Economic Evaluation of Foot-and-Mouth Disease Control Programmes

During the last decade global public opinion has been astonished by several animal diseases outbreaks all over the world:  poultry diseases, in particular avian influenza (avian flu or bird flu or H5N1), bovine spongiform encephalopathy (BSE), commonly known as mad-cow disease (MCD), foot-and-mouth disease, to mention only a few. In spite of their deep economic consequences, economists have not been significantly involved in using their theoretical and applied instruments to contribute to guide private choices and public policies to minimize these diseases social costs. It is our intention to contribute to feel this gap. This paper presents economic estimative of costs and benefits of a policy related to animal disease implemented by one the biggest exporter of meat in the world. It deals with the control and eradication of foot-and-mouth disease (F&M) in Brazil. The PNEFA (its anachronism in Portuguese) was established in 1992 and its effectiveness can be suggested by the extraordinary drop in the number of animals affected by the F&M. This result has contributed significantly to the increase of Brazilian meat in the international market. Nevertheless, costs of PNEFA were colossal, particular in terms of initial investments in laboratorial infrastructure and in human capital. This paper - the first of four papers – reports estimates of PNEFA economic costs and benefits. These estimates were for the period from 1970 to 2006. They were done using secondary data from official sources, such as the Ministry of Agriculture and Census Bureau. Our results indicate that PNEFA has not achieved break-even yet. This is so due to immense costs of PNEFA implementation, to the short period of analysis, and to type and quality of data. This leads to the second contribution – methodological in nature - of the present essay: to identify and discuss problems that arise in developing economic evaluation procedures based upon secondary source data. Our analysis suggests that any methodological design of procedures to evaluate economically animal disease control programmes or policies must combine different types of data source.