I volunteered for this in college, and fully believe that it's essential to public safety and the health of the individuals. Individuals came in to drop off hundreds of needles from many users who were too afraid or sick to come in themselves. Where else would these have gone? Trashcans and under park benches. It also was one of the few times the person could sit for a minute and do things like organize their bag, pick up condoms and band-aids, and feel comfortable in the clinic without feeling like a patient.
It is well documented that places with syringe exchange have lower HIV, Hep C, and Overdose rates than places without them. Also, places with exchanges have higher rates of people getting into recovery than places without them. This is because for many IV drug users this is the only place where they are accessing services and the only place where they are getting referrals for treatment, housing and medical care.
They fail to understand economic laws: There is an unlimited demand for something free.