This report presents the findings of the New South Wales component of a national investigation into the heroin shortage which began in early 2001. While the heroin market in New South Wales appears to have stabilised following the shortage, it has not returned to pre shortage levels and heroin purity remains low. The report examines the New South Wales impacts of the heroin shortage in terms of changes in patterns of drug use and the number of heroin users; changes in injecting drug use; changes in health effects of drug use and drug treatment; changes in drug crime and in crime associated with drugs; impact on law enforcement operations; and changes in health agency operations. The analysis finds that following the heroin shortage in New South Wales there was a decrease in heroin use, a decrease in the distribution of needles and syringes and probably also in the number of injecting drug users; a decrease in fatal and non fatal heroin overdoses; a clear increase in the use of psychostimulants, particularly cocaine; an overall increase in admissions for cocaine overdose and a brief increase in the number of drug induced psychoses; increased treatment episodes for psychostimulant use among younger people; increased levels of crime and aggression for those who continued to use heroin and other drugs; and short term increases in illicit sex work and acquisitive crime, offset by an apparent overall sustained decrease in acquisitive crime. (Executive summary, edited)