in cost induced by the change in area of production ends up being almost irrelevant for the final price (Reuter, 2001).

A large body of analysis agrees that, regardless of drug addictiveness and supply side considerations, aggressive anti-drug enforcement is unlikely to succeed in stable, mature drug markets (Pacula, 2008). This applies not only to the market for highly addictive heroin, but also to the cocaine market. This is also the reason that shifting prohibition efforts to the demand side – by imposing large penalties on users – is unlikely to succeed.<sup>9</sup> Instead, the evidence argues for modulated drug policies that emphasize regulation, education and treatment. There are strong precedents for consumption declining under a decriminalized regime. For example, when it was decided that public policy should be explicitly geared toward reducing tobacco consumption through taxation and regulation, the price of cigarettes immediately started increasing (see Chart 6). The change in policy led to an increase of almost three times in the price of cigarettes between the early 1980s and 2003, together with a well known reduction in demand.

Modulation requires, as well, tailoring policies to particular circumstances. MacCoun and Reuter point out that there are three dimensions of harm from drug use that policy interventions can affect: the number of users, the average dose per user, and the harm per dose (p. 10-11). Drug control strategies need not focus on prevalence reduction (reducing total number of drug users) to reduce the social costs of drug consumption.10 They can also focus on quantity reduction; micro harm reduction (average harm per use of drugs); and macro harm reduction (total drug-related harm). Decisions among these strategies depend on answers to a number of questions.

For example, which drugs impose the largest social and unanticipated private costs per user/dose? Heroin (high cost) and marijuana (low), for example, are far apart in this regard. Second, which drugs are most responsive to price changes? For instance, heroine consumption does not seem to respond to price changes, while cocaine consumption does. Policies towards more addictive heroin are more likely to emphasize treatment; policies towards more pricesensitive cocaine are more likely to include taxation. Third, how entrenched and large are drug markets? Even if drug policies are modulated and generally avoid outright prohibition, prohibition can be low-cost and effective in some limited circumstances. Pacula (2008) points out, in criticizing large enforcement expenditures and scant treatment outlays in attacking entrenched drug markets, that strong enforcement can discourage the spread of new drugs. At that point, addicted users are few; distribution networks are unsettled; and supplier organization is weak. Consequently, enforcement may be the appropriate response to new drugs (e.g., methamphetamines) even as treatment or taxation may be the most appropriate strategy to reduce consumption of well-established drugs.

9 Vigorous enforcement against users is not generally regarded as a viable policy option, largely because users could account for more than 10 percent of the population of many consuming countries.

10 Policies that focus on a reduction in the number of users, for example through criminalization of drug use, may increase the harm per user/dose and may increase the dose per user. Policies that reduce the harm per user/dose, such as needle exchange programs, could increase the number of users (although in their survey of many studies of needle exchange programs, MacCoun and Reuter (2001) conclude that they do not increase drug consumption).

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