The Economics of Animal Health:
Direct and Indirect Costs of
Animal Disease Outbreaks
Jonathan Rushton & Will Gilbert
Professor of Animal Health Economics
Norbrook endowed chair in Veterinary Business Management
Adjunct Professor, Institute of Rural Futures, UNE, Armidale, Australia
jrushton@rvc.ac.uk
84th General Session of the OIE
Paris, France 22nd – 26th May 2016 1
Acknowledgements
I am very grateful for the past and present Director
Generals, Dr Bernard Vallat and Dr Monique Eloit
respectively, and the OIE Council for the invitation to
carry out this study.
OIE ‐ Dr Brian Evans, Kokoé Sodji and the translators
The member states who returned the questionnaires
are also thanked.
Support of my wife and colleague – Liz Redmond
I want to recognise the support of Norbrook
Pharmaceuticals and LCIRAH in the work I carry out
2
Introduction
The 83rd General Session raised the need for more
information on “The Economics of Animal Health”
The concerns about this area reflect recent periods
with major animal disease outbreaks
They also reflect increasing pressure on public
budgets and the need to justify expenditure in key
economic areas
• Including the economic activities associated with
animals and therefore animal health
3
Introduction
In academic terms the use of economics in animal
health is relatively recent
Much of the early work was based on the use of
cost‐benefit analysis methods of past and future
disease control programmes
Some economists have argued that this was less
an economic approach, more about financial
analysis to justify decisions already taken
4
Introduction
It also raises the question of how economics is
currently being used and how data are being
collected to allow the best use of economics
We are all aware of the PVS data collection process
And some will be aware of the work that has been
done to initiate an assessment of the impact of
diseases and the usefulness of resources in an
animal health context
5
Introduction
The paper will present how data are being
collected across the world on the economic impact
of major animal diseases
In addition it will look at how these data are being
used
It will raise questions about the weaknesses in
data collection, capture and analysis
And whether economics is being used well
6
Materials and Methods
7
What is economics?
A strict definition of economics would be the study of
the use of scare resources with competing demands
The starting point when using an economic approach
would be to develop an understanding of the
allocation of resources in the system of interest, in
order to:
• Describe current allocation of resources
• Determine if the allocation is optimal
• Assess if the reallocation will lead to a situation closer to
optimality
8
What is economics?
Within this analytical framework there needs to be
a recognition that at the time of any assessment:
• There is a given set of technologies
There may well be better technologies available that are yet to
be discovered
Discovery is influenced by government policy and powerful
companies
• There is a given set of prices
These prices could be set by the market – supply and demand
However they are likely to be influenced by government policy
and/or sheer power by dominant buyers and/or sellers of
goods
9
The institutional environment
Additional aspects form the institutional
environment
They include the rules laid down by society for any
process, be it consumption or production
And include the enforcement of these rules
This powerful combination of rules and
enforcement influence the measure of optimality
that is held so dear in economics
10
Health Impact
Health Losses Expenditure & Reaction
Visible Invisible Additional Lost
Losses Losses Costs Revenue
Dead people & Fertility problems Medicines Access to better
animals Change in population Vaccines markets denied
Thin people & structure Insecticide Sub‐optimal use of
animals Increased labour costs Time technology
People & animals Delayed sale of animals Treatment of
poorly developed and products products
Low returns High prices for livestock Public health costs
Poor quality products and livestock products Modified from Rushton et al, 1999; Rushton, 2009
Health Impact
Health Losses Expenditure & Reaction
Impact
Visible Invisible Additional Lost
Losses Losses Costs Revenue
caused by Impact caused by
diseases &
Dead people &
human reaction
Fertility problems Medicines Access to better
animals Change in population Vaccines markets denied
health problems
Thin people &
animals
structure
Increased labour costs
Insecticide
Time
Sub‐optimal use of
technology
People & animals Delayed sale of animals Treatment of
poorly developed and products products
Low returns High prices for livestock Public health costs
Poor quality products and livestock products
The Framework – fixed cost investment
The impact of an animal disease has to be placed
in a context of the veterinary service
Previous investments in education, research and
infrastructure – management and physical – will
dictate how we react to disease risk and disease
presence
These fixed cost investments need to be
considered
13
The questionnaire
The questionnaire covered areas related to the
framework:
• Veterinary services – fixed costs
• Costs of control of disease outbreaks since 2000.
• Production losses caused by the transboundary diseases
that were endemic in countries.
• Wider impacts of disease on trade and the general
economy.
Final section asked who carried out the analysis
and how it was used
14
Data collection and storage
The questionnaire was sent out to all 180 member
states with a response required early in 2016
The forms were returned by 116 countries in the
specified time
Data were entered into a specifically designed
Access database
15
Data analysis
Extraction of data and descriptive analysis were
carried out and related to the key themes of the
framework
• Fixed investments in animal health
• Losses in production due to specific diseases
• Costs of reaction in terms of surveillance, prevention
and control measures
• Costs of reaction in terms of trade
All monetary amounts were converted to US$
16
Results
17
Countries that completed the questionnaire
116 countries (65%) returned the completed
questionnaire in time to be included in the
main analysis.
