Economists deliver the optimal strategy in the war against drugs
24 August 2005
The first economic model of how to efficiently channel funds into fighting illegal drug producers will be presented on Wednesday at UCL (University College London) at the 2005 World Congress of the Econometric Society.
Using a game theory model, Dr Hershel Grossman and Dr Daniel Mejía, of Brown University, USA, evaluated the effectiveness and efficiency of Plan Colombia, a Colombian initiative that was funded by the US government.
The initiative reduced cocaine exports from Colombia by 54 per cent from 532,000 kilograms to 237,000 kilograms between 2001 and 2003.
Though Plan Colombia has been successful, their calculations suggest that drug production and exports could have been further reduced by up to 16 per cent if an efficient allocation of subsidies between the two fronts of the war against drug producers had been implemented.
According to the authors, Plan Colombia focused on two fronts in the war against drugs: preventing the cultivation of crops that are the raw material for producing drugs; and stopping the production and exportation of drugs.
Dr Mejia says the model could be used to analyse the experience of other drug exporting countries, such as Afghanistan, where opium production has significantly increased in recent years.
The two economists modelled the optimal strategy that should be taken by the three key 'players': the Colombian government, the drug producers, and the interested outside group - in this case the US government.
The results show that it is five times more expensive to decrease drug exports by funding Colombian forces to try and stop production by using methods such as spraying crops with herbicides, intercepting shipments, or destroying cocaine production workshops. Instead, it's cheaper to focus on controlling the arable land the crops are grown on.
"Reducing the export of one kilogram of cocaine by funding the Colombian armed forces to regain the control of arable land cost on average $800, compared with eradication and interdiction, which costs $3700," says Dr Mejia.
"Funds appear to have been disproportionately spent on the eradication and interdiction front of the war. Instead, more of the$ 2 billion the US government spent on the initiative throughout the duration of Plan Colombia should have been on controlling the arable land where illegal crops can be grown."
Dr Daniel Mejía of Brown University will present the paper, 'The war against drug producers' on Wednesday 24 August at 11.15 BST
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About the World Congress of the Econometrics Society
The Econometric Society is the leading international learned society in the field of economics, and its quinquennial world congress is recognised as the most prestigious in economics. UCL is hosting the ninth Econometric Society World Congress from 18-24 August 2005, which is the first time the Congress has been held in London and has not been hosted by a UK institute for 35 years. A full copy of the programme can be accessed on the 2005 Econometric Society World Congress website: http://www.eswc2005.com/
About the UCL Department of Economics
The Chair of Political Economy at UCL was created in 1827 in memory of David Ricardo - establishing the first Department of Economics in England. The modern department has an outstanding international reputation in key areas of current research including applied theory, microeconometrics, game theory, labour economics, development economics, macroeconomics, industrial economics and environmental economics. It is one of only four economics departments in the UK to achieve the 'double 5*' rating in the two most recent (2001) national Research Assessment Exercises (RAE).