The Economic Benefit of Addressing Alcohol Harm in Rural Australian Communities Using A Multifaceted Approach

Research Article

The Economic Benefit of Addressing Alcohol Harm in Rural Australian Communities Using A Multifaceted Approach

Corresponding author: Professor Christopher M Doran, Room 3016, HMRI Building, Kookaburra Circuit, New Lambton Heights 2305, Tel: +61 4042 0513; Fax: +61 4042 0039; Email:

The aim of this research is to conduct a benefit-cost analysis of an Australian community-action approach to reducing risky alcohol consumption and harm: the Alcohol Action in Rural Communities (AARC) project. The trial comprised 20 communities in New South Wales, Australia, that had populations of 5,000-20,000,were at least 100km from an urban centre (population ≥ 100,000) and were not involved in another community alcohol project. Communities were pair-matched and one randomly allocated to the experimental group. Thirteen interventions were implemented in the experimental communities from 2005 to 2009. The net economic benefit of AARC ranged from AUD $1,658,429 to $2,129,265. The cost of AARC was AUD$1,214,012, comprising intervention costs ($608,102) and additional hospital inpatient costs ($605,910). Subtracting total costs from benefits showed a net benefit ranging from $444,417 to $915,253 for the lower and upper estimates of WTP respectively, equivalent to a BCA ratio between 1.37 and 1.75. For every $1 invested in AARC, the value of benefits is estimated at $1.37-$1.75. Community-action to reduce risky alcohol consumption and harms provides a positive return for the investment.

Keywords: Alcohol; Alcohol Consumption; Alcohol Harm; Benefit Cost Analysis; Community; Intervention; Effectiveness; Economic Efficiency


AARC: Alcohol Action in Rural Communities;

BCA: Benefit Cost Analysis;

WHO: World Health Organisation;

WTP: Willingness to pay


In high- and middle-income countries the economic costs attributable to alcohol misuse have been estimated at more than 1% of gross domestic product [1]. Interventions that would effectively reduce these economic costs have been identified [2,3], some of which have been endorsed by the World Health Organisation (WHO) [4]. Economic evaluation of interventions is critical to ensure the efficient allocation of resources, that is, that the value of the social and personal gains achieved by an intervention (the benefit) outweigh the scarce resources required for its implementation [5,6]. The relative economic efficiency of individual interventions aimed at reducing alcohol harms has begun to be quantified internationally [2]. In addition, the likely impact of multiple interventions has begun to be modelled: one analysis estimated that the Australian Government could achieve a 10-fold improvement in health gains compared to current practice, by implementing a package of eight cost-effective interventions [3]. To date, however, there has been no prospective economic evaluation of the benefits and costs of implementing multiple interventions simultaneously in reducing alcohol-related harm, despite some evidence from retrospective analyses that the economic benefits of this approach outweigh its costs [7]. The Alcohol Action in Rural Communities (AARC) project, a cluster RCT, provided a unique opportunity to conduct the first benefit-cost analysis (BCA) internationally of the systematic implementation of 13 interventions aimed at reducing risky alcohol consumption and related harms [8,9]. The specific hypothesis is that the value of the benefits of the AARC interventions will outweigh their opportunity cost.


The AARC BCA used a social perspective involving three steps: costing the interventions; quantifying and valuing change in alcohol harm; and estimating the benefit-cost.

Step 1: Costing the AARC interventions

Table 1 provides a summary of the 13 AARC interventions, implemented in 2005-2009 [8,9], and their key cost-drivers. Resources used in each intervention were identified, measured and valued using international guidelines for costing [5,6]. Across all interventions, the opportunity cost of time spent by key stakeholders, health care practitioners and training experts were the major components of total cost.

