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Prevention and control of animal diseases worldwide
Part I: Economic analysis: prevention versus outbreak costs
5.4.4. Comparison of prevention versus outbreak costs
In the case of Romania, no cost-benefit analysis as such of Romania’s prevention and control strategies
appears to exist currently in the reviewed literature. Nonetheless, important conclusions can be drawn in
this direction from a comparison of prevention to outbreak costs.
The animal health component of the WB Integrated plan for HPAI control for 2006-9 comes to a total
US$ 14.3 million over a 3 year period (Table 20). Of this total, some US$ 1.6 million is earmarked for
control (culling and compensation activities) in the event of an outbreak. Excluding this provision, total
prevention and control activities as such (during ‘normal times’) come down to US$ 12.6 million. The
largest component of this plan is strengthening disease surveillance, diagnostic capacity and research
which accounts for US$ 10.9 million over the 3 year period. Strengthening the institutional framework
attracts some US$ 1.5 million, and finally biosecurity US$ 0.3 million.
Against these figures, the analysis of existing data suggests that direct costs of the 2004-05 HPAI
outbreaks (including culling and control costs, excluding consequential on-farm losses) amounted to Euro
56.3 million during the 6 month period between October 2005 and May 2006, or roughly US$ 67.6
million 135 (Table 21). Official conservative estimates have put the total economic losses (direct and
indirect) due to HPAI since the beginning of the outbreaks at an amount of EUR 192 million (or US$
230.4 million). These losses the various indirect effects described above, such as ripple effects in terms of
fall in demand/prices and loss of export (official estimates put this at Euro 70 million, or US$ 84 million),
and the spill-over effects on tourism (estimated by the tourism industry at Euro 50 million, or US$ 60
million).
Our own estimates of a potential HPAI outbreak occurring in future suggest that, under the scenarios and
assumptions presented in section 6, Romania could face total direct costs and losses (including
consequential on-farm losses) of US$ 65.3 million a year.
The comparison of the relative scale of the WB prevention plan against the actual and potential outbreak
costs involved is depicted in Figure 15. It is noted that the WB control and eradication plan’s figures are
totals over a 3 year period, while the outbreak costs are quoted as amounts during the outbreak time (i.e.
covering a six-month period) or, in our projections, annual estimates.
The comparison clearly points to the fact that the potential benefits that can accrue from improving
prevention and control are worth several times the investment.
It is noted, however, that this relies on the assumption that a certain investment would result in gains in
productivity and export earnings. The extent to which this will occur will depend on the effective design
and implementation of the investment, to ensure the effective control of the disease. A risk factor will be
the re-appearance of the disease, as is often the case in practice.
The above calculations do not take into account the incremental operational costs involved, which can be a
significant part of the cost of strengthening VS.
135 Euro to US$ average exchange rate during October to May 2006
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