|
|
|
Justice System Resource Allocation: Indigenous Over-representation in the Criminal Justice System
|
An economic model of the world drug markets.This article began life as a draft for the World Drug Report 2005. After almost a decade of being told by major international research companies that it was not possible to assemble an economic model of the global illicit drugs trades, the United Nations Office on Drugs and Crime in Vienna contracted John Walker to develop ideas he had first put forward in 1999[1]. The resulting model has been acclaimed as a world first, and is available at http://www.unodc.org/pdf/WDR_2005/volume_1_chap2.pdf. For the full and final results of the model, readers should follow that link. If you prefer just to get an idea of how the models were set up, the following text describes the methodology used for three of the major categories of drugs included in the overall model. These preliminary figures may differ from those in the WDR2005 due to final consistency checks. MODELING THE WORLD DRUGS MARKETS.An important element in determining the global response to the illicit drug problem is knowing the economics of the problem. There is now enough information available from the Annual Reports Questionnaires, and from the many national and international-level studies that have been conducted in recent years, to construct a reasonably robust economic model of the main illicit drugs markets. Using data from the 2004 World Drug Report, together with a number of research-based assumptions related to how the markets work, UNODC has developed a model to estimate the total value of the illicit drugs markets around the world. The approach is to model the key drug types separately - Opiates, Cocaine, Cannabis (Herb and Resin), Ecstasy and Other Amphetamine-type stimulants – and then combine them to form a picture of the overall market. The basic generic model takes input data from the 2004 World Drug Report, Volume 2: Statistics, and allows for expert knowledge to choose from a number of options relating to how the specific market works. Thus, while the model itself is generic, the different drug types can reflect their specific market mechanisms and the different ways the markets operate in different countries and regions of the world. The model allows users considerable scope, both for testing hypotheses about relative levels of consumption and prices, and for embedding expert knowledge into the estimates. For example, in countries and regions where particular drugs are commonplace, such as producer or transit countries, the model can reflect the fact that prices are generally low and the level of consumption of those drugs is less dependent on price or supply than on user numbers and preferences, whereas in countries and regions which import their supply, both price and availability will influence levels of consumption. The model can also express known or hypothesised differences in the supply chains caused by particular geographic or ethnic links between regions or the different degrees of commercialisation of the drug production and distribution systems in different countries and regions. The model can also express differences in the extent to which countries in different regions successfully intercept the flows of illicit drugs from producer countries to consumers. Each drug model commences with key drug-specific input data at country level, including estimated drug user numbers, drug production data, drug seizure data, drug consumption data, and wholesale and retail price data from the ARQs. The appropriate regional averages are used for countries for which there are no data, unless better information is available. The different units of measurement (e.g. litres, units, doses etc) are converted into standardised kilogram equivalents. The main workings of the model starts with regional estimates of production, works out the principal trade routes, based on regional proximities and on known trade flows, and concludes with estimates of the value of the markets in each region, in millions of US dollars. It is complex, as is necessary for a model of a complex issue, but it is not “rocket science”. The modelling exercise itself has highlighted a number of apparent anomalies in the data – such as figures out of kilter with regional neighbours’ data or results that suggest that wholesalers or retailers are trading at a loss. By calculating a range of useful regional averages and totals it informs the user about which countries and/or regions are most influential in determining the overall shape and size of the market. “Bad” data can be identified and eliminated from the model or replaced by better data. The model is therefore already a useful tool for comparing and checking the various estimates and hypotheses upon which it is based. Readers must remember that the model is based on data that has recognised flaws and assumptions that have known limitations. The purpose of such a model is, however, achieved if it succeeds in providing a credible estimate of the true size of the problem and in identifying the regional hot-spots and market relativities to the extent that the appropriate levels and types of counter-measures can be identified, implemented and, through monitoring changes in the data over time, evaluated. WHAT THE MODELS TELL US ABOUT THE GLOBAL COCAINE, OPIATES AND CANNABIS TRADESCocaine trade valued at over US$70 billion per yearSince fairly accurate estimates of actual cocaine user numbers and their average consumption per user are available for the Caribbean, Central, North and South America, Western & Central Europe and Oceania[2], these estimates were embedded in the model. Consumption in all other regions was based on known levels of coca and cocaine seizures in those regions. The more developed regions of Southern Africa, North America, Near & Middle East /SW Asia, Western & Central Europe and Oceania were recognised as having more effective drug seizure mechanisms than other regions, which were reflected in consumption patterns consistent with known research-based estimates. The Tables below present the results of the Cocaine model. Table 1 presents an analysis of levels of production in source countries and distribution to consumer countries. A total of 761 tons of cocaine equivalent is estimated to be sent from South American producers to consumers around the world, of which 652.6 tons survive the attentions of source-country police and customs agencies. These 652.6 tons of cocaine equivalent, at an average of $808 per Kilogram, provide a total of US$527 million producer income, entirely generated in the South American region. Table 2 shows that North America, West and Central Europe, and South America account for most of the demand for cocaine - results that are commensurate with other research findings[3]. With a global average transit/destination-country seizure rate of 23%[4], this quantum is reduced to just over 500 tons of cocaine equivalent, which, at a global average wholesale price of $37 per gram, produces $18.7 billion of income to wholesalers. Half of this income is generated in North America alone. Most of the remainder is generated in West and Central Europe. The 13.3 million cocaine users around the world collectively consume the 498 tons that reach them, at an average global usage rate of 37.4gms/user per year and an average global price of $141/gm, to produce $70.5 billion of income to retailers[5]. Of this income, $43 billion accrues to traders in the consumer region of North America and $17 billion to traders in West and Central Europe, while only just over $5 billion accrues to traders in the producer countries themselves. Table 1. Estimated Production in Source Regions - Cocaine
* (Kg Cocaine Equivalent) Table 2. Estimated Supply and Demand in Destination Regions - Cocaine
|
