SWEDEN: Illegal Narcotics in the National Accounts
Introduction
Under the ESA regulation, illegal activities must be included in the national accounts. Illegal activities that fit the characteristics of transactions – particularly that there is mutual agreement between the parties – should be treated the same way as legal activities. Certain illegal activities do contribute to output and income in the economy and as such, they should be registered accordingly. During 2007 a major revision of the Swedish national accounts was carried out. In this context illegal activities have for the first time been included for the whole time series from 1993 and onwards. This country report will focus on the methodology and estimation of illegal narcotics that was, in part, the product of the 2007 revision. Estimates of narcotics have been incorporated into the Swedish national accounts as of 29 November 2007. However, the calculation methods used to compile the national accounts took narcotics into consideration to some extent. Including narcotics in the Swedish national accounts has an impact on the final consumption expenditure of households as well as on output and value added. According to BPM6 (Balance of payments and international investment position Manual) illegal transactions need to be treated in the same way as legal transactions. Sweden is planning to implement calculations for illegal activities, especially for those activities, which are included in the National accounts where there is evidence for the effect on the external sector. Sweden has not implemented any calculation yet for illegal activities in the balance of payments but is planning to do so in the near future in consultation with National accounts.
Scope, Methodology, Compilation Practices, and Data Sources
Eurostat suggests that drugs with different areas of use and prices should be studied separately. Accordingly, the estimates of narcotics make a distinction between the following substances: amphetamines, heroin, cocaine, cannabis, ecstasy and narcotic medicines. Below follows a compressed description of the estimations, for a more comprehensive description we refer to the web links in the annex.
Final Consumption Expenditure of Households
The basic premise is that all narcotics used are consumed by households. Efforts have been made, by several reports to estimate total consumption. These estimates are based primarily on assumptions regarding the number of addicts and their average consumption. A similar model have been adopted by the NA, with data on prices, number of addicts, average dose and days of abuse as input. The model is constructed as follows:
Household final consumption expenditure per substance = Price (SEK/gram) x number of addicts x average dose (grams per day of abuse) x number of days of abuse.
The calculation of drug consumption is done separately for six types of drugs: cannabis, heroin, cocaine, amphetamines, ecstasy and narcotic medicines. In calculating household final consumption expenditure on drugs it is relevant to make a distinction between heavy abuse and other abuse.
Prices
The Swedish Council for Information on Alcohol and Other Drugs (CAN) collects price data for the most common drugs. For the period 1988–2006 price data are available for hashish (and to some extent marijuana), amphetamines, cocaine and heroin. From the year 2000 and onwards, price data is also collected for ecstasy, khat, LSD and GHB. The respondents are asked to give the “street prices” on the basis of the usual amount dealt, converted to SEK per gram as appropriate. The prices are based on CAN’s data, but in the case of narcotic medicines the price quoted by the National Criminal Investigation Department is used. In the case of cannabis, a weighted price between hashish (90%) and marijuana (10%) is used.
Calculation of Consumption by Heavy Abusers and Other Users
“Heavy abuse” is, in this context, defined as including all abuse via injection, irrespective of the substance and frequency, and all daily or almost daily use of drugs, irrespective of the method of intake. The annual consumption per abuser is assumed to be 160 grams for amphetamines, 160 grams for heroin and 300 grams for cannabis. Medicines classified as narcotics a dose of 5 tablets per occasion is assumed (based on discussions with the National Criminal Investigation Department), the number of active days of abuse per year is estimated at 200 days, giving an annual consumption of 1 000 tablets. On the basis of the above assumptions regarding the substances used, the annual consumption and the street prices arrived at by CAN, total consumption is estimated at around SEK 2.7 billion. The group denoted “other users/abusers” consist of users who are not classified as being heavy ones. This includes in part those who engage in occasional/experimental use and in part those who are at a stage between occasional use and heavy abuse. The information available in this area comes from various interview and questionnaire surveys. SOU 1998:18 estimated the types of drugs consumed in Sweden and the volumes used of each. Calculations of consumption of amphetamines, heroin and cannabis have also been compiled by the Swedish Customs.
Output
In Sweden domestic output occurs on a very small scale. In the case of heroin and cocaine, there is no indication that they are manufactured in Sweden. There is a certain degree of limited home cultivation of cannabis plants for own consumption, but the effect on total supply is considered marginal. In the case of synthetic drugs, the manufacture of ecstasy is considered almost nonexistent and the manufacture of amphetamines as very small. In this context, no attempt is made to calculate domestic output, as consistent data reveal this to be marginal. Instead, it is assumed that all drug consumption in Sweden is supplied through imports.
Intermediate Consumption
Since domestic output consists only of the trade margins which accrue before the drug reaches the final consumer, intermediate consumption should be very low. Here it is assumed that intermediate consumption, which may not have already been covered in the national accounts, is very low, and consequently no estimate is made.
Imports and Exports
Imports are estimated by using import prices and the estimated amount of drugs consumed, corrected for differences in the degree of purity. It would be desirable to be able to estimate output, imports and consumption separately and then reconcile availability and use of drugs, in accordance with the usual method of compiling the national accounts. However, owing to the high uncertainty of the basic data, especially in the case of imports, it has been impossible to estimate supply in a satisfactory manner. Drugs in transit should not be included in exports and imports. Since there is no domestic output of drugs in Sweden, exports can only occur in the form of sales to tourists. However, this is likely to occur on a very small scale, and therefore no estimates of exports are included.
Linkages Across Statistical Domains
Imports of drugs and other type of illegal activities across the borders affects the Balance of payments statistics and a new calculation needs to be implemented for external statistics in Sweden. A significant part of the information is collected surely in the Travel services already, especially in the import of travel services that needs to be identified separately. The information on illegal activities needs to be consistent between National Accounts and Balance of payments. There are other types of illegal activities as smuggling of firearms, illegal gambling and counterfeit goods and piracy that may be in significant amounts but the effect and extent of the activities needs to be investigated for the balance of payments statistics. As of today, the estimates for narcotics presented above are only covered in the national accounts and not in the balance of payments.
Current Challenges and Conclusions
Consequences of implementing the estimates
As stated above, it has been assumed that some intermediate consumption is already included in the national accounts. This applies to imports as well through the item “foreign exchange for travel”, which includes all currency conversions. Introduction of drugs into the Swedish national accounts therefore have an impact only on households consumption expenditures and on output from the margins on resales. On the basis of assumptions regarding the number of users, their average annual consumption and prices, consumption expenditure of households is estimated at SEK 2 847 million in 2001. Consumption by heavy users is estimated at SEK 2 698 million and by other users at SEK 149 million. The described calculations created benchmarks from 2001, these have been used in order to create estimates for 2002 and onwards. The time series from 2002 use partially updated values where it is applicable.
Annexes
The Swedish GNI inventory. See page 405-413, chapter 7. For a description of all estimations of illegal activities, please see page 401-421.
Original report on estimation of illegal activities in the national accounts.
https://www.scb.se/statistik/_publikationer/NR0103_2008A01_BR_NRFT0801.pdf