Media/News > Fact Research Guide > Size of the drug market

Size of the drug market

Global estimate
Value of the UK drug market

Estimating the size and value of illegal drug markets has important implications for policy making, providing an indication of the scale of potential problems and consequent justification for enforcement and other budget allocations.

Unfortunately, attempts to estimate the value of any illegal market are highly problematic: illegal drug producers and dealers do their best to remain hidden, do not list themselves on stock exchanges, file tax returns or publicly audit their accounts. Much of the data used to estimate the value of the market are themselves estimates based upon assumptions, or incomplete and unreliable data.

The unreliable nature of much of the data used calls into question the value of such statistics – that are at best, guesstimates with wide error margins. It also means that there is a large difference between the upper and lower estimates. This inconvenience has lead to a temptation by some to choose an arbitrary median figure, or to take the highest estimate and qualify it with 'up to'.

Global estimate

The United Nations Office on Drugs and Crime (UNODC) has made several attempts to put a figure on the value of the global drug market. In its 1997 World Drugs Report the UNODC estimated the value of the market at US$400bn.^[1] This estimate has been widely used by the media and law enforcement agencies but has come under criticism from some experts as being far too high.

The economist Peter Reuter has suggested that an inflated figure has resulted from a confusion between turnover – which may run into hundreds of billions – and international trade which is far lower, because most of the added value is within the borders of consumer countries.^[2] An international trade worth 400 billion would put drugs alongside arms and oil amongst the world's biggest traded good. The more likely trade figure is nearer (and probably under) 100 billion – more comparable with the global trade in textiles. The key here is to be clear what is being talked about: turnover or trade. Profits are a different question again.

In a seminar paper by Francisco E. Thoumi, published by the Transnational Institute, Thoumi says that an unpublished study by Peter Reuter for the Financial Action Task Force (FATF) resulted in an estimated range between US$45bn and US$280bn.^[3] Thoumi says that this study was not published because some member countries wanted a higher figure.

In the 2005 World Drugs Report the UNODC put the value at US$13bn at production level, $94bn at wholesale level and US$332bn based upon retail prices.^[4] It also acknowledged that the US$400bn figure had been criticised by some experts as being too high [p124].

The International Narcotics Control Strategy Report (INCSR), a report produced the United States Department of State which describes the efforts of key countries to attack all aspects of the international drug trade, has also commented on the value of the global drug market. The 2005 INCRS describes the US$400bn estimate as an "educated guess" but that "estimates of hundreds of millions of dollar are not out of order".^[5] This huge difference between estimates shows the difficulty in valuing an illegal market and appears to be an acknowledgement that US$400bn figure is at the higher end of estimates.

Value of the UK drug market

An independent report produced for the Home Office by Bramley-Harker estimated it to be worth £6613.5m in 1998 (although it qualifies this by saying that it likely to be an over estimate).^[6]

This report follows a "bottom-up" approach, identifying the prevalence of different types of users (eg regular and occasional users) and their consumption characteristics to calculate estimates of the value and size of the market. The drugs included were Amphetamines, Cannabis, Cocaine, Crack, Ecstasy and Heroin. This work is the most thorough to date and builds on similar work undertaken by the Office for National Statistics published in 1998, which estimated the value of the market in 1996 to be upwards of £4.2bn.

The Independent Drug Monitoring Unit (IDMU) has produced a report Taxing the UK Drug Market which estimated the value of the drug market between £2147.7m and £6546.0m.^[7] This report used data from the Bramley-Harker report and the British Crime Survey as well as data it collects from it's own surveys. Unlike Bramley-Harker, the IDMU also includes the LSD market in its total estimate.

An online report published by the Home Office in 2006 has estimated the UK drugs market to be worth £4.645bn in 2003/4^[8], with a margin of error of +/- £1.154bn. This estimate was built on the work of previous studies, particularly the Bramley-Harker report. The lower figure compared to Bramley-Harker estimate has been attributed in a fall in the price of drugs since 1998 and differences in methodology and sources of evidence.