Chapter 1: The ramifications of the illicit drug market (EU Drug Markets Report)

Chapter 1: The ramifications of the illicit drug market 

Figure 1.1 Estimated minimum retail value of the illicit market for the main drugs in the EU 

Pie chart showing EU illicit drug market shares

Note: Percentages do not add to 100 % due to rounding. Source: EMCDDA. 

Illicit drugs are big business. The hidden nature of the illicit drugs business makes it difficult to estimate the amount of money it generates, but the United Nations Office on Drugs and Crime (UNODC) has estimated that illegal drugs account for about 20 % (17–25 %) of global crime proceeds and are equivalent to about 0.6–0.9 % of global gross domestic product (GDP) (UNODC, 2011a). However, it is important to bear in mind that such figures are not precise estimates but rather an indication of orders of magnitude. To put the size of the illicit drug market into the context of the wider economy in the European Union (EU), it has been estimated that illegal drug production and trafficking in the eight Member States for which data are available (1) represented between 0.1 % and 0.6 % of the national GDP in the period 2006–13 (Warmark Magnusson, 2008; ISTAT, 2014).

In the EU, the retail market for illicit drugs is estimated to have been worth at least EUR 24 billion in 2013 (range EUR 21 billion to EUR 31 billion); the cannabis market is the largest, accounting for about 38 % of the total, followed by the heroin (28 %) and cocaine (24 %) markets (Figure 1.1). These new estimates are based on very limited data, with many gaps, which has necessitated some very broad assumptions. Hence, these figures must be viewed as initial minimum estimates that will need to be revised in the future as the data underpinning them is improved (see box on p. 24). The estimation process has built on previous work in the area (Trautmann et al., 2013) and uses the demand-side estimation approach described in detail in the accompanying technical report (EMCDDA, 2016a). Beyond estimates of the size of the retail market there is a need to develop our understanding of the economics of other aspects of the drug market, such as production and wholesale supply activities, to allow a fuller estimation of the costs and revenue generated at other stages of the drug market and inform broader estimates of illicit financial flows relating to the illicit drug market in the future.

Figure 1.2 

The widespread ramifications of illicit drug markets in society  

Source: EMCDDA. 

The impact that drug markets have on societies is not restricted to their financial weight. As well as generating vast sums of money, as was highlighted in the previous edition of this report, drug markets are increasingly diversified and globalised and interact more and more with other licit and illicit markets and activities. Thus, drug production and supply, and the individuals or groups engaged in these activities, cannot be considered in isolation: they have connections and impacts throughout the criminal sphere, the licit economy, government institutions and society more generally.

These areas of interaction and overlap can be considered within four broad groupings, as illustrated in Figure 1.2, although the distinctions between these groupings are blurred. These broad areas, the most important of which are discussed in more detail below, are:

1.    interference in or involvement with legitimate businesses and the wider economy;

2.    involvement in other types of criminal activities, e.g. human trafficking and exploitation, and terrorism;

3.    strain on and corruption of government institutions;

4.    impacts on society in general.


The challenge of estimating the size of the illicit drug market

The illicit nature of drug supply means that the market is hidden and collecting data on the nature and extent of the phenomenon is very difficult; for this reason there are important gaps in our knowledge of key aspects. This hampers the estimation of the size of the market and any such estimates have a number of important limitations and often vary considerably as a result of the use of different data sources and the assumptions made to fill in gaps.

For this report our approach has been to use, wherever possible, data sources that are collected routinely and reported to the EMCDDA by most EU countries to enhance consistency and facilitate on-going development. Methods of imputation for missing data and all assumptions made, together with the limitations of the current estimates, have been documented in detail in the technical report (EMCDDA, 2016a).

The estimation process essentially involves taking estimates of the number of people who use each drug in a year for each country in the EU and then multiplies these by an estimate of the average amount used in a year and the average retail price in each country. The national estimates are then summed to provide a European total.

Key limitations to be borne in mind when considering the estimates presented here are:

  • Undercoverage. General population surveys of adults (aged 15–64 years) have formed the basis of most of the estimates of numbers of users, but it is known that some groups of users, particularly some marginalised groups, may be under-represented in these surveys. While we have attempted to use estimates of problem users and treatment data to identify use by some of these groups, there are still likely to be gaps in coverage. 
  • Under-reporting of use. Estimates of numbers of users, as well as of frequency of use and amounts consumed, are based on self-reports and it is known that, particularly with respect to stigmatised behaviours, people will often underestimate or under-report use. We have not made any adjustment for this because at present, we have no robust data on which to base any adjustment and the extent of under-reporting is likely to vary considerably between countries.
  • Knowledge gaps. There are significant gaps in the availability of the basic information that we need to estimate market size. In particular, we have very little information about the amounts of drugs used by different groups of users (such as occasional versus frequent users), the relative use of different forms of drugs (e.g. cannabis resin versus herb or ecstasy powder versus tablets) or quantities consumed in different countries, although we do know that there are large differences between countries. Similarly, information on the prices paid is limited. In such areas, we have had to make assumptions and use the best data available.

In the light of the above limitations and others described in the accompanying technical report, it is clear that the estimates presented in this report must be interpreted with caution and must be seen as minimum estimates. There is a need to develop a programme of work to improve the basic data on which such estimates are based to improve future estimates.

Short title: 
Chapter 1

(1) Estimates are publicly available for the Czech Republic (2010), France (2013), Germany (2011), Italy (2011), the Netherlands (2010), Spain (2010), Sweden (2006) and the United Kingdom (2009). The combined GDP of these countries accounts for over 80 % of the total EU-28 GDP.