Using iSIKHNAS for Budget Advocacy 3.1 The economic impact of disease

Objectives for this session At the end of this session you should be able to: – Describe the economic impacts of disease – Identify direct and indirect impacts of disease

What is economics? Economics is the study of the relationships between resources (or inputs) and products (or outputs) in a production system Usually the products are sold for the benefit of people (consumers) In livestock production: – Resources or Inputs are land, animals, labour, feed, veterinary treatments and so on – Products (outputs) are meat, milk, eggs, skins, wool, manure and anything else that is produced and sold Inputs and outputs are usually measured in monetary ($) value

Effects of disease Disease has an economic effect on livestock production by: – Increasing costs – costs of treatment and prevention and – Decreasing the value of the product produced – less product produced and reduced value of product Economics: – uses $ values to estimate the cost of disease and the costs and benefits of disease control measures – Allows comparisons of different control measures – Helps make better decisions on control measures – Can be applied to an individual farm or to an industry at district, province or national level

Direct and indirect effects Disease can have an economic effect on livestock production in different ways: Direct effects: – Direct effects (losses) occur when the disease has a direct effect on the amount and quality of product available for sale For example anthrax kills animals, so that there are fewer available for sale Indirect effects: – Indirect effects (losses) occur due to any other factor associated with disease (other than direct production effects) which increases costs of production or reduces the value of the product sold Anthrax vaccination is used to protect animals (and human health) from losses due to anthrax Effects must be: – specific – able to be translated into economic value

Non-financial effects Some effects cannot be quantified in financial terms (Rupiah) – Human deaths – Environmental damage – Stress, anxiety and social effects These may be very important and should be documented and considered – For example rabies control may not be justified on purely financial impacts but is if you consider the non- financial impacts

Economics and decision making Economics Technical factors Political/Social considerations Non-financial impacts Budget constraints Decision maker Decision

Discussion & questions?

Exercise Separate into groups of 4-5 (30 min) Each group: – Choose a disease (different for each group) from : brucellosis, rabies, HPAI, helminthiasis, foot-and-mouth disease, Haemorrhagic septicaemia, classical swine fever or something else) – list up to 10 things that might be considered economic effects (“costs”) of disease and classify as direct or indirect. – How is the effect measured? – Who bears the costs? could be to the individual farmer, the industry (all farmers), consumers or government

Discussion groups report back and discuss (5-10 min each) For the effects proposed: – Are they effects due to disease? – Are they direct or indirect effects? – Can they be quantified in a monetary value (Rupiah)? – Who bears the cost?

Some examples Direct: – Deaths – Abortions – Reduced fertility (fewer animals born) – Reduced body weight (reduced sale value) – Reduced production (eggs, milk) – Reduced product quality (egg size or quality, reduced meat quality, skin quality)

Indirect effects: – Treatment or prevention costs – Zoonosis effects (human infections) – Reduced value to society for example from reduced trade or tourism because of public health or animal welfare concerns – Lost markets because of disease risk – Lost markets because of quarantine – Control costs for government – Destruction and disposal for emergency diseases – Compensation for affected farmers – Foregone income if a farm has to be destocked and kept empty

Final discussion

Session summary Economics is used to quantify the cost of disease and the costs and benefits of controlling disease Disease has an economic effect on livestock production by: – Increasing costs or – Decreasing the value of the product produced Disease effects may be direct or indirect Non-financial are not quantifiable financially but can be important Disease control decisions depend on a variety of factors, of which economic analysis is one contributor