The cost-effectiveness of prohibition


Back in April, the Transform Drug Policy Foundation published a paper comparing the cost effectiveness of the prohibition and the regulated legalization of drugs. I've only just got around to reading it, but I can confirm that it is an excellent piece of work.

The report finds that the total cost of prohibition of heroin and cocaine (the calculations focus solely on these two 'hard' drugs, since this is where the most extensive data is available) is £16.8bn per annum.

The benefits of prohibition depend on the extent to which prohibition decreases heroin and cocaine use – something for which there are no authoritative figures – and therefore reduces its health, social and economic costs. Depending on your assumptions here (the paper details four different scenarios), the estimated 'benefits' of prohibition range from £618m to –£309m.

This means that the total net cost of prohibition is somewhere between £16.2bn and £17.1bn.

The authors go on to compare this with a regulated legalization model under which heroin and cocaine would be freely available to buy from licensed pharmacies, with 10 percent of users (those with the most serious addiction problems) receiving diamorphine and cocaine by medical prescription. Depending on whether you assume that opiate and crack cocaine use would (a) go down by 50 percent, (b) stay the same, (c) go up by 50 percent, or (d) go up by 100 percent, the net cost of legalized heroin and cocaine under this model would be £3.2bn, £6bn, £8.8bn, or £11.6bn.

To put it another way, if opiate and crack use fell by 50 percent, we would save £14bn. If it didn't change, we would save £11bn. If it rose by 50 percent, we would save £8bn. And even if opiate and crack use doubled, we would still save £5bn, according to the authors' calculations. It is worth noting that this does not include any potential tax revenue that would be generated by drug legalization – something the authors believe would be small anyway, since drugs would be so much cheaper if the 'illegality premium' were removed.

This research deserves to be taken seriously. It's high time we had a mature and rational debate about drug legalization in the UK.

For more on the problems with prohition, I'd highly recommend the IEA's Prohibitions, edited by John Meadowcroft. The picture above is from the NORML Foundation.