Preparing for animal health emergencies: considerations for economic evaluation

Livestock production systems and the societies in which they are embedded face a set of risks presented by infectious diseases and natural and human-made disasters which compromise animal health. Within this set, threats are posed by natural, deliberate and accidental actions that can cause sudden changes in animal health status, requiring the allocation of additional resources to manage animal health. Determining the benefit of preparing for such emergencies is a challenge when the total set of risks includes the unknown. Any method for analysing the economic costs and benefits of animal health emergencies must not only accommodate this uncertainty, but make it a central feature of the analysis. Cost-benefit analysis is a key approach to economically evaluating animal health interventions. However, the value of this approach in dealing with uncertainty is often called into question. This paper makes the case that, by restricting the outcomes of an emergency event to specified states of nature, boundaries can be placed on the uncertainty space, allowing cost-benefit analysis to be performed. This method, which merges state-contingent analysis with cost-benefit analysis, is presented here. Further discussion on the economic characteristics of emergency events, and the nature of the threats posed to animal health systems, is also provided.