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Measuring the benefits of drug law enforcement: The development of the Australian Federal Police’s Drug Harm Index 1 Robyn G. Attewell , Michael McFadden 2 (3rd Annual Conference of the International Society for the Study of Drug Policy, March 2009) 1 2 Internal Audit and Business Analysis, Australian Federal Police, Australia University of Queensland Social Research Centre, Australia (Word count 3531) Abstract This paper outlines the historical development of the Australian Federal Police (AFP) Drug Harm Index (DHI) and its application in the evaluation of strategic approaches to combating the importation of illicit drugs into Australia. The AFP DHI was developed to provide a single measure that encapsulates the potential value to the Australian community of drug seizures. The index represents the dollar value of harm that would have ensued had the drugs seized by the AFP reached the community. It is based on estimates of the social, health and financial cost of drug abuse. The DHI is a Key Performance Indicator used both internally and externally to report on drug trafficking investigations conducted by the AFP’s Border and International Network. The development and refinement of the index over almost a decade has been in response to the expanding literature on estimating the community cost of illicit drug use and the changes in drug types, drug production, availability and consumption. The most recent review proposes purity adjustments, precursor conversions and the inclusion of sedatives. The paper also outlines the future refinement and proposed broader application of the index. The DHI enables economic evaluations to be performed by providing the basis for the benefit estimate in a benefit cost analysis. It is estimated that, overall, the Australian community receives approximately $5 to $6 of benefit for every dollar invested in federal drug law enforcement. The performance of three AFP drug policy strategies (partnerships with other agencies, focus on serious and complex crime, and emphasis on intelligence) were evaluated and it is concluded that higher rates of economic return were achieved for all three. Background The impetus for the development of an index of performance regarding importation of illicit drugs was driven by the accountability reporting requirements resulting from the introduction of an outcomes and outputs framework by the Australian Government (Department of Finance and Administration, 2004). Each year, all Australian federal agencies are required to define and report on the outcomes expected to be achieved through their outputs. The DHI provided the AFP with a mechanism for translating data on total seizures of various drugs, into a single dollar figure of social impact which was simple to calculate and report. 1 The AFP provides a federal law enforcement capacity across a large range of national interests. It enforces a range of federal laws covering border crime (such as drug importation and people smuggling), economic crime (including fraud, money laundering, tax offences identity crime and corruption), and ‘high tech’ or cyber crime (including online child sex exploitation). Other AFP outputs include counter terrorism, aviation security, the protection of high office holders and an international deployment group which provides capacity building programs and offshore law enforcement initiatives in the Pacific region and elsewhere. It should be noted that general community policing responsibilities, including most drug-related offences, are provided by separate law enforcement agencies specific to each Australian State and Territory. The exception is the Australian Capital Territory (ACT) where such services are provided by the AFP through a contracted service with the ACT Government. Thus, the law enforcement activity referred to in this paper relates primarily to preventing the importation of large to medium size consignments of illicit drugs (or their precursors) into Australia, and not to domestic production, trafficking or possession of drugs. Details of the previous versions of the AFP DHI have been published (McFadden, Mwesigye and Williamson, 2002 and McFadden, 2006). This paper provides details of the most recent update of the index and provides an overview of its development. This paper also provide examples of benefit cost analysis based on the AFP DHI (McFadden, Mwesigye and Williamson, 2002 and McFadden, 2008). Methodology Drug Harm Index methodology The basic notion of the AFP DHI is that the primary benefit from drug seizures is that the drugs are prevented from