2294 part 1 final report.pdf - Agra CEAS Consulting

Prevention and control of animal diseases worldwide
Part I: Economic analysis: prevention versus outbreak costs
It is noted that a number of other studies (discussed elsewhere in this Report) explore the various potential
benefits of improved prevention in a less rigid methodological framework. Such analysis can be based on
surveys, case studies, and official or anecdotal evidence. The explored benefits include inter alia trade
effects, productivity gains, poverty alleviation and social welfare implications. In the vast majority of
cases, the findings suggest there are significant benefits.
Table 10 Cost-benefit of improved prevention and control: selected examples
Country
Latin
America (a)
Impact
An analysis of the benefit of improvements to animal health in Latin America. This research
is currently in progress. (A141):
Scenarios: Compares the ‘Current Situation’ (CS) with an ‘Improved Situation’ (IS). The CS is
described in terms of expenditure per animal equivalent (AE) which ranges from US $ 1.5 in
Argentina, to US $ 0.7 in Brazil and US $ 0.4 –0.50 in Paraguay and Peru. Scenario 1 envisages
an increase in expenditure per animal equivalent to 50 % of the difference between average
expenditure in Brazil/Argentina compared to Paraguay /Peru, which equates to an increase of
US $0.32 per animal; this would result in increased expenditure of some $ 18 million in
Argentina and $ 3.5 million per year in Bolivia. Scenario 2 is based on the number of vets and
average ‘salary’; the IS here refers to moving upwards in terms of costs to a range between US $
75-146 million.
Results: Preliminary estimates are presented in terms of Net Present Value (NPV) and economic
surplus (producer and consumer surplus). The conclusion is that trade impacts are a very
important benefit: for every single unit of expenditure welfare gain ranges from 11 to 22 units.
Given assumptions on removal of trade barriers, continued world economic and meat demand
growth, growth in productivity in other regions etc., 100% of impact would only be achieved by
year 15. An injection over 15 years of some additional US $157 million per year, which has
an internal rate of return of 50%, generates a NPV of US $1.9 billion or US$ 3 per head of
population or US $4.2 per animal equivalent. On the other hand, productivity gains alone,
although significant, are not considered a sufficient economic justification for investment.
Philippines
Scenarios: Maintaining FMD control at current levels with continued presence of the disease,
compared to a publicly funded programme achieving eradication by 2005 (policy objective at
the time of the study), 2007 and 2010. Baseline is 1997, the beginning of the national FMD
control programme when the annual economic cost was highest, peaking at over US$14 million,
due primarily to extensive vaccination. This is projected to rise gradually from year 2000 levels.
Approximately a third of the total each year, or an average US$1.1 million, represents public
control costs for prevention, mostly related to surveillance and monitoring activities. An
additional US$0.3 million (9%) is spent to contain the persistent FMD outbreaks. Commercial
pig producers support the largest share of the cost, US$1.7 million (54%), for preventive
vaccination. The value of production losses suffered by producers due to FMD is limited to an
estimated US$0.1 million.
Results: Under varying assumptions regarding the development of exports of livestock products
following eradication, estimated benefit-cost ratios for the investment in eradication range
from 1.6 (2010, no exports) to 12 (2005, export gain of 10,000 tonnes of low-value and highvalue
livestock products). This indicates eradication is the most economically viable public
investment. The commercial pig sector is estimated to capture 84% of the benefits generated by
the investment, versus 4% by backyard farmers. (A233)
Civic Consulting • Agra CEAS Consulting 91