The economic impacts of a hypothetical foot and mouth disease outbreak in Australia

Abstract

This study uses a multicountry, dynamic, quarterly CGE model, GlobeTERM, to estimate the economic impacts of a hypothetical foot and mouth disease outbreak in Australia. The national welfare losses arising from the outbreak depend mostly on the duration of trade sanctions by importers of Australian animal products. If an outbreak is contained within several months, and trade sanctions are dropped within a year of the outbreak, the net present value of Australia's welfare losses may be around AUS$10 billion. If all importers restore Australian access within a year, other than China–Hong Kong, which delays by 5 years, welfare losses are around AUS$21 billion. In a less likely scenario, in which trade sanctions persist in all trading partners for 5 years after the disease has been eradicated, contrary to international guidelines, welfare losses may exceed AUS$85 billion. Trading partners also suffer welfare losses due to trade sanctions. These losses are large enough to imply, from a global perspective, that a shift towards vaccinate-to-live policies combined with global efforts to eradicate the disease may be cost-effective.