The cost-effectiveness of control costs associated with a hypothetical outbreak of Foot-and-Mouth Disease (FMD) in a dai

1. The cost-effectiveness of control costs associated with a hypothetical outbreak of Foot-and-Mouth Disease (FMD) in a dairy intensive region of Ireland Emma Dillon University of Dublin, Trinity College. Supervisors: Prof. Alan Matthews, Dr. Fiona Thorne Teagasc RERC Student Day, 1st June 2006. Funding: Teagasc Walsh Fellowship, Irish Research Council for Humanities and Social Sciences

2. Overview • Introduction • Motivation & Objectives • FMD control & eradication • The Trading Environment • Methodology • Epidemiological Model – Spreadmodel • Empirical analysis – a dairy intensive region • Conclusion & Future Work - GTAP

3. Introduction Epidemiology & Economics: Separate scientific areas but complementary when the goal is the efficient management of animal health (FAO). Epidemiological Model Economic Model Cost-effectiveness analysis

4. Objectives • Evaluate the cost-effectiveness of alternative control strategies for a number of simulated outbreaks, examining for the first time the potential role of emergency vaccination in Ireland. • Model path of disease spread outlining direct and indirect costs associated with control using: • Stamping-out (SO) • SO + Emergency vaccination (SOEV)

5. Motivation • 2001 outbreak – vulnerability exposed • Increasing threat of transboundary animal diseases - Globalisation - Wider Market integration - Increased animal movement • Risk implicit with trade can be estimated, reduced & managed – A global approach is needed • EU Directive (2003/85/EC)– SO IPs & DCPs • Change in OIE trade rules – Free trade status • Is emergency vaccination a real alternative?

6. Epidemiological background • FMD – most economically damaging disease - Direct effect on livestock production - Subsequent trade effects - Other indirect/downstream effects • Routine vaccination ended in Europe in 1992 in light of CBA which found stamping out to be: - Safer - Cheaper - More in tune with the Single Market • 2001 outbreak - criticism of Culling policy… • Lack of consensus on whether or not EV can eradicate.

7. FMD in Ireland • First introduced in 1839 - 10 outbreaks since • 2001 outbreak - a lucky escape? - Single holding - Stringent movement restrictions - Wider European outbreak • Overall Economic impact on agricultural sector was positive • Export values up €63m in 2001 • But cost to Exchequer €107m • Tourism losses €210m for first 6 months

8. Empirical Analysis • Economic impact of a hypothetical outbreak in country’s largest county, Cork. • 10.1% of country’s farms • 14,199 cattle herds • 1,023,268 animals • Average herd size = 74 • Cattle – major source of spread

9. FMD control and eradication • Culling(SO) – destruction of livestock believed to be infected or exposed to infection: carcasses subsequently disposed of rather than processed for food (slaughter). • Emergency Vaccination(EV) – immunisation of susceptible animals commenced after an initial outbreak is confirmed - suppressive or protective • Recent Directive allows for its use as adjunct to the basic culling policy (SOEV).

10. Emergency vaccination is carried out from the infected premises (IP) for a certain radius (10km) and from the outside perimeter in to prevent the disease from from spreading outside this area. In theory may it have a role in “closing in” on the disease, creating a cordon of protective animals that can effectively stop diffusion of disease.

11. The Trading Environment • OIE code – recognition of disease free status. • In reality markets may not re-open immediately – a basis to renegotiate resumption of trade. • Zoning and regionalisation – a lifeline. • World beef trade segmented between FMD endemic and FMD free – Price differential. • FMD disease status: an important determinant of international trade in livestock products – an effective barrier to higher price markets. • Irish agricultural & agri-food exports €7,140m in 2004 – hugely dependent on export trade.

12. Methodology • Combine an epidemiological and an economic module to assess the control costs associated with both strategies. • Potential costs associated with a disease control programme: - Direct costs (relatively easily identifiable) - Eradication costs - Production losses - Indirectcosts (more difficult to identify) - Trade restrictions - Knock-on effects for non-agricultural sector

15. Epidemiological Model • Spreadmodel: epidemiological model of disease spread with an economics component. • Output of epidemiological module linked to the economic module, tracking various costs of hypothetical outbreaks & related control strategies. • Based on a stochastic state-transition model. • State-transition models derive (or assume) probabilities between different ‘states’ (i.e. health conditions) and use these to trace course of epidemic. • Transition probabilities represent the probability that an individual will move to state j in next period when presently in state i.

