Let it Snow! Let it Snow! Let it Snow! Estimating Cocaine Production Using a Novel Dataset Based on Reported Seizures of Laboratories

Abstract

Background: Data on the cocaine market appear to be inconsistent, as they tend to show declining prices vis-a-vis a steady or increasing demand and a declining supply. This paper proposes an explanation for this trend by providing evidence that there is an under-estimation of the supply of cocaine.

Methods: We propose a conservative estimate of cocaine production in Colombia for the year 2008 using the reported seizures of laboratories made by the counteracting organisations operating within the Colombian territory.

Results: Our estimate is at least twice the estimates declared in the official statistics, although we are careful to keep all of our variables to their minimum boundary values. We conclude that our methodology could prove to be a very useful tool, especially if used in parallel with the standard tools. Moreover, the characteristics of the tool (affordability, ease of use and the potential for worldwide adoption) make it a powerful instrument to counteract cocaine production.

Keywords: cocaine, cocaine production, drug seizures, Colombia

JEL Classification: K42, L23, L65, O20, O54