Further countries supplied forms later
18
Proportion of the global livestock population
by species
100
90
80
70
Three quarters (15 out of 20) of the top twenty
60 countries with bovines replied to the survey, 13
50 out of 20 of the top small ruminant and poultry
40
30
countries and 18 out of 20 of the top swine
20 population countries.
10
0
Bovines Camelids Equids Lagomorph Other Poultry Small Swine
and ruminants
rodents
19
Survey coverage
There was a relatively low response of returns
from SE Asia, parts of East and West Africa and a
major country in the Middle East
This affected the level of coverage for poultry,
small ruminants and bovines.
However, the survey has both a good geographical
reach and also a good coverage of the major
livestock species.
20
Veterinary services
All countries provided data on veterinary service
personnel
There was a total of 722,105 veterinarians,
328,572 veterinary assistants and 407,785 other
support staff reported
Overall from the member states who replied there
are 2,369 LSU per veterinarian and 1,628 LSU per
veterinarian and veterinary assistant.
21
75 000
70 000
65 000
60 000
Number of Livestock Units per Veterinarian
55 000 First Mid Third
50 000 Quartile Point Quartile
45 000
40 000 The ideal staff ratio is difficult to define
Further analysis is required that includes: the value
35 000
30 000
of animals; the role of companion and sporting
25 000
animal medicine; and the salary levels of staff
20 000
15 000
10 000
5 000
‐
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 97 101105109
Each bar represents a country
Veterinary service expenditure
Only 50 of the countries who returned the
questionnaire provided specific data on the costs
of the veterinary service
Of these countries a total of US$ 4 billion was
estimated to be spent annually
US$ 3.1 billion came from public sector budgets
and US$ 0.5 billion from private sector funds
140,00
130,00
120,00
110,00
100,00 First Mid Third
Expenditure per livestock unit ranged from US$ 0.06
90,00
Quartile Point Quartile
US$ per Livestock Unit
80,00 to US$ 934.32 LSU/year
70,00 The average was US$ 6.80 per LSU/year
A 60,00
quarter of the countries who reported expenditure
50,00
spent less than a US$ 1 per LSU/year and half of the
40,00
30,00
countries less that US$ 4.00 per LSU/year
20,00
10,00
‐
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47
Each bar represents a country
Specific disease control programmes
A majority of the countries (105 out of 117)
reported having specific disease control
programmes.
Three quarters of the programmes were for just
seventeen diseases
Food borne and zoonotic diseases are frequently
reported programmes, yet there is an absence of
programmes to control campylobacter
30
28
26
24
Number of Control Programmes per country
22 First Mid Third
20 Quartile Point Quartile
A quarter had more that 7 specific disease
18
programmes and nearly three quarters five or more
16
14
12
programmes.
10 One country reported 29 specific disease
8 programmes and three countries only one
6
0
1
4
7
10
13
16
19
22
25
28
31
34
37
40
43
46
49
52
55
58
61
64
67
70
73
76
79
82
85
88
91
94
97
100
103
Each bar represents a country
60
50
Number of disease programmes
40
Countries reported a total of 682 specific disease
programmes, approximately half had programmes
30
for brucellosis, avian influenza and FMD
24 countries reported a PPR programme despite this
20
being a problem in approximately 80 countries
10
0
Average annual cost of disease control
programmes by type of disease
Approximately half of the disease control
programmes recorded (379 of 682) had data on the
annual expenditure
28
Costs of programmes for diseases that are
endemic, sporadic or not present
Endemic – US$95 million per year
• Major costs endemic bovine tuberculosis (US$ 49.6
million) followed by varroa (US$ 6 million) and ASF (US$
4.3 million)
Sporadic US$ 35 million per year
• Bovine tuberculosis (US$ 5.3 million), Aujeszky (US$ 3.1
million), TSE (US$ 2.9 million) and ASF (US$ 2.2 million).
For countries free – US$99 million per year
• FMD (US$ 81.9 million) was the major cost.
29
Production losses
Nearly two thirds of the countries reported having one
or more endemic transboundary disease
The most commonly reported endemic transboundary
No data provided were useful to estimate
diseases were
• production losses of these diseases
FMD (28),
• PPR (28),
• Newcastle disease (19),
• ASF (15),
• CBPP (15),
• brucellosis (14)
• lumpy skin disease (11)
30
Disease outbreaks
31
100
90
80
70
Number of outbreaks
60
There were 358 reported disease outbreaks since
50
40
2000
A quarter of these were due to avian influenza
30
Two thirds were caused by just five diseases AI,
20
FMD, CSF, Newcastle disease and ASF
10
0
Costs of disease outbreaks
Of the 358 outbreaks reported only 128 had
information on the costs of the outbreaks which
totalled US$ 12.1 billion since 2000
Two thirds of these costs were attributed to five
TSE outbreaks alone and a further 20% of the costs
were caused by 33 outbreaks of avian influenza
Proportion of outbreak costs reported by disease
since 2000 (total costs were US$ 12.1 billion).
