This essay will critically evaluate how increased risk and increase price of the illicit drug and whether the price increases is harmful to consumers. Increased risk in this contest can be defined, as policies adopted by the authority to curtail the flow, cultivation and distribution of illicit drug or crops from which these drugs are derived.
The risk associated with illicit drug trade could be policies adopted by the authority to stop or curtail the supply chain of illicit drugs. These policies could be curtailment, police surveillance, international border post control and seizures. The price and risk model proposed by Peter Ruth and Mark Klienman, looked at the supply side of the drug market, which shows that when there is the high risk of control, it will affect the availability of drug and pricing. When the drug price is low, the availability of drug is high and these results to increased consumption. Increasing drug enforcement usually contributes to the level of drug demands, as when an addict or drug dealer is apprehended there is more added risk of such person be arrested or punished for drug handling and this will definitely discourage consumers. Secondly if the price increases as a result of the punitive measures to limit the flow of drugs the amount of illicit consumption will drop. This theory worked well in the case of Marijuana, when the price of marijuana rose constantly from 1974 to 1984, although it rises eight times in potency (THC content). In contrast to the 1984-1989 drug war, the price went up sharply with little changes
However, when the risk of obtaining illicit drug is high, the supply chain will be low, increasing the price of the drug and this leads to the lower availability of the drug, therefore, lowering consumption.
The price of illicit drugs is not regulated by the authority or enforceable through the legal system rather, the price is determined by the traffickers who are willing to continue and encourage the production of the crop (opium). If the Law enforcement agent intervenes by destroying the illicit crops farm, the producers will have to relocate to different location to continue production and change their mode of operation which may either be changes in concealment and tactics aimed at reducing risk irrespective of the challenges; as the cost of production is far lower than the product itself. Despite the risks associated with the production of illicit drugs, the traffickers will pay the farmers to move to another location to continue their farming as the farmers has no alternative means of livelihood; however the profit margin of the drug will drop, but will not affect the dealers as they will still be able to get their supply. The only result of that effect is that it will create scarcity, leading to a price increase. The price elasticity of illicit drug is vital, irrespective of the economic consequences of illicit drug and also in accessing the consequence to the consumers who abuse the drug, as it is the assumption is that, higher prices will reduce the level of drug consumption.
According to the United Nation report, after the plant disease that wiped out almost half of Afghanistan’s opium crop yields in 2010, the yield increased from 3600 tonnes in 2010, to 5800 tonnes in 2011, which brought price increase, as a result of the crop destruction, and in 2011, the opium global production rose to about 7000 tones, however; during the corresponding year the shift of illicit drug consumption reduced in Europe and North America, showing that the price of drugs could be determined by containment policy and risk but not by consumption level.
Increased seizures of illicit drugs in international and national borders are risk contributing factors. The European Monitoring Centre for Drug and Drug Addictions Reitex Surveillance network, statistics indicates that between 1995 and 2009, it is estimated that illicit drug including cannabis seized was lower than in previous year. Heroin seizure increased by 380% from as low as 5000, tones to 24000, tones in 2009, Cocaine from 2100kg, up to 121000kg, in 2006. The report stated that despite the increased seizures of illicit drug, the output either remain stable or increased. These did not show that the global supply of illicit drugs has not seen any level of reduction, indicating that the product supply has risen sharply contributing to price stability.
Punitive measures adopted to tackle illicit drug market have negative unintended consequences, such as opening other distributing networks, from the previously known ones, and consumers are quite willing to purchase at any given price. The United Nations drug policy in mid 1980’s moved away from drug use to fighting the growing trend of international trafficking of psychotropic substances, which as a result of the enforcement and high risk associated with the trade course prices to increase, as the drug market is not regulated by authority rather it is determined by the supply and demand. However, the effort by local and international law enforcement agents to tackle or reduce the output of illicit drugs, did not brought about any shift in the quantity of output as the amount of drugs seized in previous years are doubled in the next cropping season, meaning that, Law enforcement is not the best approach for drug control (Antonio Maria Costa, Executive Director of UNODC, 2007). Also the enforcement to eradicate the production of cocoa crops, will not stop the farmers, farming which is only the main source of their income, rather, the measures will displace the farmers to other areas, causing the farmers to shift their attention to other areas, which are seen as safe place, the “Balloon effect”, the traffickers, small sellers and farmers will move to continue their business. The farmers who need little or no technology and cost to start farming will use the opportunity created by law enforcement personnel to cultivate new crops in their new location, while the traffickers will look for new routes to transit their drugs, and the petty sellers to change the location of operation. However, the containment programme like interdiction and illicit drug enforcement laws will create artificial scarcity while the price of heroin, cocaine and marijuana will go up. The more risk involved to obtain and sell illicit drugs, the more prices will go up, consumers will have to pay a higher price to obtain the drug, the price rise will result in low consumption, and the less risk will result to more drugs available, cheaper price and pure quality, unlike where the price is high, traffickers and petty sellers will adulterate the drug to enable them maximize their profit and this will be harmful to consumers.