entering the community. Thus the various costs that would have been associated with the use of these drugs are avoided. The AFP DHI is defined simply as the dollar estimate harm avoided per kilogram (c) multiplied by the seizure weight in kilograms (w). However, the relative harm differs for various classes of drugs, so this needs to be repeated for each drug type and then summed across the different drug classes. Mathematically, this can be written as DHI = Σi ciwi where i = 1 .. n, n is the number of different drug classes and ci and wi are the costs and seizure weights for drug class i. Both the complexity and evolution of the DHI are associated with deriving the most valid, accurate and up-to-date estimates of social cost per kilogram, and the choice of the most appropriate and comprehensive groupings of drugs to which these estimates can be applied. The AFP DHI was first derived in 2001, revised in 2003, an interim adjustment made in 2006, and another major revision is currently being finalised. AFP DHI 2001 version In the absence of a comprehensive estimate of the social cost of drug abuse in Australia, the original index was based on street price converted to cost per kilogram. McFadden, Mwesigye and Williamson (2002) reasoned that street price could be substituted for the economic value since estimates from separate studies in the United States differed by no more than 5%. Regionally based Australian street prices were 2 then obtained for heroin, cocaine, amphetamines and cannabis and used in the DHI formula after an adjustment for a difference in purity between drugs seized at the border and drugs on the street. AFP DHI 2003 version The primary improvement in 2003 was basing the index on Australian data. Full details are available in McFadden (2006). The harm value per kilogram was derived from dividing the total (annual) cost of harm estimated by Collins and Lapsley (2002) by an estimate of total (annual) consumption of drugs from Australian surveys (Hall 2000 and AIHW 1999). The Collins and Lapsley study was one of a series of studies commissioned by the Commonwealth Department of Health and Ageing to measure the social costs of drug abuse. Total social costs were obtained by summing separate component estimates of tangible and intangible costs (Figure 1). Crime was the largest cost component (Figure 1). This breakdown was important since these component costs were further disaggregated by drug type (opioids, stimulants and cannabis) by McFadden (2006). It should be noted that precursor chemical seizures were included in the stimulant group. Figure 1. Estimates of social harm attributable to illicit drug use divided into tangible and intangible costs in Australia, 1998, from Collins and Lapsley (2002). Note health costs include road crashes and resources denotes resources used in abusive consumption Pain & suffering Labour Loss of life costs Health care Resources Crime Tangible Intangible AFP DHI 2006 version An interim update occurred in 2006 due to peer review and literature review which suggested that there was an overestimate of the harm associated with heroin and an underestimate of harm associated with amphetamines. Hence the heroin and amphetamine weightings were adjusted within the constraint of keeping the total estimated harm consistent with Collins and Lapsley (2002). The effect is illustrated in Figure 2. AFP DHI 2009 review The AFP has commissioned a review of the DHI by the University of Queensland Social Research Centre (UQSRC). At the time of preparing this paper, the AFP had yet to endorse the recommendations contained in the UQSRC submission. 3 The main issues prompting the review are the availability of new source data (updating from 1998 to 2004) and the need to evaluate the impact of an additional drug type (sedatives) which was not previously addressed but which has become more prominent in recent AFP seizures. Despite an update in the Collins and Lapsley series (2008), Moore (2007) was used as the starting point for the index since separate specific estimates of social cost per kilogram for different drug types were provided and other limitations of Collins and Lapsley were addressed. The estimates were extrapolated to other drug types through using the relative harm ratings from a UK survey reported by the Advisory Council on the Misuse of Drugs (Commons Scientific and Technology Committee, 2006) (Table 1). Total consumption of the different drug types was calculated consistent with the previous version, by applying estimates of average consumption from the 2007 World Drug Report (UNODC, 2007) to estimates of the total