Avian Influenza Compensation in Developing Countries: Issues and Knowledge Gaps

1. Avian Influenza Compensationin Developing Countries: Issues and Knowledge Gaps Christopher Delgado Rural Strategy and Policy Adviser, World Bank ARD On behalf of a larger team yet to be finalized Brainstorming Washington, D.C. July 13, 2006

2. Objectives • Consult colleagues on compensation issues of strategic and operational relevance • Promote consensus on what is doable and how • Promote consensus on an approach to derive guidance from examples of good practice of compensation • Agree on a way forward to make progress by this Fall

3. Topics for Discussion • The scope of compensation (why, what, who, for how long, etc.) • Setting compensation rates • Implementing compensation procedures • Promoting regional coordination • Promoting timeliness • Identifying funding needs and sources • Longer-run mechanisms

4. Deciding on the Scope • The objectives of compensation • Attention to synergies and trade-offs among disease control and other objectives • What will be compensated • Who will be compensated The balance among urgent short-run and longer-run issues • General guidance vs. country and region specificity

5. Deciding on the Scope: Control vs. Safety Net • Control requires rapid and comprehensive responses; may require harsh across-the-board administrative solutions if compensation incentives do not work quickly or comprehensively enough • Safety nets require targeting and fine tuning to different circumstances; implicitly they involve a vision of how the poor should adjust their livelihood strategies after the emergency is over Can One Instrument Address Two Different Targets??

6. Reality Check: Thailand Source: Poapongsakorn et al. 2003

7. Deciding on the Scope: Safety Nets • Backyard broilers/layers • still 20-30% of all chickens in Indonesia and Thailand, higher share in Africa • Significant components of income of poor women. • Promising ag. income source for poor • Poultry consumption growing at 5% + per annum per capita for 25 years in developing countries (compare to less than 0.5% p.a. p.c. for grain) • But majority of economic losses are from consequent damages • Losses along supply chain • Lower economic activity in rural areas • Lost tourism, etc.

8. Deciding on the Scope:Disease Control • Disease control is the primary objective • Requires rapid compliance with reporting and culling • Reduces losses to economy and incomes • Compensation is a key component of the incentive package for compliance • As part of a broader control effort • Can be perverse if not implemented properly • Governance issues affect timeliness and comprehensiveness of response • Avian Influenza or broader scope?

9. Deciding on the Scope: What? • All farm losses, only on-farm losses from Avian Influenza (and how to know?), or only on-farm culling by authorities? • Off-farm losses? • Losses beyond meat value (fighting cocks, grandparent stock, etc.) • Market losses? • Losses from undesirable or illegal poultry activities?

10. Deciding on the Scope: Who? • Include compensation for contract farmers (who lose), or just the integrator as owner? • What about other splits of management and ownership rights? • What about compensating men as Heads of Household where the chickens belong to and are managed by wives? • What about incentives to non-owners (such as field staff) for early reporting?

11. Deciding on the Scope: Time Frame For Compensation? • Speed is the deciding factor for emergency disease control; need to put compensation procedures in place before full-scale outbreaks • Preventing re-occurrence will require on-going institutional solutions including but not limited to how compensation is provided • Funding for those longer-term solutions will need to be different than for emergency management, but will also need to build upon what is done under emergency management • When to begin transition?

12. Setting Compensation Rates • Too high: infected animals brought into new areas vs. too low: poor compliance • How disaggregated a commodity: species, quality, size, economic value (grandparent stock, fighting cocks, etc.)? • Market prices before or after outbreak? • Whose market prices: local, national, global? Or some estimate of cost? What if very different across countries in same region?

13. Issues in Institutional Procedures (1) • Clear pre-conditions for payment from a preparedness plan • Widespread awareness of eligibility, procedures, amounts • Governance procedures to build trust • Training, equipping and deploying staff • Certification of losses when public animal health services are weak (and mobilization of private and community workers to help) • Dealing with collectivities for implementation (prod. associations in Vietnam, etc.) • Farmer-accessible applications

14. Issues in Institutional Procedures (2) • Linking compensation to recorded losses • Ensuring incentives actually go to those that make the decisions relevant to early compliance • Timely and transparent disbursement • Mechanisms for handling complaints • Fund transfers among levels of government • Alternative instruments (to cash) such as credit provision for re-stocking • Improving the efficiency and transparency of the process

15. Promoting Regional Coordination • National borders are often not effective barriers to live animal transfers • Ex.: Nigeria vis-à-vis Niger and Cameroon • Ex: Laos vis-à-vis Thailand and Vietnam • Absence of regional coordination can derail even an otherwise perfect compensation program

16. Identifying Funding Needs • Need estimation procedures to avoid cost of over-estimation of needs and loss of credibility from under-estimation • Need to incorporate timing of deliver more fully as an issue • Need a way to map needs to physical regions that is transparently derived from needs

17. Identifying Sources of Funding • Early stages: governments need to begin creation of framework for implementation before outbreaks occur • Donor funding will be needed for speedy early responses • Longer term, need mechanisms to share ongoing costs of disease control with producers, processors, marketing agents and consumers

18. Longer Run Development Issues • Disease is becoming endemic in many areas; many issues (such as vaccination) beyond present scope of discussion • Yet compensation efforts for smallholders may need to transit to adjustment aid to either meet bio-security needs or find other livelihoods • May also be a need for an international support mechanism for rapid responses in compensation for culling over the long term as outbreaks occur (eventually covering other animal diseases besides avian influenza?)

19. Animals and Health 75% of emerging disease is zoonotic 80% of agents with bioterrorism potential are zoonotic Nearly all new human diseases are from animal reservoir Annual Production Growth Per Capita in Developing Countries 1975-2001 Poultry 5.9 % Pork 4.0% Beef 3.2% Cereals 0.4% Long Term Reality Check Source: OIE Source: FAOStat