However, the positive effect of increasing price of illicit drug to consumers, for example in the USA, during 1980’s and early 1990’s, the consumption level was very low, as the youths were less likely to experiment using illicit drug, due to its high cost but during the 1980’s, people were more likely going to experiment using drug due to the low price, because it is readily affordable, as marijuana was very cheap and affordable, making it more likely that the consumption level will rise again as marijuana will be the choice drug of the youths and adults; in contrast to cocaine and heroin, which is a high class drug.
The experimental level was so low, because the price of class A drugs were high, making, researchers to conclude that, increase price, makes consumption level to be low, while the consumption level increases when the price is low, however, both the use of heroin and cocaine have the same pattern (NHSDA).
Moreover, increase price due to increase risk, might encourage consumers to look inward rather than outward in drug consumption. Consumers may have a rethink on the amount of drug they will be able to buy when price is high, hence the consumer, will put into consideration on the amount of money he will use for other household items, and may choose to purchase lower dose of illicit drug with the same amount of money, hence overspending on the cost of drug will affect other household expenses. The addict may also choose between going to prison and deciding to take drug treatment/rehabilitation in other to quite, or alternatively may switch over to other types of drug, which is cheaper than cocaine or heroin.
It could be said that demands for illicit drugs substances could be attributed to price elasticity, and other factors that could determine the price could be market factors other than price can contribute to drug demand shift. But the price may be associated with the relationship between the quantity and quality of drug demanded as shown in the drug market curve, as each action influences changes in price.(Market for drugs, National Research Council. 2010).
Moreover; it could be argued that, increased price of illicit drug as a result of increased risk, will reduce the competition and consumers will have a choice of using heroin, cocaine or switch to alternative cheaper drugs like cannabis, amphetamine-type stimulants, and other readily available synthetic substance, or alcohol which can be obtained at shop without restriction. The availability of alternative drugs as indicated above is a challenge on policies aimed at drug reduction, as most of these items like the cannabis can be cultivated indoors at any location regardless of climate and other factors that placed the production of opium or Cocoa leaf to a particular geographical area. The use of price and purity to determine the consumption level by addicts will not be realistic.
Furthermore, increased risk do not deter drug traffickers, rather it will increase the price of illicit drug, and the demand will then push the supply higher than usual causing the traffickers to make more profit. According to international Journal of Scientific research publications volume 4, issued 11 November 2014, estimated that the drug shipped across Europe by the traffickers to end users and around the globe has tripled across Europe, Davin (2000) suggested that cocaine traffic might shift its base to West African due to increased demand in Europe, as new routes are being sourced by the traffickers to emerging illicit drug market. The report by UNODC (2007), made a remark that even if the entire drug supply source are to be eliminated, either at the source or traffic routes, there will be a lot more drug addicts that will be looking for alternative way to satisfy their drug addiction (UNODC: World Drug Report 2007). However, this argument has also proved that increase risk will not only increase the price, but it will not deter a hardliner drug addict to quite its habit
According to Antonio (2008), the large consumption of Cocaine by the Europeans countries, which he estimated to be around 4 million people, using about 36 thousand kilograms of the trafficked drug each year (2006) made it difficult for a price shift, as the increase of risk will definitely affect the price. The traffickers will do all it can take to get the drugs to its final destination, as traffickers tend to move to different routes and dealers will move to different new areas to avoid law enforcement apprehension. These approaches of diffusion make traffickers stop at the different location due to perceived risks, prompting dealings to reduce on other known routes or corners.
Despite the fact that increase risk might affect the level of supply downwards, it will increase prices and profits, causing more agents, traffickers, drug mules and more farmers to take to the trade of illicit drug and crop market, however, the danger associated with taking part in the drug trade may cause uncertainty, thereby prompting the drug traders to switch to alternative method of lively hood that are legitimate and less risky.
Other factors that might increase the price of drugs is supply route intervention, which can increase the price of illicit drugs to end users, but this has prompted the drug users to make a choice of either to stop drug consumption or go through treatment, or choose to turn to crime to feed his drug habit (Canadian Government’s Commission of Inquiry 1973:321). The report also suggests that 50% of the drug addicts are highly placed professionals who have no problem in sourcing out money to fuel their drug habit, only few drug addicts about 47.6 % earn money from the illegal source. (Harlow 1991).
However; Drug enforcement policies are measured on the basis that buyers and sellers of illicit drug markets respond to propositions, and efforts to increase law enforcement against illicit drug suppliers will reduce the number of drugs supplied at and will have negative effect on the purity and quantity of the drug