number of users in Australia from the 2007 National Drug Strategy Household Survey (AIHW 2008) and the population census (ABS, 2008). In a final step, conversion ratios from precursor to final product were sourced from the UNODC (2006) and applied to amphetamine costs for ATS precursors ephedrine and pseudoephedrine (0.70) and to MDMA costs for MDMA precursors (0.10) according to the following formula: Cost per precursor kg = Cost per product kg x conversion rate Table 1. Expert panel ratings of overall harm (Commons Science and Technology Committee, 2006), inclusion in Moore (2007) and correspondence with AFP and Australian Bureau of Statistics (ABS) drug classifications. Overall Harm UK Drug of Interest Rating(0 = no risk, 3 = extreme) Corresponding Included in Corresponding AFP Moore (2007) Drug Group Analgesic ABS Drug Classification Heroin 2.77 Yes Heroin (Opioids) Cocaine 2.30 Yes Cocaine Stimulants Barbiturates 2.08 No Other Sedatives Street methadone 1.94 No Heroin (Opioids) Analgesic Ketamine 1.74 No Other Sedatives Benzodiazepines 1.70 No Other Sedatives Amphetamines 1.66 Yes Amphetamine Stimulants Buprenorphine 1.58 No Other Analgesic Cannabis 1.33 Yes Cannabis Stimulants 4-MTA 1.27 No Other Stimulants LSD 1.23 No Hallucinogen Stimulants Methylphenidate 1.18 No Other Stimulants Steroids 1.15 No Other Anabolic Agents GHB 1.12 No Other Sedatives Ecstasy 1.09 No MDMA Stimulants 4 Table 2. Aggregation up to the Final Social cost per kilogram by broad drug class from estimates for specific drugs with weighting by prevalence (AIHW, 2008). AFP DHI 2009 Final Social $ per kg AFP Drug Group $ per kg UK drugs of interest Stimulants Sedatives Cannabis 1,008,522 Heroin 1,008,522 2007 prevalence % 1,148,914 0.2 Street methadone 802,307 0.05 Buprenorphine 653,169 0.05 Heroin Opioids $ per kg Amphetamines 333,472 Amphetamines 333,472 2.3 Cocaine 461,369 Cocaine 461,369 1.6 Hallucinogen 246,421 LSD 246,421 0.6 MDMA 218,966 Ecstasy 218,966 3.5 Barbiturates 417,844 0.1 Ketamine 350,212 0.2 GHB 224,323 0.1 7,658 9.1 302,426 335,648 7,658 Sedatives 335,648 Cannabis 7,658 Cannabis Note: Street methadone and buprenorphine are combined in the AIHW survey (0.1%). They were allocated equal portions of that estimate of prevalence of recent us (0.05% each). Table 3. Overview of the development of the AFP DHI in the period 2001 to 2009 (noting that the 2009 update has not been implemented and remains a proposal at this time) Year of update/ review 2001 Year of primary source data 1999 2003 1998 2006 1998 2009 2004 Drug classes Heroin, Cocaine, Amphetamines, Cannabis Opioids, Amphetamines, Cannabis Opioids, Amphetamines, Cannabis, Precursors Opioids, Amphetamines, Cannabis, Precursors, Sedatives Purity adjustment Yes Precursor conversion No No No No Nominal Yes Yes Primary limitations Based on US research Based on 1998 source data; amphetamine harm underestimated Based on 1998 source data; excludes sedatives, only nominal inclusion of precursors Based on 2004 source data; cost estimates interpolated for certain drugs. Precursor conversion and purity estimates are incomplete. Potential impact on AFP DHI results Table 3 summarises the methodological development of the AFP DHI over the past decade. Figure 2 illustrates the change in relative weights for each primary drug class over the time. It should be noted that the most recent update has not yet been implemented and is a proposal at this stage. McFadden (2006) made detailed comparisons on the result of calculating the original AFP DHI (2001) and the AFP DHI (2003) on AFP seizures in the period 1987 to 2003. It was concluded that the results were comparable (in fact, only 3% different) and trends in annual values were similar. The potential impact is greater in the most recent review, but this is largely due to large GHB seizures in 2008. The total savings 5 to the community from AFP drug seizures during the period July 1999 to December 2008 were estimated to be $7.8 billion using AFP DHI 2006, but increase to $9.8 billion using the proposed AFP DHI 2009; a 27% increase. A breakdown of costs indicates that 15% of the increase is based on the inclusion of sedatives, 2% to CPI increases and 10% to changes in the cost estimates. Figure 2. Estimated social cost per kilogram of drugs of different types in successive versions of the AFP DHI ($AUD) (noting that the 2009 DHI remains a proposal at this time). $1,200,000 AUD $1,000,000 $800,000 DHI2003 $600,000 DHI2006 $400,000 DHI2009 $200,000 s ive Se da t is Pr ec ur so rs Ca nn ab ul an ts St im O pi o id s $0 Return on Investment Methodology Benefit-cost analysis provides a way of