Briefly, the thirteen interventions included: community engagement which included the process of inviting communities to participate in, and contribute to, the project; general practitioner (GP) training in alcohol screening and brief intervention which included clinical addiction specialists providing training sessions for local GPs in screening and brief intervention (SBI); feedback to key stakeholders in which key community representatives took responsibility for implementing the locally agreed interventions and ensuring that data feedback was appropriate; media campaign which coincided with every new or updated data analysis and with the implementation and completion of interventions; workplace policies/practices training in which all major employers in each community were identified and offered a choice
of workplace interventions of different levels of intensity that best met their need; school-based intervention in which students (16-17 year olds) were provided with an interactive session targeted at preventing alcohol harm; GP feedback on their prescribing of alcohol medications in which local GPs were sent a letter outlining the likely number of alcoholdependent individuals in their community, current rates of prescribing and a summary of the evidence on their effectiveness; community pharmacy-based SBI in which pharmacists were provided with details of the ten-item AUDIT (an alcohol screening instrument) with instructions for completion and scoring; web-based SBI which also used the AUDIT,
providing immediate personalised feedback to respondents on screen; Aboriginal Community Controlled Health Services support in which staff were given training in SBI; good sports program for sporting clubs which involved a program to reduce alcohol-related harm in sporting clubs; identifying and targeting high-risk weekends in which weekends were targeted with the co-ordinated implementation of multiple strategies to address alcohol-problems; and, hospital emergency department–based SBI in which presenting patients were asked to complete the AUDIT and were subsequently
sent personalised feedback.

Step2: Quantifying and valuing change in alcohol-related harm

Quantifying change in harm from pre- to post-intervention The combined impact of the interventions was measured using both routinely collected data (crime, traffic-crashes and hospital inpatient admissions) and self-reported data [8, 9]. For the routinely collected data, the extent of change from pre-intervention (2001-2004) to post-intervention (2006- 2009) was determined by a counterfactual analysis [5, 10]. This method estimates the effect of the AARC interventions by applying the proportional pre- to post-intervention change in the control communities to the pre-intervention harm in the intervention communities, and then comparing that estimate to the observed changes in the intervention communities. Self-reported changes in consumption and harm were not included in this analysis to avoid double counting of benefits and costs, although the self-report data were used to quantify, in monetary terms, the value households in the AARC communities place on reducing alcoholrelated harm in their communities [11].

Valuing the saved resources from reduced harm 

Per incident resource costs of crime for assaults, sexual offenses and malicious damage were taken from the Australian Institute of Criminology [12], and a cost for street offences estimated as part of the AARC project [13]. These do not include intangible costs, including those imposed on victims, which avoids overlap with the willingness to pay estimates. The Australian Bureau of Transport Economics’ estimates were used to cost traffic crashes that resulted in a fatality, an injury (serious and minor) and no injury (property damage): crashes resulting in a fatality or injury were computed on a per-person basis, while crashes that did not result in injury were computed on a per-crash basis [14]. Estimates of hospital costs for alcohol-related hospitalisations used Australian Diagnostic Related Groupings for alcohol abuse and alcohol dependence [15]. All costs were standardised to 2006 Australian dollars using the Consumer Price Index
[16]. In 2006, one Australian dollar was the equivalent to US$0.7526 (

Valuing the community benefit from reduced harm

A willingness to pay (WTP) approach [17,18] was used to quantify, in monetary terms, the value households in the AARC communities place on reducing alcohol harms in their communities [11]. Details of the methods are available elsewhere [11] but, in brief, the pre-intervention community survey (sample size = 3,017; response rate 40% [8,9]) asked respondents to nominate the dollar amount their household would be willing to pay to reduce alcohol-related harm in their community by 10% and by 20%.

The implications of the 10% and 20% reductions were contextualised  using a hypothetical community with characteristics(e.g. population size) comparable to the 20 AARC communities. Each respondent was randomly assigned to one of two different payment ranges (in order to assess payment range and mid-point bias): $10 increments from $0 to $100 with an option for more than $100; or $25 increments from $0 to $250 with an option for more than $250. Respondents were also given the choice of ‘don’t know’ and ‘prefer not to say’.

Step 3: Estimating the benefit-cost

The BCA compares the benefit of the interventions (the value of the changes from pre- to post-intervention in saved resources plus communities’ WTP for fewer incidents) with the intervention costs. The results of the BCA are presented as both an absolute value (benefits – costs) and as a ratio (benefits / costs), where a ratio greater than one indicates that the benefits outweighed the costs.

