Veterinary Epidemiology and Zoonosis

COST BENEFIT ANALYSIS OF DISEASE CONTROL

• The costs and benefits of disease control campaigns can be assessed using several methods including gross margin analysis and partial budgeting.

Partial farm budgets

• Partial farm budgets have been used to assess the suitability of control strategies (notably against endemic diseases such as mastitis and internal parasitism) on individual farms.
• A partial budget is a simple description of the financial consequences of particular changes in farm management procedures, of which disease control programmes are a part. ‘Partial’ indicates that assessment is restricted to the factors that are likely to change as a result of the procedural changes.

Social cost-benefit analysis (CBA)

• Social cost-benefit analysis is developed as a means of assessing large-scale investment policies.
• It has been used widely in veterinary medicine to assess national animal disease control campaigns against epidemic and sporadic diseases.

‘Internal’ and ‘external’ costs and benefits

• Internalities (private costs and benefits) are those that accrue directly to an investment project. Costs and benefits accrue to others are termed externalities.
• Example 1:  farm mastitis control campaign
  • Internalities
    • Dry-cow antibiotic therapy (a cost)
    • Increased milk yield (a benefit)
  • Externalities
    • Antibiotic residues in milk may have undesirable side effects on unknowing consumers
• Example 2:  FMD control campaign
  • Internalities - Loss of animals
  • Externalities - Inconvenience of restriction on movement and access.

Discounting

• Control campaigns may operate over several years.
• The value of a sum of money now is greater than the same sum of money at a later date because it could be invested now to produce a larger sum in the future as interest accrues.
• If cost and benefits, spread over several years are to be compared, then must be adjusted to calculate their value now.
• The process of adjustment, which is the opposite of compounding is called discounting.

Shadow prices

• The social value of a benefit may not always be the market price. For example, a liter of milk is valued at its market price by the farmer. However, the lower value may be due to surplus milk production.
• A national disease control campaign that resulted in increased milk production would therefore use the value of the milk, termed a shadow price, in economic evaluation.