quantifying the economic performance of a program. Firstly, benefits and costs are estimated in dollar terms. Then they are quantitatively compared by calculating either a ratio (of benefit to cost) or a difference (benefit minus cost). The ratio is termed the Return on Investment (ROI). It is interpreted as the return achieved for each dollar spent. The difference is termed the net present value (NPV). It is the net return after costs are taken into account. The AFP has applied this type of analysis in evaluating drug law enforcement for the 1999-00 to 2000-01 period (McFadden, Mwesigye and Williamson, 2002) and a slightly more comprehensive version for the 2000-01 to 2004-05 period (McFadden, 2008). On the benefits side of the equation the AFP DHI 2001 and AFP DHI 2006 were used, respectively, in the two studies, to estimate the direct impact of making the seizures. In the latter study, a further deterrence benefit was included. This was estimated to be an additional 10% of the direct impact. On the costs side of the equation, the original analysis only included estimates of policing and border control costs incurred by the AFP and the Australian Customs and Border Protection Service (Customs), respectively. This was expanded to include legal costs (Director of Public Prosecutions costs and court costs) and prison costs (based on Productivity Commission estimates of costs per prisoner per day) (Figure 3). A crude estimate of variability in the final ROI figure was obtained through applying a notional variability factor to the components. This ranged from 5% for costs estimated directly to 20% for costs estimated from secondary sources. 6 Return on Investment Results Despite the additional sophistication of the second model and the slightly different time periods, the ROI estimates from both studies were similar; a $5.20 return for the first and $5.80 for the second. The second study was based on unit record data of 2,716 drug investigations in the five year period. Three specific strategies relevant to this period were able to be evaluated by recalculating the ROI after restricting the analysis to those cases impacted by the policy, such as those involving domestic and international partners, those concentrating on serious or complex crime and those involving intelligence. For example, 1,936 out of the 2,716 cases were referred to the AFP by Customs. These cases resulted in an ROI estimate of $6.00 compared to the overall estimate of $5.80. Figure 4 shows the full set of results. Each policy related estimate corresponded to a larger return than the overall estimate and thus provides an evidence base for recommending further implementation of the policies. This marked an important step forward in the use of the Drug Harm Index from being primarily a reporting and an accountability tool to an essential component of the AFP’s ability to monitor, adjust and refine specific operational strategies in drug law enforcement. The AFP is currently in the process of updating the records in the second study to include cases completed by December 2008. The number of drug investigations available for analysis is 3,641. Preliminary analysis using the AFP DHI 2006 indicates an overall ROI of 5.7 which is nearly the same as the earlier estimate. However, if the recommendations of the UQSRC report into the 2009 review of the DHI are accepted, the ROI increases to 6.8. The availability of more unit records will allow the AFP to conduct more sensitive and detailed analyses of the efficiency and effectiveness of its drug law enforcement strategies. It is again indicative of an approach of ongoing improvement and refinement to our techniques for assessing our own performance. A detailed report should be available later in the year. Figure 3. Estimates of cost and benefit of federal Australian drug law enforcement associated with illicit drug seizures in the period 2000-01 to 2004-05 (McFadden 2008) $2,000 Costs $1,750 AFP AUD $m $1,500 Customs $1,250 Legal $1,000 Prisons $750 $500 Benefits $250 Direct (AFP DHI) $0 Costs Benefits Deterrence 7 Figure 4. Estimates of return on investment in drug law enforcement associated with illicit drug seizures in the period 2000-01 to 2004-05 (McFadden 2008). Note that error bars provide some indication of variability in the component costs. The percentages shown are the proportion of the total investigations for each subset. However, the subsets are not mutually exclusive. Return on Investment (ROI) $0 $1 $2 $3 $4 $5 $6 $ 7 $ 8 $ 9 $ 10 $ 11 All AFP drug investigations Subset involving: Domestic partner 71% International partner 12% Serious & complex