. Figure includes expenditures for prevention, treatment and harm reduction.

Convergence of policies: demand side Strong political support for prevention Growing emphasis on proven effective programmes Few demonstrated programs of even modest effectiveness Many implemented programs ineffective Increasing budgetary and political support for treatment OST is spreading Even to unlikely countries, e.g. China, Iran In 26 of 27 EU Member States

Convergence of policies: demand side Other Harm Reduction measures also spreading Syringe Exchange Programs now in many countries Even in U.S. though not with federal support Reduced willingness to punish drug users More decriminalization of drug use, mostly marijuana Administrative sanctions for possession of small quantities for personal use Few arrestees are incarcerated Emphasis on pushing arrested addicts into treatment

Convergence of policies: supply side Increasing toughness towards sellers More arrested Longer statutory sentences Longer actual sentences US exceptional in numbers incarcerated European intensity probably one tenth

European arrest figures rising The trends represent the available information on the national number of reports for drug law offences (criminal and non-criminal) reported by all law enforcement agencies in the EU Member States; all series are indexed to a base of 100 in 2001 and weighted by country population sizes to form an overall EU trend; the figures between brackets refer to the total number of offences as reported in 2001 (before weighting).

Drug-law offences / arrests In most countries use and possession still account for majority of arrests cannabis offences dominate Very few cannabis arrests lead to prison sentences

Arrests for use/possession and dealing/trafficking 1998 2005 2005 Use + possession for use 2005 Dealing + trafficking Czech Republic 1,530 2,128 7.8% 92.2% Hungary 6,670 7,616 91.7% 8.3% Netherlands 12,616 20,548 30.9% 68.8% Portugal 11,395 11,825 52.9% 47.1% Sweden 11,490 18,844 86.1% 13.9% Switzerland 63,2201 56,3421 (2006) 83% 15%2 Turkey 8,360 (2002) 13,229 48.0% 52.0% United Kingdom 130,643 122,459 (2004) 86.4% 13.6% 1. Drug use offences, including cases linked with dealing and/or trafficking 2. 2% for ‘unknown offences’

Drug consumption Western drug use largely stable or declining Marijuana prevalence rates among youth falling Some exceptions Heroin dependent population aging and declining Cocaine rising in Europe, falling in US ATS patterns complex but numbers still rather small (with some exceptions, e.g. CZ)

US High School Senior Use 1975-2007

Experimentation with cannabis is common in Western countries

Total US Cocaine consumption 1988-2000 (in metric tons)

Consumption indicators for non-Western countries are weak Cannabis use generally much lower than in US e.g. 2005 survey Mexico City: 3.2% of 12-17 year olds report ever using marijuana U.S figure 10 times as high Heroin use stable except for major epidemic in Russia and Central Asia Cocaine use slight outside of Western countries and a few in South America Mexico still modest use levels despite its trans-shipment role ATS unclear Prevalence figures are stabilising in some (advanced) transitional countries in the past decade. Drug use prevalence increased in developing countries.

Supply side changes modest: opiates and cocaine The production of opiates and cocaine is concentrated in very few countries Afghanistan is by far the main producer of opium, Colombia of coca No changes which countries produce, just some shifts in distribution across countries

Supply side changes unclear and rather negative: ATS ATS production is spread over several countries; The number of production countries increased in past decade; New producers: in particular transitional countries; ATS production diverse, from small-scale kitchen laboratories to large industrial-scale laboratories; Some shifts in quantities produced from countries with intensified control to countries with less control.

Supply side changes diffuse and rather negative: Cannabis Cannabis production in more than 172 countries. Cannabis resin production more concentrated than cannabis herb production; cannabis resin in 58 116 for cannabis herb production. Mexico and Morocco only large scale exporters but account for small share of total consumption An increasing number of countries are involved in cannabis herb production. Cannabis herb production takes diverse forms, from small-scale home growing to large-scale agricultural business

Supply side changes: trafficking Impact of anti-trafficking measures on quantities trafficked hard to measure Seizures indicator for trafficking routes rather than for trafficked quantities Changes in trafficking routes occur every few years Central Asia heroin trafficking post-1995 West African cocaine route post-2005

Unintended policy consequences on drugs market Increasing interdiction rates for trafficking may lead to greater export demand; Violence of producers, traffickers, dealers and users as response to tougher enforcement; Large black markets generate incentives for corruption; Environmental and health damage caused by enforcement induced replacement of big methamphetamine laboratories by smaller labs using varying ingredients

Despite supply reduction efforts: prices have declined, e.g. in EU The trends represent the available information on national street-level prices (either typical or mean prices, depending on countries and data available) for each drug in the EU Member States and Norway, weighted by country population sizes to form an overall EU trend. Prices have been adjusted for national inflation rates (base year 2001) and all series indexed to a base of 100 in 2001.

US cocaine and heroin prices have declined

US enforcement up, prices down

Control efforts have minimal effect on global drug supply Examples: Increased control efforts not reflected in prices of illicit drugs, especially in Western countries Policy can reduce the nature and location of harms related to production and trafficking Interventions can affect where production and trafficking occurs Balloon effect: control efforts in Peru and Bolivia shift production to Colombia 'Closing' of Netherlands Antilles smuggling route for cocaine to Europe may have supported West African route

Drug policy has limited effects on drug demand Drug use is driven by broader social, economic and cultural factors Policy measures can not affect: Whether an epidemic starts Severity of epidemic Prevalence of dependence Policy can reduce harmfulness of drug use Drug problems drive drug policy

Selection of 18 countries for detailed study Criteria for selecting countries Size (China and India) Major role in production and/or trafficking (Iran and Colombia) Major consumers (the United States) Coverage of all regions of the globe Substantial differences in the drugs problem they face (production, trafficking and use) Differences in societal changes during the past ten years; Western Transitional Developing

Selected countries Australia The Netherlands Brazil Portugal Canada Russia China South Africa Colombia Sweden Czech Republic Switzerland Hungary Turkey India United Kingdom Mexico United States

Principal methodological issues No primary data collection Analysed available data sources EMCDDA, UNODC, national studies, expert opinion Conceptual challenges: Differences across nations in concepts and terminology (e.g. problem drug use) Empirical challenges: Data quality (e.g. political interests) Data scarcity Data inconsistency (e.g. differences in age groups and periods covered) Data on non-Western countries extremely limited

Production is very low cost