# Presentation: 713776

## Economics of Global Tobacco Control

- Kenneth E. Warner
- University of Michigan School of Public Health
*Presented to the Interagency Committee on Smoking and Health, “Addressing the Global Tobacco Epidemic”*
*Washington, April 13, 2005*

## Principal source: World Bank report, Curbing the Epidemic: Governments and the Economics of Tobacco Control (1999)

## Disclosure

- Consultant to World Bank on work that led to publication of *Curbing the Epidemic *(1997-99)
- World Bank’s representative to 4 of the 6 negotiating sessions on the Framework Convention on Tobacco Control (2001-02)

## Coverage

- 1.  Role of tobacco in global economy

## Coverage

- 1.  Role of tobacco in global economy
- 2.  Role of tobacco in individual countries

## Coverage

- 1.  Role of tobacco in global economy
- 2.  Role of tobacco in individual countries
- 3.  Global “net value” of tobacco

## Coverage

- 1.  Role of tobacco in global economy
- 2.  Role of tobacco in individual countries
- 3   Global “net value” of tobacco
- 4.  Methods of reducing tobacco consumption
- 	a.  Supply restrictions
- 	b.  Demand restrictions

## Coverage

- 1.  Role of tobacco in global economy
- 2.  Role of tobacco in individual countries
- 3   Global “net value” of tobacco
- 4.  Methods of reducing tobacco consumption
- 	a.  Supply restrictions
- 	b.  Demand restrictions
- 5.  Projected toll of tobacco, with and without (additional) tobacco control

## Role of tobacco in global economy

- ● ≈ 33 million people in tobacco farming worldwide
*-  Includes seasonal workers, part-time workers, family members of farmers, & farmers who grow other crops*
*-   Of total, approx. 15 million in China*

## Role of tobacco in global economy

- ● ≈ 33 million people in tobacco farming worldwide
*-  Includes seasonal workers, part-time workers, family members of farmers, & farmers who grow other crops*
*-  Of total, approx. 15 million in China*
- ● In most countries, tobacco manufacturing < 1% of total manufacturing employment

## Role of tobacco in global economy

- ● ≈ 33 million people in tobacco farming worldwide
*-  Includes seasonal workers, part-time workers, family members of farmers, & farmers who grow other crops*
*-  Of total, approx. 15 million in China*
- ● In most countries, tobacco manufacturing < 1% of total manufacturing employment
- ● Importance of distinguishing economic _*presence of*_ tobacco from _*dependence on*_ tobacco *[Industry’s economic argument]*

## Role of tobacco in individual countries: Leading tobacco leaf producers [thousands of metric tons, 2001]

| China | 2,661 |
| --- | --- |
| India | 701 |
| Brazil | 568 |
| USA | 450 |
| Turkey | 260 |
| Zimbabwe | 175 |

## Leading tobacco leaf exporters [thousands of metric tons, 1999]

| Brazil | 343 |
| --- | --- |
| USA | 191 |
| Zimbabwe | 164 |
| China | 132 |
| Turkey | 129 |
| India | 120 |

## Leading cigarette manufacturers [billions of cigarettes]

| China | 1,749 |
| --- | --- |
| USA | 717 |
| Russian Fed. | 293 |
| Japan | 265 |
| Germany | 206 |
| Indonesia | 190 |

## Leading cigarette exporters [billions of cigarettes]

| USA | 148 |
| --- | --- |
| Turkey | 111 |
| Netherlands | 102 |
| Germany | 91 |
| Singapore | 59 |
| China | 42 |

## Role of tobacco in individual countries: Burden of declining consumption/production

- Most countries are net (or full) importers of tobacco
*Reductions in tobacco spending ***aid*** their economies*
- Two countries are especially dependent on tobacco leaf exports: Zimbabwe and Malawi

## Global “net value” of tobacco

-    Net drain on world economy, reflecting health and productivity costs
-    Recall lack of net contribution of tobacco *per se* (i.e., substitutes would produce comparable economic value)

## Real cost of reductionin tobacco economy

- Industry-projected job losses not real *[gross vs. net job loss]*
- Real cost = transition costs

## Methods of reducingtobacco consumption

- Supply restrictions
- Demand restrictions

## Supply restrictions

- Prohibition of production and sale of tobacco products *[Bhutan]*
- Restriction on sales to youth
- Crop substitution and diversification
- Price support/subsidy/allotment policies
- Restrictions on international trade
*Combating smuggling*

## Demand restrictions

- Cigarette taxation
- Consumer information *[e.g., school health education; media anti-smoking campaigns]*
- Advertising/promotion restrictions/bans
- Restrictions on smoking in public places and workplaces

## Cigarette taxation

-      Tax increases → price increases → demand reduction
-      10% increase in price →
- 	● *4% decrease in quantity demanded in developed countries*
*	**● **8% decrease in quantity demanded in developing countries*

## Slide 23

**Notes:**
This graph can be replicated for virtually any country for which the data are available.  It will show the same mirror image seen here.

## Cigarette taxation (cont’d.)

-    Sustained 10% increase in real price of cigarettes in all regions of the world would cause...
- 	*40 million smokers to quit (and others not to start)*
*	**10 million premature deaths avoided*
*	**	*9 million of them in developing 	countries!

## Cigarette taxation (cont’d.)

- Increasing cigarette taxes inevitably leads to revenue increases, generally large

## Slide 26

**Notes:**
This graph can be replicated for virtually any country for which the data are available.  It will show the same mirror image seen here.

## Consumer information

- School health education
- 	*Evidence indicates little effect unless best-practice programs implemented, with “boosters” throughout secondary school **[Lantz et al. 2000]*
- Antismoking media campaigns
*Large, sustained, professionally-designed campaigns effective **[e.g., “truth” **(Farrelly et al. 2005)**]*

## Advertising/promotion restrictions/bans

- Restrictions/partial bans
- 	*Limited impact; industry substitutes alternative venues for advertising, novel promotional techniques*
- Complete ban on all forms of advertising and promotion
- 	*Approx. 6% decrease in demand for cigarettes** **[Saffer and Chaloupka 2000]*

## Restrictions on smoking in public places and workplaces

- 	Associated with decreases in smoking
-    Smoke-free workplaces estimated to be equivalent to large tax increase re reducing smoking
*If all workplaces in US became smoke-free, consumption **** 4.5% per capita **[Fitchtenberg and Glantz 2002]*

## Toll of tobacco, with and without (additional) tobacco control

- Without additional tobacco control, 450 million deaths 2000-2050
*By 2030, 70% in developing countries*
- With initiation and adult consumption  50%, *210 million premature smoking-produced deaths avoided*
*Each gains 15-25 years of life*

## Bottom line (and conclusion)

- Well-designed tobacco control is...

## Bottom line (and conclusion)

- Well-designed tobacco control is...
- effective

## Bottom line (and conclusion)

- Well-designed tobacco control is...
- effective
- cost-effective

## Bottom line (and conclusion)

- Well-designed tobacco control is...
- effective
- cost-effective
- possibly cost-saving

## Bottom line (and conclusion)

- Well-designed tobacco control is...
- effective
- cost-effective
- possibly cost-saving
- definitely humane