Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized INNOCENT BYSTANDERS INNOCENT Philip Keefer and Norman Loayza, Editors andNormanLoayza, Philip Keefer Developing Countries and the War onDrugs War Countriesandthe Developing INNOCENT BYSTANDERS INNOCENT BYSTANDERS Developing Countries and the War on Drugs PHILIP KEEFER AND NORMAN LOAYZA Editors A COPUBLICATION OF PALGRAVE MACMILLAN AND THE WORLD BANK © 2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: [email protected] All rights reserved 1 2 3 4 13 12 11 10 A copublication of The World Bank and Palgrave Macmillan. PALGRAVE MACMILLAN Palgrave Macmillan in the United Kingdom is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire, RG21 6XS. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Offi ce of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights @worldbank.org. ISBN: 978-0-8213-8034-5 (softcover) ISBN: 978-0-8213-8036-9 (hardcover) DOI: 10.1596/978-0-8213-8034-5 (softcover) DOI: 10.1596/978-0-8213-8036-9 (hardcover) eISBN: 978-0-8213-8035-2 Library of Congress Cataloging-in-Publication Data has been applied for. Printed in the United States. Contents Foreword by Fernando Henrique Cardoso xi About the Editors and Authors xv Abbreviations xxi Introduction 1 Philip Keefer and Norman Loayza 1 Drug Prohibition and Developing Countries: Uncertain Benefi ts, Certain Costs 9 Philip Keefer, Norman Loayza, and Rodrigo R. Soares 2 The Historical Foundations of the Narcotic Drug Control Regime 61 Julia Buxton 3 Can Production and Traffi cking of Illicit Drugs Be Reduced or Only Shifted? 95 Peter Reuter 4 Evaluating Plan Colombia 135 Daniel Mejía 5 Evo, Pablo, Tony, Diego, and Sonny: General Equilibrium Analysis of the Market for Illegal Drugs 165 Rómulo A. Chumacero v vi Contents 6 Competitive Advantages in the Production and Traffi cking of Coca-Cocaine and Opium-Heroin in Afghanistan and the Andean Countries 195 Francisco E. Thoumi 7 Cocaine Production and Traffi cking: What Do We Know? 253 Daniel Mejía and Carlos Esteban Posada 8 Responding to the Challenge of Afghanistan’s Opium Economy: Development Lessons and Policy Implications 301 William A. Byrd Index 341 Box 8.1. National Drug Control Strategy—Objective, Priorities, Pillars 320 Figures 1.1. Number of Adults Incarcerated for Drug Law Violations in the United States, 1972–2002 14 1.2. (a) Potential Opium Production, 1990–2007; (b) Potential Cocaine Production, 1990–2007 30 1.3. (a) Retail Cocaine Price, 1990–2006; (b) Retail Opiate Price, 1990–2006 32 1.4. Real Prices for Cocaine, Heroin, and Marijuana, 1975–2003 33 1.5. Annual Prevalence of Marijuana, Cocaine, and Heroin Use among U.S. High School Seniors, 1975–2008 33 1.6. Rate of U.S. Hospital Emergency Room Mentions for Marijuana, Cocaine, and Heroin, 1978–2002 per 100,000 Population 34 1.7. (a) Cocaine Retail Price and GDP per capita; (b) Heroin Retail Price and GDP per capita, 1997–2005 38 Contents vii 1.8. (a) Prevalence of Cocaine Consumption and GDP per Capita in Population Age 15–64; (b) Prevalence of Heroin Consumption and GDP per Capita in Population Age 15–64, 1997–2005 43 4.1. Trends in Cocaine Use in Consumer Countries, 1999–2006 137 4.2. Trends in Cocaine Prices, 1999–2006 138 4.3. Number of Hectares Cultivated with Coca Crops and Potential Cocaine Production in Colombia, 1999–2006 139 4.4. Productivity of Coca per Hectare per Year in Colombia, 1999–2006 139 4.5. Potential Cocaine Production in Bolivia, Colombia, and Peru, 1999–2006 140 4.6. Interdiction in Producer and Transit Countries, Since 2000 141 4.7. Amount of Cocaine Interdicted and Disrupted