Cost of the AARC interventions

The total cost of the 13 interventions was estimated at $608,102 (Table 1). Over 50% of all costs relate to engagement ($55,517), media advocacy ($195,393) and feedback of data and results to key stakeholders and communities ($81,718).

Table 1. Intervention description, key cost driver and cost.

 Quantifying and valuing reductions in alcohol-related harm

Per incident costs

The per incident costs of alcohol-related crimes were estimated at $5,015 for assaults, $2,457 for malicious damage, $13,307 for sexual assaults and $934 for street offences [13]. The per incident cost of alcohol-related traffic crashes was estimated at $1,789,386 for fatal crashes, $103,966 for injury crashes and $7,021 for crashes that did not result in injury. The average resource cost of hospitalisations was $2,081 for alcohol abuse and $2,260 for alcohol dependence.

Quantifying changes in harm from pre- to post-intervention

Benefits from reduced harms

Table 2 summarises the estimated change from pre- to postintervention in the numbers and costs of alcohol-related crimes and traffic crashes, separately for the control and intervention communities. Absolute numbers and costs of harm are presented, together with the percentage change from pre- to post-intervention, adjusted by the counterfactual analysis.

Table 2. Alcohol-related crime and road traffic crashes in AARC communities.


For alcohol-related crime, the counterfactual adjusted reduction was equivalent to 6% fewer incidents at a cost saving of $1,717,188. For alcohol-related traffic crashes, the counterfactual adjusted increase in crashes that resulted in an injury or no injury was equivalent to 3.9% more incidents at an additional cost of $981,932. Fatal alcohol-related crashes were excluded from the analyses because numbers from 2001 to 2009 were too low to allow a stable estimate in both the intervention (N=31) and control (N=43) communities. In total, the counterfactual adjusted reduction in alcohol-related crime and crashes was equivalent to 1.4% fewer incidents at a cost saving of $735,256.

Additional costs from increased harms

The costs of hospital inpatient admissions for alcohol dependence and abuse were calculated in the cost side of the BCA equation because they were hypothesised to increase as more people sought, or were referred to, treatment9. As anticipated, inpatient admissions for alcohol abuse increased from pre- to post-intervention by 27% in the control communities (N = 467 to 592) and 115% in the experimental communities (N = 321 to 689), equating to a 69.4% increase (N = 282) in the experimental communities from pre- to post-intervention, at an additional cost of $586,866. Inpatient admissions for alcohol dependence increased 17% in the control communities (N = 483 to 563) and 20% in the experimental communities (N=251 to 301), equating to a 2.9% increase (N = 8) in the experimental communities from pre- to post-intervention, at an additional cost of $19,044. Attaching a monetary value to changes in harm Households’ mean WTP to achieve a 10% reduction in community alcohol-related harm was $35.43 using the $10 interval scale and $53.50 using the $25 interval scale [11]. These dollar amounts are used to provide a lower and upper estimate of households’ WTP.

Combining reduced harm with community WTP

A 1.4% reduction in alcohol-related crime and traffic crashes was equivalent to a monetary value of $4.96 and $7.49 for the lower and upper WTP estimates, respectively. Multiplying this estimate with the number of post-intervention years (N = 4) and the number of households in the intervention communities (N = 46,529) results in a total community WTP of $923,173 and $1,394,009 for the lower and upper estimates, respectively. These calculations are summarised in
Table 3.

Table 3. Communities’ WTP to reduce alcohol-related harm.

Estimating the benefit-cost

Table 4 shows the net economic benefit of the AARC interventions is estimated to range from AUD $1,658,429 to $2,129,265. These estimates combine the value of resource savings from reduced alcohol-related crime and traffic crashes ($735,256) with the community WTP estimates ($923,173 and $1,394,009 for the lower and upper estimates, respectively). It also shows a net cost of AUD$1,214,012, comprising the AARC intervention costs ($608,102) and the additional hospital inpatient admissions ($605,910). Subtracting costs from benefits results in a net benefit ranging from $444,417 to $915,253, for the lower and upper estimates of WTP, respectively. This is equivalent to a BCA ratio of between 1.37 and 1.75. For every $1 invested in AARC, the value of benefits is estimated at between $1.37 and $1.75.

