2294 part 1 final report.pdf - Agra CEAS Consulting

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Prevention and control of animal diseases worldwide Part I: Economic analysis: prevention versus outbreak costs 900,000,000 800,000,000 700,000,000 600,000,000 '000 US$ 500,000,000 400,000,000 300,000,000 200,000,000 100,000,000 0 Impact: scenario 1 (most likely) Impact: scenario 2 (low impact) Impact: scenario 3 (high impact) Ripple: domestic market (a) Ripple: export markets (b) Spill-over: tourism (c ) Wider society (d) Note: Impact presented on an annual basis. For full results see Annex 5 (a) Total net impact on domestic and international markets: depends on impact of outbreak on consumer demand and price levels and proportion of producers/production affected; unaffected producers/countries may actually gain from higher prices. (b) Excludes other potential ripple effects, notably the impact on agricultural input sectors, due to lack of evidence/data. (c) Costs to the economic sectors of tourism/travel only covered here. Other potentially affected economic sectors (e.g. services) excluded, due to lack of evidence/data. (d) Economic impact based on the public health effects of a pandemic influenza. Excludes other potential impacts, such as environmental effects, due to lack of evidence/data. Low value assumes 15% attack rate; high value assumes 35% attack rate. Source: “OIE Del1 global costs analysis.xls”, Agra CEAS Consulting. Civic Consulting • Agra CEAS Consulting 154
Prevention and control of animal diseases worldwide Part I: Economic analysis: prevention versus outbreak costs 6.4. Comparison of prevention costs to outbreak costs In the case of HPAI, the most recent global needs assessments of prevention and response to HPAI suggest that some US$ 2.27 billion would be required over a 3-year period (as discussed in section 4.2). Of this amount, prevention and preparedness costs as such account for just over US$ 1 billion (Table 4). It is noted that these calculations do not take into account the incremental operational costs involved, which can be a significant part of the cost of strengthening VS. Against this assessment, outbreak costs under the ‘most likely’ scenario and for H5N1 countries only are estimated at US$ 5.34 billion per year for the direct production costs and losses alone (excluding consequential losses) (Figure 20). Adding consequential on-farm losses, the total direct impact comes to US$ 11.75 billion per year. Assuming the impact of an outbreak spread over a period of 2 years (‘most likely scenario’) the total direct impacts would be US$ 10.7 billion excluding consequential on-farm losses and US$ 23.5 billion if these losses are included. Moving towards scenarios B and C these costs increase further to US$ 12.3 billion and US$ 26.9 billion respectively (in the case of scenario B) and to US$ 19.4 billion and US$ 42.7 billion respectively (in the case of scenario C). Before even considering the indirect impacts, the benefits of improved prevention by far outweigh the potential outbreak costs and losses. Adding potential ripple effects (only in terms of the potential losses in domestic and export markets) to the above scenarios would bring the total impact to US$ 41.6 billion over a 2 year period. The ‘benefit’ of improved prevention in this case is defined as the potential savings that could/should be made on outbreak costs if an effective prevention and emergency preparedness structure is in place. 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. It is also noted that as several countries start embarking on improving their prevention and control systems and strengthening their VS, some of these losses would be mitigated; however, the timeframe of the calculations here (2-3 years) is relatively short for such effects to be felt through. In addition, other benefits include the potential contribution to poverty alleviation, as discussed in section 3.7, given that a significant number of the countries included in these estimates are defined as LDCs or low income countries (Annex 3). Under the most likely scenario, in the event of an HPAI outbreak the estimated direct impact (excluding consequential losses) for the LDCs as agroup ranges from US$ 72.6 million in scenario A (only 4 LDCs affected) to US$ 258 million in scenario B (8 LDCs affected) and nearly US$ 600 million if all LDCs were to be affected (scenario C). Furthermore, the investment in strengthening the control of a particular disease, e.g. HPAI, can have important spill-over benefits on the entire VS. Civic Consulting • Agra CEAS Consulting 155
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