16. Epidemiological Model contd. • Five possible ‘states’ modelled in Spreadmodel – susceptible, latent, infected, immune or dead. • Herds shift (make transitions) among these states. • Probabilities (input parameters) determine whether or not disease transmission occurs from simulated contact among infected and susceptible herds. • Three categories of spread simulated: • Infection as a consequence of direct contact between susceptibles and contagious animals. • Spread through indirect means (vehicles, people etc.) • Airborne

17. Pathways in the State Transition Model Source: Schoenbaum (2000)

18. Simulation • Herds are unit of concern (14,199) but number of animals (1,023,268) taken in to account with a probability density function representing herd sizes. • At beginning of each replicate one herd at centre of general circle is said to be latent or incubating, all other herds are susceptible. • General circle around initial outbreak assumed to have a radius of 70 km. • Two scenarios: • SO (culling only policy): herds within a 3km of IP • SO + EV: EV carried out within a 10km radius of IP

19. Simulation Results • Results tend to confirm the general consensus on the use of EV in an Irish context i.e. any benefits (control cost savings) are outweighed by subsequent trade losses. • In theory EV may have a role in dampening down the disease, potentially shortening the length of an outbreak, however this is clearly not the case here. • Results in this case in fact show EV does not shorten the duration of the outbreak and in this instance actually exacerbates costs. • The mean total cost is €317.3m higher when vaccination is deployed, the bulk of this excess coming from gross trade losses.

20. Simulation Results contd. • Control cost savings undoubtedly made using EV: - 17 fewer herds & 915 fewer animals culled - Cleaning & disinfection costs €424,261 less - Surveillance visits costs €167,580 less - Carcass disposal costs €212,541 more with SO - Indemnification cost savings of €720,121 with (Figures relatively small, outbreak is duration short) • Although logistical costs are reduced trade losses outweigh this and employment of EV in this context is not cost effective.

21. Issues… • Very Large Gross Trade Losses figure – especially when vaccination is employed. Excessive? • Negligible difference in Days to trade resumption between the two control strategies. Intuitively not surprising that time out of markets is similar – herds are culled in both cases (eventually). Therefore difference lies in the volume of trade affected? • Duration of the outbreak - EV does not appear to be closing in on the outbreak as expected…

22. Conclusion • Given the significance of agricultural trade for this region the implications of adopting a campaign of emergency vaccination (EV) here would seem to be too great. • A culling policy (SO) appears to be morecost-effective in this case. • A number of issues arise therefore it should be noted that these are preliminary results and are merely shown to illustrate the method used.

23. Future Work • Extend analysis to look at regions of differing herd density and type – results may be different. • Implications of protective vaccination as opposed to suppressive vaccination? • Sensitivity analysis – parameter values (looking in particular at trade costs associated) - Simulate effect of trade ban using multi-regional partial or general equilibrium model. • Knock-on effects for the economy (e.g.tourism) – a CGE approach • Despite these caveats, the use of EV to control the disease seems unjustified in this case.

24. GTAP (Global Trade Analysis Project) • GTAP: a multi-regional AGE model capturing world economic activity in 57 different industries of 66 regions. • Analytical approach looking at the economy as a complete system of interdependent components (industries, households, investors, government, importers, and exporters). • Economic shocks on one component create ripple effects throughout the system. • Effect of FMD outbreak can be thought of in terms of various different shocks to the economy.

25. GTAP contd. Three sets of shocks: • Those directly affecting agriculture sector. -Ban on exports and movement restrictions • Cull of livestock • Those directly affecting tourism. - Fall in overseas and domestic visitors • Those associated with government policies to control and compensate farmers for outbreak. • Disposal costs • Compensation payments

27. Thank You for your attention.Questions & Comments are welcome…