Jointly determined livestock disease dynamics and decentralised economic behaviour

A dynamic model of livestock disease and decentralised economic behaviour is constructed as a jointly determined system. By accounting for feedbacks between behavioural choices and disease outcomes, the model captures the endogenous nature of infection risks. Government mandated testing of livestock herds and how private biosecurity incentives are affected by the structure of disease eradication polices are considered. How well disease control policies are targeted affects their effectiveness and may result in farmers substituting government testing and disease surveillance for private biosecurity. Numerical simulation results demonstrate that failing to account for feedbacks between the disease ecology and economic systems may overestimate the effectiveness of government disease control policies.     

Livestock Disease Indemnity Design When Moral Hazard Is Followed by Adverse Selection

Averting or limiting the outbreak of infectious disease in domestic livestock herds is an economic and potential human health issue that involves the government and individual livestock producers. Producers have private information about preventive biosecurity measures they adopt on their farms prior to outbreak ( ex ante moral hazard), and following outbreak they possess private information about whether or not their herd is infected ( ex post adverse selection). We investigate how indemnity payments can be designed to provide incentives to producers to invest in biosecurity and report infection to the government in the presence of asymmetric information. We compare the relative magnitude of the first- and second-best levels of biosecurity investment and indemnity payments to demonstrate the tradeoff between risk sharing and efficiency, and we discuss the implications for status quo U.S. policy.     

Understanding Adoption of Livestock Health Management Practices: The Case of Bovine Leukosis Virus

Herd-level livestock health management decisions have implications for farm profitability and the potential public impact of a livestock disease outbreak. Thus, adoption of health management practices is of interest to government officials concerned with managing the risk of disease outbreak and controlling the spread of infection. This paper uses a fractional logit model to estimate the disease risk reduction for livestock health management practices on farms, and then uses the economic benefits of these risk reductions as explanatory variables in an econometric model of adoption of these practices. We find that the economic damages from disease associated with a particular practice are statistically significant but ultimately of little practical economic importance in adoption decisions. Implications for policy and relation to prior research findings are discussed. Les décisions entourant la gestion sanitaire du troupeau ont des répercussions sur la rentabilité des fermes et sur l'impact qu'une éclosion de maladies animales pourrait avoir sur la population. Par conséquent, l'adoption de pratiques de gestion sanitaire intéresse les représentants du gouvernement soucieux de gérer le risque d'éclosion de maladies et de maîtriser la propagation d'une infection. Dans le présent article, nous avons utilisé un modèle logit fractionnaire pour estimer la diminution du risque de maladies lorsque des pratiques de gestion sanitaire du troupeau sont adoptées à la ferme et nous avons ensuite utilisé les avantages économiques de cette diminution du risque comme variables explicatives dans un modèle économétrique d'adoption de ces pratiques. Les résultats ont montré que les dommages économiques liés aux maladies associées à une pratique en particulier sont statistiquement significatifs, mais qu'ils sont finalement sans importance économique dans les décisions d'adoption. Nous avons examiné les répercussions sur la politique agricole et avons fait le lien avec des résultats de recherche antérieurs.