Table 4. Benefit cost analysis of AARC.


The AARC project is both the largest and most methodologically rigorous (cluster RCT) evaluation of community-action aimed at reducing risky alcohol consumption and alcohol related harm undertaken internationally. The results show community-action significantly reduces average weekly consumption and rates of alcohol-related verbal abuse, has a marginally significant effect in reducing alcohol-related street offences, long-term risky drinking and single occasion
high-risk drinking, and marginally significantly increases hospital inpatient admissions for alcohol abuse9. This study is the first prospective analysis of the economic impact of community-action in reducing risky alcohol consumption and harm. The comprehensive BCA, which is rarely applied in public health research, showed that because its benefits outweigh its costs, community-action provides a positive return for the investment. However, it is likely that this analysis has under-estimated the true benefit-cost of the approach, primarily because the health gains accruing over time from greater utilisation of hospital inpatient treatment were not included, even though the costs of providing this additional health care were included. Indeed, this BCA did not capture any potential benefits beyond 2009, despite the likelihood that the apparent reductions in alcohol-related  risky drinking in the intervention communities will reduce the incidence of future alcohol-related harms.

Methodological considerations

Although the detailed methodological issues relevant to estimating the economic benefits and costs of community-action have been articulated in AARC’s economic publications [11,13,19-25], they are summarised as follows. First, there is a dearth of good quality literature on the value to society of a crime or road traffic crash. Current evidence represents a piecemeal approach to estimating resource use, relying on a top-down approach that derives an aggregate budget and then apportions the aggregate to various cost-drivers, such as the probability that an accident is reported to police and the time police spend at a crime scene. This method of costing is inherently less accurate than one which adopts a bottom-up approach. Due to time and resource constraints, the top-down approach was also utilised in this study, but only after refining the method of estimating costs to improve their validity [5,13].

Second, to avoid double counting with objective indicators, this study did not value the self-reported 20% reduction in average weekly consumption, the 30% reduction in the proportion of single occasion high-risk drinkers, the 42% reduction in verbal abuse, nor the 33% reduction in alcoholrelated street offences [9]. Given emerging evidence for the high economic cost of the harm imposed by drinkers on other people, such as third-party pain and suffering [26], and the lack of current evidence on measuring these costs, such as out of pocket expenses [27], it is most likely that this study has under-estimated the true economic and social benefits of community-action in reducing alcohol related harms. Third, this analysis included the cost of additional inpatient hospitalisations in the experimental communities, even though the value of the health gain from treatment, which  would be expected to accrue over time, was not included. To this extent the estimated BCA ratio further under-estimates the true economic benefits of AARC.

Fourth, despite its limitations, the WTP method remains an important method for estimating the monetary value households place on a reduction in harms within their community, and not accounting for this value would represent a substantial omission from the economic analysis.


Alcohol misuse has deleterious health, social and economic consequences. The AARC project utilised rigorous evaluation methods to quantify both the effectiveness of a community-action approach to reducing risky alcohol consumption and harms (a cluster RCT) and its economic efficiency (a BCA). In combination with outcomes from nested intervention studies and economic analyses [19,21-23], results from the AARC project provide policy makers, governments and researchers with rigorous evidence that community-action limits some types of risky alcohol consumption and harms, and provides a positive return for the investment. The AARC descriptive analyses also highlight that the benefits of community- action are likely to be enhanced by the implementation of effective complementary legislation, such as pricing mechanisms and greater restrictions on alcohol availability [3,28,29], and more effective drink-driving laws targeting young people [20,30,31].


The project was funded by the Foundation for Alcohol Research and Education, an independent charitable organisation ( The research was approved by the Human Research Ethics Committee of the University of Newcastle and all human participants provided informed consent. The trial was registered with the Australian New Zealand Clinical Trials Registry (registration number ACTRN12607000123448). The authors would like to thank the anonymous reviewer for constructive feedback.


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