crime 14% Intelligence-led policing 19% Discussion The simplicity of the AFP DHI as an aggregation of social cost by seizure weight across different drug types belies the difficulty in producing a valid and accurate index. The estimation of social cost of illicit drugs is only truly applicable in the timeframe and region in which source data are collected. However, the expense of conducting such studies makes it unlikely they would ever be conducted annually. The same limitation applies to estimating consumption. In addition, consumption estimates are notoriously difficult and non-response and underestimation will always be a problem when posing questions about illegal activity. Further limitations of the methodology include the assumption that harm is constant by weight and over time. Adjustment for dependant users and market supply may address these issues. Some consideration should also be given to environmental costs such as those associated with the production of synthetic drugs as in the recent report on the economic cost of methamphetamine use (Nicosia, Liccardo Pacula, Kilmer, Lundberg and Chiesa, 2009). Finally, although some sensitivity analysis was conducted on the economic evaluation, the statistical precision of the estimation needs to be considered in more detail. Conclusion Despite the limitations resulting from the paucity of data and the complexity required to keep pace with the ever-changing illicit drug landscape, the DHI is based on sound methodology and has proven to have great utility as a performance measure within the AFP. Since it is based on the premise of estimating benefit through reduction in consumption, it is also applicable beyond law enforcement, for example in evaluation of drug treatment programs. Further development of this type is being addressed in Australia by a coalition of researchers, policy makers and policy implementers who have sought funding to develop a more broadly applicable Australian Drug Harm Index which will be suitable for use in both law enforcement and health fields. The AFP is a keen supporter of this and is one of the partners in the proposed project. It is expected that the collaboration would result in better access to contemporary research through pooling resources, higher level of scientific rigour in the methodology, and negotiation and agreement on the best approaches to the identified limitations. 8 Finally, an Australian DHI would result in uniformity of reporting to government which would be advantageous in the current period of economic restraint. References Australian Bureau of Statistics (2008) 3235.0 - Population by Age and Sex, Regions of Australia, 2007, Commonwealth of Australia. Australian Institute of Health and Welfare (1999) National Drug Strategy Household Survey 1998, Commonwealth of Australia. Australian Institute of Health and Welfare (2008) 2007 National Drug Strategy Household Survey: first results. Drug Statistics Series number 20, Cat. no. PHE 98, Canberra: AIHW. Collins D & Lapsley H (2002) Counting the Cost: Estimates of the Social Costs of Drug Abuse in Australia in 1998-9, Canberra: Commonwealth Department of Health and Ageing. Collins D & Lapsley H (2008) The costs of tobacco, alcohol and illicit drug abuse to Australian society in 2004/05, Commonwealth of Australia. Commons Science and Technology Committee (2006) Drug classification: making a hash of it? House of Commons. Department of Finance and Administration (2004) Structuring Outcomes and Outputs, Commonwealth of Australia. Hall W, Ross J, Lynskey M, Law M & Degenhardt L (2000) How many dependent heroin users are there in Australia? Monograph 44. Sydney: National Drug and Alcohol Research Centre. McFadden M (2006) The Australian Federal Police Drug Harm Index: A new methodology for quantifying success in combating drug use, Australian Journal of Public Administration, 65 (4), 68-81. McFadden M, Mwesigye S & Williamson G (2002) Pricing outputs: A case study in law enforcement, Australian Journal of Public Administration, 61 (4), 80-88. 9 McFadden M (submitted 2008) Measuring the Benefits of Drug Law Enforcement, International Journal of Public Sector Management. Moore T (2007) Working estimates of the social cost per gram and per user for cannabis, cocaine, opiates and amphetamines, Drug Policy Modelling Program Monograph 14, Turning Point. Nicosia N, Liccardo Pacula R, Kilmer B, Lundberg R and Chiesa J (2009) The economic cost of methamphetamine use in the United States, 2005, RAND Corporation. United Nations Office on Drugs and Crime (2006) Precursor control at a glance, United Nations Publication, RAS938. 10