Quantifying the Cost of Drone-Related Threats in New Zealand

Author: Shelley, Andrew. V.1

Published in National Security Journal, 08 November 2021

DOI: 10.36878/nsj20211108.03  

Download full PDF version – Quantifying the Cost of Drone-Related Threats in New Zealand (932 KB)


This article provides initial estimates of the most significant threats from drones  in New Zealand. An economic approach is adopted with risks expressed as an expected annual cost, which is consistent with the adoption of a cost-benefit framework for policy development. It will be demonstrated that the expected annual  cost of drone misuse are greater than that of a mass shooting, with the risks in the  prison system alone exceeding the expected cost of a mass shooting. The expected  annual cost of a terror attack exceeds that of the risks to the aviation industry. However current government proposals for registration of drones and licensing of  pilots will do little to address the potential threats, which generally – though not  exclusively – arise from individuals who have no intention of complying with the  law. Indeed, it seems unlikely that the Ministry of Transport’s proposed policies  will be effective in countering the most significant threats – those policies are likely  to cost more than the risk that they might avert. Consequently there is a need to  develop a strategy for countering the misuse of drones by those engaged in illegal  activities.

Keywords: Drones, Unmanned Aerial Systems, risk analysis, terrorism.


While drones – more formally known as Unmanned Aerial Systems (UAS) – are acknowledged as having potential to provide considerable economic benefit, like all technology they can be misused, potentially resulting in events such as disruption to  air traffic, interruptions to power supplies, injury to people, privacy violations, trespass, and terrorism. All of these events adversely affect wellbeing and security broadly  defined. For any given instance of misuse, the misuse could variously be unintentional,  negligent, or intentional. Some intentional misuse could result in a criminal harm,  such as endangering transport;1 negligent and intentional misuse could also result in civil harms such as an interference with the privacy of an individual.2 While these three categorisations of unintentional, negligent, and intentional imply different legal  responses, from a security perspective the reason why an adverse event occurred does  not reduce the impact of that event. The analysis that follows focuses on what might be broadly considered to be security related threats. The legal issues and potential  responses to the civil harms of trespass and privacy are not considered here and have  been dealt with elsewhere.3

The Ministry of Transport (MOT) recently proposed a package of measures such as  mandatory education, registration of drones, rule changes, as well as potential for geo-awareness and remote identification of drones at a future time,4 contending that these proposals will effectively address the misuse of drones.5  It is argued here that  the MOT’s proposals will only be effective for those individuals who choose to comply  with the proposed regulations, and will not be effective against criminal harm. New Zealand has seen this same situation arise with firearms reform: law-abiding firearms  owners complied with the reforms, while criminal gangs retained prohibited firearms  and the pre-existing growth in the level of firearms-related crime has continued unabated.6 Furthermore, while providing indicative estimates of the costs of similar regulatory measures in other jurisdictions, the MOT does not provide any quantitative estimate of either the costs of misuse or the purported benefits of the proposed reforms. This article  therefore develops quantitative estimates of the cost of misuse of drones, which then  provides a foundation to assess whether proposed policy interventions are justified, and  whether alternative strategies might be required to counter misuse. Even if the MOT proposals were 100% effective in preventing these threats, the expected benefits from  them will be significantly less than their likely cost.

New Zealand currently has no legislation that enables effective action against drones  being utilised in criminal or security-sensitive activities. The Asia-Pacific Economic Cooperation (APEC 2021) Bill would have temporarily remedied this situation for the  duration of the APEC 2021 events, with the Bill providing Police with: powers to seize,  detain, and take control of a drone; the power to “disable or destroy” a drone “or prevent it from taking off, by any means” (emphasis added) including the use of electronic  counter-measures;7 powers to require a pilot to land a drone or “stop or limit any activity that may cause a risk to security”;8 providing Police with powers to request identifying details of a drone pilot.9 However, the Bill was withdrawn when the physical visits  by dignitaries to New Zealand as part of APEC 2021 were cancelled due to covid-19. In September 2021 a new Civil Aviation Bill was introduced to Parliament10 that provides  a “response officer” with similar powers to those in the APEC 2021 Bill.11  It is unclear  when the Bill will have passed its second and third readings and pass into law.

This article develops an estimate of the expected annual economic cost of the identified  risks. Framing risk as expected annual economic cost has strong linkages with quantitative risk assessment. The assessment of risks based on likelihood and consequence (or severity) is a standard aspect of modern risk assessment, with the interaction between likelihood and consequence often expressed as a risk matrix.12 A risk matrix provides a shorthand way of establishing the actions that should be taken in respect of a risk, and  particularly whether an activity should be able to proceed. However, the validity of the  risk matrix approach relies on an objective calibration of the risk levels in the matrix, and does not generally provide an estimate of the level of resources that should be committed to address an identified threat. The economic approach is also concerned with  likelihood (or expected frequency of the event) and consequence, but the consequence  is expressed in monetary terms if it is possible to do so. The advantage of this approach is that there is a direct indication of the maximum level of resources that should be  committed to mitigate or control the risk. If the cost of the controls is less than the  expected risk then implementing the controls will make society better off (i.e., it is relatively efficient to implement the controls), but if the cost of controls is greater than the  expected risk then the control will make society worse off (and hence it is inefficient to  implement the controls).

In the national security context a more nuanced view of risk can be obtained by calculating risk as the product of (a) the probability of a particular threat, (b) the probability  of an attack’s success given that it occurs,13 and (c) the consequence of a successful attack.14 This study is concerned not just with an ‘attack’, which suggests an intent to  cause harm or damage, but also with other events that may adversely affect security. For  example, an individual who ignorantly or negligently flies in airspace near an airport  in a location that causes a hazard to aircraft is not conducting an attack, but they are  threatening safety and security. Thus, to better capture the range of potential events I  use the term ‘threat event’ rather than ‘attack’.

This paper proceeds as follows: the next section briefly summarises relevant literature  on the nature of drone-related risks. The methodology used for quantifying the risks is then described. The methodology assesses the expected frequency of events, using broad but intuitive ranges for how often an event is likely to occur and for how often the  event is likely to result in a loss. Cost estimates are provided for each identified risk. The  results of the analysis are presented and briefly discussed. The article concludes with some commentary on the results in the context of the potential costs of implementing  a drone registration system.

1 Dr Andrew Shelley is Managing Consultant of Andrew Shelley Economic Consulting, and Chief  Executive of the drone training school run by Aviation Safety Management Systems Ltd. His research focusses on the regulation of drones and counter-drone systems. He is currently completing a Master of International Security through the Centre of Defence and Security Studies, Massey University. Email for correspondence: Andrew.Shelley@xtra.co.nz.