Alcohol abuse costs New Zealand only a fraction of the amount cited by a recent Government report, an independent study has found.

Social costs of excess alcohol consumption cost New Zealand's economy NZ$662m (US$421m) annually, not the $4.8bn cited in a report commissioned by the Ministry of Health, according to a study published this week by two researchers at the country's University of Canterbury.

The Government study, completed by Business and Economic Research Ltd (BERL) and published in March 2009, found that social costs of illegal drug and alcohol abuse were a combined $6.8bn.

"We find substantial flaws in BERL's method that together account for well over 90% of BERL's calculated costs of alcohol use," said researchers Eric Crampton and Matt Burgess, of the University's Department of Economics and Finance.

"The BERL report is wholly inadequate for use in assisting policy development," they said, adding that New Zealand recoups $516m annually in alcohol duty taxes.

The researchers claimed that the BERL study contained "serious deficiencies" in methodology, including double-counting the cost of insurance and insured losses and not accounting for differences between alcoholics and the rest of the drinking population.

The study will likely spark debate in New Zealand about how the Government seeks to tackle alcohol-related harm.

Several differences between the BERL and Canterbury studies rest on what can be counted as a cost directly related to alcohol consumption.