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Prevention and control of animal diseases worldwide
Part I: Economic analysis: prevention versus outbreak costs
The macro-economic impact will be considerably more severe when the indirect effects of an epidemic on
trade, tourism and services are added to the direct effects on the livestock sector as such, given that these
sectors make a relatively large contribution to the national GDP in most economies. If potential (and
extremely difficult to estimate) human pandemic costs are added, and when dynamic multiplier effects are
considered (i.e. the domino effects that the decline in one sector in one country may have on all areas of
economic activity and on other countries, including as remote sectors as the stock markets 83 ) the global
impact on the economy may be comparable to a severe recession 84 .
Table 6 Overall impact of animal disease outbreaks: selected examples
Country
Asia
Asia
Thailand
Vietnam
(a)
Thailand
Indonesia
Nigeria (a)
Impact
The total losses in GDP accruing from the damaged poultry sector in Asia amounted to US$10
billion. (This is calculated on the basis of over 150 million poultry destroyed as the result of the
2003 and 2004 Asian HPAI outbreaks. It includes direct and indirect economic impact and trade
losses for the region as a whole). (A40)
According to Oxford Economic Forecasting the total GDP losses accruing from HPAI in 2004 are
estimated at US$ 10–15 billion for Asia, of which US$ 1.2 billion are accounted for by losses in
Thailand, and US$ 0.3 billion in Vietnam. These estimates are based on an assumed quarter-year
loss of income for poultry farms, and include Asia-wide multiplier effects from the farm losses.
The scaling up of health-risk impacts, e.g. from AI in birds to a more generalised problem for
livestock and a drop in tourism, could create annual economic losses of as much as US$ 50–60
billion, even if human cases of disease were to remain limited. Escalation of the latter would have
yet more serious implications.
Significant trade losses for a country that used to be the world’s fifth largest poultry exporter
before the HPAI outbreak, the cost of animal disease surveillance and control, and livelihood
losses to poultry keeping households are estimated to have resulted in 1.5% national GDP loss
(A76). In April 2005, the Thai PM stated that avian flu had cost his country some US$1.1 billion.
In Indonesia, the value of birds lost as such to HPAI is estimated at US$16-32 million, the total
direct loss to the broiler and layer breeders and producers at US$ 171 million and, when indirect
losses are added, the total loss goes up to US$ 387 million or a factor of two. (Data source:
Indonesian Poultry Information Centre). These estimates do not account for the loss incurred by
village/ backyard farmers, estimated at 30 million households keeping 200 million chickens. (A76,
A91)
On the whole, the total economic cost due to the HPAI crisis including direct and indirect losses is
83 See for example IMF analysis on the global impact of avian flu on financial markets (A77).
84 See for example, the estimated macro-economic effects on the Australian economy, based on the Treasury macro
econometric model (TRYM). The model incorporates 6 steps and accumulates the impact in each step (in order:
global demand shocks, deaths, labour market, effects on consumption, business climate and investment). When all
steps are added, the total effect to the economy is a 5% fall of the GDP. This is about half the level of the recession
in the Australian economy caused by the Great Depression. As discussed elsewhere, these results should be treated
with caution as they are very dependent on the underlying assumptions and scenarios. (A179)
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