Today, I'm going to talk about even how drug law enforcement affects drug markets. Drug policies shows that actually protect the health and well-being of citizens. So, if we want to establish if enforcement works, we have to measure the effects of its enforcements when drug market against the question if enforcement is actually instrumental in reducing drug consumption and it's harm. A simple economic model of drug market suggests that this is the case because if law enforcement removes enough product from the market, let's say, enough heroin from the heroin market, they should raise prices for the heroin remaining on the market and this in turn should mean less demand for this heroin. In the real world, there are several problems with this idea. Actually, the model does not work out. First, although it might be true that illegality of drugs makes them more expensive, tough enforcement does not. The explanation for that has already been given by Peter Reuter and Mark Kleiman 30 years ago. In their 1986 paper Risks and Prices, they argued that the price difference between drugs and other agricultural goods globally traded such as coffee or cocoa can indeed be explained by the fact that drugs are illegal. Enforcement of prohibition can indeed result in seizures of product or incarceration of traffickers both of which means that the traffickers with loss of income. Drug traffickers, Reuter and Kleiman argue, are aware of this risk and they account for these by adding risk premiums to the initial price of the drugs. In essence, Reuter and Kleiman model states that the risk of enforcements per se not the actual level of enforcement is driving drug prices. If this model is correct, it is not the actual level of enforcement that makes drugs expensive, it's the mere fact that traffickers have to operate in a illegal environment. Indeed, studies have shown that stepping up enforcement does actually not raise prices at a significant level. Tougher enforcement seems to raise drug prices only marginally at best. The second problem with the initial model of restricted supply raising prices and diminishing demand has to do with the question where these risk premiums are actually added in the supply chain? The common assumption in fighting drug market is that drug supply should be addressed at the source, in the production countries. It's easier, the argument goes to destroy large plantations or improvised laboratories in production countries and actually ceasing processed products, which is only a fraction of the volume of these plantations. The problem with this idea is that risk premiums and prices tend to get higher the closer one moves to the retail markets. This mean that upstream enforcement to raise prices at retail level is actually futile. A simple calculation, we'll use this. Let say a kilogram of heroin processed in an illegal laboratory in Afghanistan currently costs of around $700. It's price at the wholesale level in Switzerland is around thirty $30,000. Assuming that an extremely successful enforcement campaign in Afghanistan could remove two kilograms of heroin for every kilogram that leaves the country, upstream enforcement would be able to raise the price per kilo kilogram threefold from $700 to $2100. This might sound impressive, but its effect on wholesale and retail prices in Switzerland are not. The additional $1400 the traffickers have to pay in Afghanistan would only at four percent to the Swiss wholesale price at the moment. Already at the wholesale level, the price rise cost by successful upstream enforcement will be moderate at best. For users who buy street heroin far above the price of $30 per gram here in Switzerland, the effect of enforcement in Afghanistan would hardly be detectable in the end. The third problem with enforcement is that trafficking organizations are much more resilient to drug law enforcement than we often assume. Research has shown that network forms of organization and most drug trafficking organizations are actually networked forms of organizations, are much quicker to adapt to changing circumstances than hierarchical organizations. This means that even if law enforcement achieve successes in fighting particular organizations or closing down particular routes for drugs smuggling, it's likely that drug trafficking organizations will be able to cope and change their tactics very quickly. Law enforcement personnel often expresses the feeling that they are always one step behind drug traffickers. Seen from an organizational perspective, this might be true. It has to do with the fact that drug traffickers are much better adapting to law enforcement activities than the other way around. Taken together, there are several reasons for why a simple model of supply and demand is not a realistic representation of the dynamics of drug markets. From an economic perspective, drug enforcement alone is not suitable to protect the health and well-being of citizens in the context of drug policies.