NETHERLANDS: Measuring Illegal Drugs

Introduction

In the Netherlands separate estimates are made for the production of drugs (cannabis and XTC/amphetamines) and the trafficking of drugs for which no production in the Netherlands takes place (heroin and cocaine).

For cannabis, the value of exports is 3350 million euros in 2015; for XTC/amphetamine the value of exports is 175 million euros; and the margin for the international trade in heroin and cocaine has a value of 505 million euros. 

Scope, Methodology, Compilation Practices, and Data Sources

In the estimation methods, a combination of demand and supply-side based approaches is used. Domestic consumption is estimated by combining the number of users, the average quantity used and street price. The method distinguishes between type of drug (heroin/cocaine, cannabis, XTC/amphetamine), and in case of heroin/cocaine type of user (heavy addicts that have a known long addiction and recreational users). For imports, exports and domestic consumption of hard drugs (heroin/cocaine), the price information is derived from the World Drug Report (UNODC). In case of cannabis and XTC, price information is obtained from the National Drugs Monitor by the Trimbos Institute.

Cannabis

Total volume of domestic use of cannabis is estimated at 58 to 143 tons per year (KLPD, 2012, Nationaal dreigingsbeeld 2012. Georganiseerde Criminaliteit, Zoetermeer, October 2012.). For the national accounts estimate of consumption of households for 2015 a volume of 100 tons is assumed. Of this consumed volume 90 per cent is domestically produced ‘nederwiet’(KLPD, 2012). Production is estimated using seizure rates based on the above mentioned report of the KLPD 2012. Operators of the electricity network estimate that on an annual basis there are 25.000 active plantations. Annually 5000 plantations are dismantled giving a seizure rate of 20 per cent. The seizure rate for imports is assumed to be also 20 per cent.

Next to that the KLPD-report states that the average revenue per crop per plant amounts to 28,2 grams dry cannabis and a plant allows 4 crops per year. The price for cannabis is set equal to the most used variety (nederwiet), which is annually published in the National Drugs Monitor (Trimbos). The amount of seizures is published annually by the UN. A three-year moving average is used in order to dampen incidental fluctuations in seizures. Based on the above information estimates for output and use of cannabis are made.

In order to estimate total domestic production, the volume of confiscated production capacity is estimated based on the number of confiscated plants, the crop per plant and the number of crops. Domestic production of cannabis is estimated using the confiscated capacity and the above mentioned seizure rate. As confiscation takes place in the course of the year total production half of the confiscated capacity is assumed to be sold prior to confiscation.

In order to estimate sales, output has to be reduced by the actual confiscated cannabis. As it in unknown in what stage of the growth process the cannabis plants are when they are confiscated, it is assumed that half of them concerned market-ready cannabis.

The share of costs of production (both intermediate consumption and fixed capital formation) is mainly based on expert estimates as no data sources are available. For cannabis a distinction is made between production of cannabis and retail trade of cannabis through coffee shops. Costs of trade via coffee shops is set at 50 per cent of the trade margin. For other trade channels this percentage is set at 30 per cent. For re-exports a rate of 10 per cent is applied. Finally costs for production are estimated to be 40 per cent of the cost price. The cost price of production is set at half the street price. Total costs for cannabis are estimated at 1668 million euros, of which 1137 is allocated to intermediate consumption and 531 million euros to GFCF.

Heroin and cocaine

For the estimation of transactions concerning heroin and cocaine several data sources are used. The National Drug Monitor from Trimbos Institute provides information on the number of users of heroin/cocaine distinguished between heavy addicts that have a known long addiction and recreational users. For imports, exports and domestic consumption of hard drugs, price information is gathered from the World Drug Report (UNODC). The confiscated amount of hard drugs is based on data from the World Drug report of the UN. A three-year moving average is used in the estimation procedure. As the KLPD report (see above) does not provide information of seizure rates for heroin/cocaine this rate is derived from information from a web article from Dutch broadcasting (NOS) based in information from criminal circles and is estimated at 20 per cent. Based on the above information estimates are made. The number of heavy addicts amounts to 14.386 and the number of recreational users to 49.803. Heavy addicts need 0.5 grams of heroin per day while recreational users use 1 gram per week.

This leads to a total estimates use of 5.22 million grams.

The volume of imports is estimated using confiscated drugs in combination with a seizure rate of 20 per cent.

Exports are estimated as a residual item of imports and consumption of households. For the latter an adjustment is made because consumed heroin/ cocaine is less concentrated then the imported drugs in order to reduce the imported cubicle volumes (factor: 0.59). Further it is assumed that half of the exported heroin/cocaine concerns (quasi) transit trade and is no part of the Dutch economy.

The value of output is estimated as a residual item of the value of exports, consumption of households and imports Intermediate consumption is estimated as 10 per cent of trade margins, separately for domestic consumption and exports and amounts 44 million euros, leaving a value added of 460 million euros.

XTC / amphetamines

Production is estimated using confiscated XTC and a seizure rate of 20 per cent. As the Netherlands is known as the major producer of XTC imports are expected to be zero. According to de National Drugs Monitor 2015 the number of users amounts 0,7 per cent of the population between 15 and 65 years of age. The users of amphetamines is estimated to be 0.5 per cent of this population. It is assumed that the users of XTC and amphetamines show an overlap of 60 per cent. The average number of pills during a night is 1.3. The street price is published annually in the National Drug Monitor.

De production costs of one XTC/ amphetamine pill is estimated at 0.15 euro based on information from a web article of the NOS. Intermediate consumption is estimated at 15 million euro (100.1 * 0.15) leaving 160 million euros for value added.

Linkages Across Statistical Domains

These estimates are compiled by National Accounts statisticians and shared with BoP. There are no differences between the imports/exports according to NA and BoP, this is including illegal activities.

Current Challenges and Conclusions

The biggest challenge is the collection of data, as the illegal activities cannot be directly observed by the statistician. Some of the assumptions made are based on older reports; preferably they are updated every year.

Annexes

For detailed calculations reference is made to the GNI inventory (for the revision year 2015) page 343 and onward:

https://www.cbs.nl/nl-nl/publicatie/2019/07/bruto-nationaal-inkomen-methodologie-volgens-esa-2010