Client: The Ministry of Health and ACC

Authors: Adrian Slack, Dr Ganesh Nana, Michael Webster, Fiona Stokes and Jiani Wu

Date: July 2009

This research estimates the social costs of harmful alcohol and other drug use, excluding tobacco, in New Zealand.  Harms related to drug use include a wide range of crime, lost output, health service use and other diverted resources.  Harmful use has both opportunity costs, which divert resources from alternative beneficial uses, and psychological or intangible costs, such as reduced quality or length of life.

The report provides four broad answers.  It estimates the:

• total social costs from harmful drug use in 2005/06.
• potential level of social costs that are avoidable.
• cost to society stemming from alcohol and other drug-related injuries
• social costs from harmful drug use borne by the government

The study shows that harmful drug use imposed a substantial cost on New Zealand in 2005/06.

• Overall, harmful drug use in 2005/06 caused an estimated $6,525 million of social costs.
• Harmful alcohol use in 2005/06 cost New Zealand an estimated $4,437 million of diverted resources and lost welfare.
• Harmful other drug use was estimated to cost $1,427 million, of which $1,034 million were tangible costs.
• Joint alcohol and other drug use that could not be separately allocated to one drug category cost a further $661 million. If the joint costs are split proportionately, total alcohol and total other drug costs equate to $4,939 million (over three quarters) and $1,585 million (just under one quarter).
• Using estimates from international research, this study suggests that up to 50 percent ($3,260 million) of the social costs of harmful drug use may be avoidable.
• The research indicated that 29.9 percent (or $1,951 million) of the social costs of harmful drug use result from injury.
• The costs of harmful drug use from a government perspective amount to an estimated $1,602 million, or just over one third (35.1 percent) of the total tangible costs to society. 

BERL project reference: #4577

Click here for the report.