A few weeks ago, a police officer made a routine traffic stop in Upland, California, just outside of Los Angeles. The officer was accompanied by a police dog named Petey.
As they approached the car, Petey began barking. Something about this car was clearly strange. Sure enough, they discovered that the vehicle had about 66 pounds of cocaine stashed in a hidden compartment.
“Drugs off the street, smuggler went to jail, and our good boy got a steak,” the Upland Police Department posted about the drug bust on social media.
Drug busts like these are mounting around the nation, but they are just a small fraction of what’s estimated to be a record-breaking surge in the supply of cocaine. In their most recent annual World Report, the United Nations Office of Drugs and Crime found that, after a decade of rapid growth, “Global cocaine production has hit an all-time high once again, accompanied by significant increases in cocaine seizures, cocaine users and – most tragically – cocaine-related deaths in many countries.”
So what’s behind this surge? And how is it affecting us in the United States? A new working paper from economists Xinming Du, Benjamin Hansen, Shan Zhang, and Eric Zou — “Coca’s Return and the American Overdose Fallout” — has some answers.
Why cocaine supply is surging
A decade ago, it seemed like the heyday of the cocaine market was mostly behind us. The drug was still popular in certain places, but it was also something of a relic, associated more with discos in the 1970s and Wall Street in the 1980s.
Du and the other economists suggest that at least part of cocaine’s decline was the result of fierce supply-side interventions in Colombia. With significant U.S. involvement, Colombia “waged an aggressive campaign against the plantation of coca, the raw plant used to make cocaine,” they write. As a result, “Colombia’s coca fields shrank from about 168,000 hectares in 2000 to just 48,000 by 2013, and cocaine became much less available in the United States.”
But around 2015, the economists write, a couple of policy changes “created a perfect storm for coca’s resurgence.” First, the Colombian government ended its U.S.-supported aerial fumigation program on public health grounds. Many feared that the chemical they sprayed (glyphosate) was carcinogenic. Then, in late 2016, the Colombian government signed a historic peace deal with the Marxist revolutionary guerilla group FARC. For decades, FARC had tried to overthrow the Colombian government, and to finance their war, they got heavily involved in the cocaine trade.
“For years, the FARC had tightly controlled and taxed coca production in the areas it dominated,” the economists write. “When the rebels demobilized, a power vacuum formed in remote coca-growing regions. A variety of other armed groups ranging from dissident FARC factions to cartels rushed in to seize these territories. These new traffickers actively encouraged local farmers to plant more coca as they consolidated control.”
Also, in a classic case of unintended consequences, the Colombian government introduced “a coca crop substitution program that promised stipends and development aid to farmers who eradicated their coca,” but that plan backfired because farmers “quickly realized they needed to have coca plants in the ground to qualify for compensation, which led many to start new coca plots or expand existing ones in hopes of securing the promised subsidies.” (Side Note: Check out a recent Planet Money episode about a U.S. effort to get Peruvian coca farmers to grow blueberries).
Because of these and other factors, the program to eradicate coca farming in Colombia failed, and production exploded. “By 2022, Colombia’s coca cultivation area and potential cocaine output were more than three times their 2015 levels,” the economists write.
Much of this cocaine came to the United States (as well as Europe, which has also been seeing a historic cocaine boom). Data from the Drug Enforcement Administration (DEA) shows that, after 2015, “the average size of cocaine seizures jumped markedly, while seizures of other drugs did not follow the same pattern.”
And, hello classic supply and demand, with a surge in cocaine production and distribution, prices fell, helping to stoke a demand boom.
Ben Hansen, an economist at the University of Oregon who co-authored this study, says cocaine is an “experience good,” meaning it’s a kind of product users have to experience to stimulate demand. “Because cocaine is an experience good, if you have a big supply shock, that leads to more people potentially using it and therefore experiencing it, and liking it,” Hansen says. “And then they want it again.” In this way, a flood of new supply generates a surge in new demand.
Cocaine has many negative side effects, but the scariest one is overdoses. Following a long period of “stable cocaine-related mortality,” the economists write, cocaine-related overdose fatalities began surging in the United States by the late 2010s.
The fallout from the cocaine surge
Du, Hansen, Zhang, and Zou estimate what this surge of cocaine supply has meant for American overdoses. The economists calculate that had the post-2015 Colombian cocaine explosion never happened, there would be around 1,500 fewer overdose deaths in the United States every year.
For context, in 2023, the last year with complete data, there were about 30,000 overdose deaths involving cocaine, according to the CDC. That was about 28% of all overdose deaths.
That’s significantly less than overdose deaths from synthetic opioids (primarily fentanyl), which were involved in nearly 73,000 deaths, or about 69% of the total.
Hansen, who has also studied the opioid market, says they were particularly sensitive to the reality that, at the same time as this cocaine surge, there was also a fentanyl surge, and sometimes people overdosed after ingesting both drugs (sometimes unintentionally because the cocaine was cut with fentanyl). “ And when we restrict to overdose deaths that were only involving cocaine, we still continue to find this relationship, suggesting that this is not just a fentanyl correlation that we’re accidentally picking up here,” Hansen says.
The United States, of course, isn’t the only nation to experience negative effects from the dramatic expansion of cocaine production and distribution. Another new working paper by economists Gianmarco Daniele, Adam Soliman, and Juan Vargas, “Cocaine Goes Bananas: Global Spillovers from an Illicit Supply Shock,” documents that this post-2015 cocaine surge “coincided with a sharp increase in homicide rates of about one-third, with substantially larger effects in port areas” in Colombia. They also find that violence from the cocaine trade spilled over to Ecuador, which is one major transit hub for cocaine, and that contributed to a “nearly five-fold increase in homicide rates” in that nation. The economists also link the explosion of cocaine supply to an explosion of use in Europe, which likely has had negative effects similar to ones seen in the United States.
Policymakers are paying attention. For instance, the Colombian cocaine surge has been one big reason for a fraying of relations between the U.S. and Colombia under President Trump. Earlier this month, President Trump and the President of Columbia, Gustavo Petro, met and fighting the cocaine trade was at the top of their agenda.
One clear implication of this new study from Du, Hansen, Zhang, and Zou is that supply-side interventions can work to reduce cocaine use, particularly at the source where cocaine is coming from.
Hansen compared drug traffickers to multinational corporations. Like corporations, “They’re going to respond to the bottom line,” Hansen says. “And if you make it a lot harder to produce things, well, they’re gonna probably scale back production, just like when we regulate other companies or raise their taxes.”