from Flows toward the United States, 2000–06 142 4.8. Estimated Quantity of Export-Quality Cocaine Flowing toward the United States, 2000–06 143 4.9. The Model in a Nutshell 148 5.1. Fitted Probabilities and Expenditures 178 7.1. Estimates of Coca Bush Cultivation in Bolivia, Colombia, and Peru, 1987–2005 259 7.2. Estimates of Coca Bush Cultivation in Bolivia, Colombia, and Peru by UNODC and ONDCP, 2000–08 260 7.3. UNODC and ONDCP Estimates of Coca Bush Cultivation in Colombia, 1999–2005 262 7.4. Potential Dried Coca Leaf Production and Prices in Bolivia and Peru, 1990–2007 263 7.5. Coca Base Production and Prices in Colombia, 2000–07 264 7.6. UNODC and ONDCP Estimates of Potential Cocaine Production in Bolivia, Colombia, and Peru, 1996–2006 266 7.7. Average Expected Purity of Powder Cocaine in the United States, 1981–2007 268 viii Contents 7.8. Average Purity of Powder Cocaine in the United States, 1981–2007 269 7.9. Percentage of U. S. Population Age 12 and Older Reporting Use of Cocaine, 1985–2007 271 7.10. Cocaine Use in the Past 30 Days among 12th Graders in the United States, 1991–2006 271 7.11. Average Price of 1 Gram of Pure Powder Cocaine in the United States, 1981–2007 272 7.12. Price of Cocaine in the United States and Europe at Street Purity, 1990–2007 273 7.13. The Market for Cocaine (1980–2008) and the Stability of Cocaine Supply (2000–08) 274 7.14. Coca Bush Cultivation and Eradication in Bolivia, Colombia, and Peru, 1993–2008 281 7.15. Seizures of Coca Base and Cocaine in Bolivia and Colombia, 1997–2007 283 7.16. Destroyed Illegal Cocaine Laboratories in Bolivia and Colombia, 1997–2007 284 7.17. Seizures of Cocaine in the United States, 1989–2007 285 8.1. Dry Opium Prices in Kandahar and Nangarhar, 1997–2006 309 8.2. Opium Poppy Cultivation in Selected Provinces, 2003–07 309 8.3. The Vicious Circle of the Drug Industry in Afghanistan 318 8.4. Consolidation of the Drug Industry in Afghanistan 319 Tables 1.1. Price Structure of 1 Kilo of Pure Cocaine and 1 Kilo of Pure Heroin, Selected Countries and Cities, Mid-1990s and 2000 18 1.2. Cross-Country Evidence on the Determinants of Retail Cocaine Prices, 1997–2005 36 1.3. Cross-Country Evidence on the Determinants of Retail Heroin Prices, 1997–2005 37 Contents ix 1.4. Cross-Country Evidence on the Prevalence of Cocaine Consumption in Population Age 15–64, 1997–2005 44 1.5. Cross-Country Evidence on the Prevalence of Heroin Consumption in Population Age 15–64, 1997–2005 45 2.1. Pre–World War II Drug Conventions 74 2.2. Post–World War II Drug Conventions 82 2.3. The International Drug Control Apparatus 89 3.1. Estimated Prevalence Estimates of Opiate Abuse Worldwide, 2007 97 3.2. Estimated Prevalence of Cocaine Use Worldwide, 2007 98 3.3. Production of Dry Leaf Coca in Bolivia, Colombia, and Peru, Selected Years 1990–2007 99 3.4. Global Production of Opium, Selected Years 1990–2006 100 3.5. Highest-Ranking Countries for Seizures of Cocaine and Opiates, 2006 102 3.6. Price and Purity Estimates for 1 Kilogram of Cocaine and Heroin, 2007 105 3.7. World Trade in Selected Agricultural and Industrial Commodities, 1999 117 4.1. U.S. Assistance for Plan Colombia by Program Objective 136 5.1. Functional Forms 176 5.2. Parameter Values 177 5.3. Probabilities 178 5.4. The Eff ects of Increased Risks 181 5.5. The Eff ects of Stiff er Penalties 183 5.6. The Eff ects of Legalization 185 A5.1. Distribution of the Expenditures of the U.S. Government on Control of Marijuana, Cocaine, Crack, Stimulants, LSD, PCP, and Heroin, 1986–2003 189 A5.2. Relative Prices, 1981–98 190 A5.3. Risks 191 x Contents 6.1.