Using iSIKHNAS for Budget Advocacy

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 Decision maker Technical factors Political/Social considerations Non-financial impacts Decision Budget constraints

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

Using iSIKHNAS for Budget Advocacy