2294 part 1 final report.pdf - Agra CEAS Consulting

Prevention and control of animal diseases worldwide
Part I: Economic analysis: prevention versus outbreak costs
assumed to be an average over 6 months (in the beginning crisis has a higher impact on sales/prices, with
return to normal the impact progressively diminishes).
Source: Agra CEAS Consulting, based on data from literature (including A3, A7 and A9)
It is generally estimated that the economic impact of the AI epidemics has amounted to less than 1% of
Vietnam’s GDP. UN agencies have estimated that, in the first outbreak alone (when the impact has been
more extensive) the total economic impact (including direct costs and losses and indirect impacts in
upstream and downstream activities) have amounted to over US$ 200 million which was about 0.6% of
the GDP that year (A204). Both the WB and the IMF have concluded that, in macroeconomic terms, the
impact of avian flu on the country’s economy has been very modest, and that despite the outbreaks the
national GDP continued to post strong growth (rising by 8.4% in 2005) contributing the targets set within
the Vietnam’s poverty reduction strategy (A266, A266b).
The picture is, however, very different when the micro-economic impact of the disease is assessed. In
Vietnam, relatively the largest losses were felt by small scale, often indebted, commercial chicken
producers with limited numbers of other livestock 118 (A76). The social and economic costs were also
particularly felt by Vietnam’s millions of farm households with small numbers of poultry. Around 8
million of Vietnam’s 12 million households were estimated to be engaged in poultry production prior to
2003, and this number is estimated to have fallen by 50% following the outbreak, suggesting a significant
impact on the sector’s restructuring (A9, A16) 119 . Moreover, the impacts are unevenly distributed, as
income from poultry and eggs is relatively more significant for the poorest part of the population 120 .
Simulation models (FAO PPLPI) show that a backyard poultry sales ban would result in up to 25% loss of
income for the poorer households (losses could be reduced to 10% if there was some diversification
towards alternative production); if households were also banned from raising poultry for their own
consumption the loss could be double for the poorer households (A30).
If the outbreaks escalated into a human pandemic, this would have devastating economic and social
consequences, including large-scale loss of livelihoods as well as lives. Vietnam, like other countries
affected countries, confronts choices in balancing preparation versus action since both imply economic
costs. At least three impacts should be considered under a human pandemic scenario: (a) effects of
sickness and mortality on potential output; (b) private preventive responses to an epidemic; and (c) public
sector responses.
118 Despite the fact that compensation was paid, this was at a lower rate than initially announced, was only paid to
farmers that registered with the authorities, and there were delays.
119 Although some of this restructuring was partly induced by government policies and not just the economic forces
at play following the HPAI outbreaks.
120 Vétérinaires Sans Frontières (VSF) in a case study of a village in the highlands of North Vietnam estimated that
a smallholder lost US$ 69-108 from the HPAI outbreaks, including the value of lost birds and loss of an average
2.3 months with no activities (no income and consumption ). In Vietnam about 18% of the households earn less
than US$1 per capita a day and 64% of the households less than US$2. (A76)
Civic Consulting • Agra CEAS Consulting 115