Newcastle Other diseases
Equine Influenza
Disease
Rabies
FMD
Blue
Tongue
Virus
One TSE outbreak was estimated to cost US$ 6.95
billion signifying over half of all the reported costs
of outbreaks reported since 2000
AI
TSE
Average duration and monthly costs of
disease outbreaks by disease
Longest duration of an outbreak was TSE
The most expensive with regards cost per month
were rabies and equine influenza
35
Trade Impacts
36
Proportion of outbreaks that were reported
to affect trade by disease
Other diseases
AI
PRRS
Schmallenberg Virus
RVF
PPR
BTV
FMD
CSF
ASF ND
TSE
Trade losses reported during the outbreaks of
specific diseases
The actual costs of the trade losses were not
reported for all disease outbreaks
Only eight outbreaks of disease that caused trade
losses had quantitative data on estimated losses
38
Trade losses reported during the outbreaks of
specific diseases
Losses caused by a disease outbreak continued to
have a lasting impact on trade
Some countries have never regained their original
markets after the control of the outbreak
39
Comments on the impact on trade due to
transboundary disease in neighbouring or trading
partner countries
Half of the respondents said they had problems
with their trade due to neighbouring or trading
partners having transboundary diseases
Most impacts were negative, but some were
positive
40
Wider economy impacts
About a half of the countries reported impacts on
the wider economy due to disease
Only 16 analyses were reported
Partial equilibrium models were used in the
Only six countries reported the type of analysis
estimates of impact in the USA for avian influenza,
Half of the analyses were for avian influenza, two
Porcine Epidemic Diarrhoea virus (PEDv) and TSE.
for FMD and two for TSE
Italy used consequential losses models for the
analyses of avian influenza outbreaks.
Other countries did not specify the methods used
41
Frequency of Analysis Analysis carried out by:
100% 100%
80% 80%
60% 60%
40% 40%
20% 20%
0% 0%
Preventive Endemic Outbreaks Preventive Endemic Outbreaks
Much of the economic analysis was carried out
Regular Ad hoc Not done In house Academic Consultants
inhouse
Analysis used by: and used inhouse for decision making
Analysis used for:
100% 100%
80% 80%
60% 60%
40% 40%
20% 20%
0% 0%
Preventive Endemic Outbreaks Preventive Endemic Outbreaks
Vet service Treasury Private sector Advocacy Justification Resources
Discussion and conclusions
Summary of the data collected
Countries could report on the number of vets, yet
not all had data on costs of the veterinary services
Data on the economic impacts of disease are sparse
There was no information available on production
losses
There is a concentration of information on costs of
control and trade impacts in some countries
The information available is inadequate to develop
a picture of overall investment in animal health
44
Veterinary Service
Education Research
Educated Professionals Technology and Innovations
Animal Health
Professionals
Financial Public Veterinarians Private Veterinarians Veterinarians
support & Support Staff & Support Staff in wider society
Financial
support Financial Payments
Animal* owners Goods &
& food Industry Services
Financial Animal Health Tax
support related Subsidy
Government Tax
Tax
NGOs & Investments Local, National *Includes livestock,
Private Sector & Donations and Global Society companion and sporting animals
Veterinary Service
Education Research
Educated Professionals Technology and Innovations
Animal Health
Professionals
Public Veterinarians Private Veterinarians Veterinarians
& Support Staff & Support Staff in wider society
Animal* owners
& food Industry
Financial
support
Government
Tax
Local, National
and Global Society
Animal
Health System Animals &
Products
Food
Animals
Food
Industry
Animal Animal
Veterinary Transport
Health Animals Health
Service
Inputs Outcomes
Companion
Animals
Sporting
Animals
An improved application of economics to
animal health
An economic approach An animal health approach
Understand A disease
the context becomes important
Adding value Adding value
Identify the weak A strategy is
through
resource allocation through
developed
searching for advocacy
optimality
Understand An economic
why it is weak justification is made
Reallocate resources Disease programme begins48
The challenge
The pragmatic approach to animal health in many
cases has worked
Rinderpest has been eradicated globally, and a
So is there a need for a shift in how we do
number of diseases have been eliminated from
business?
large populations of animals
Plus animal health status of populations under the
control of people has improved markedly
49
A way forward
Animal health inputs are supplied in a context of
the changing role of animals in society
We need to understand animal populations, their
There is a need for data capture and
health status and our responses – this includes the
analysis systems that allow
wider veterinary services
PRIORITISATION
Within this context there is a need for information
on the education, research and policy challenges
50
Health Impact
Costs of surveillance, control &
Animal health & welfare burden prevention plus impacts on
markets
Bio‐economy models Bio‐economy models
Production Disease
Parameters
Programmes Core Markets
Species & Species
Private Public Chronic Shocks
Population Spend Spend Distortions
At a micro‐level
Inputs (costs) ‐ Animal health system costs that
affect animal health status and burden (losses)
Outputs (benefits) – The avoided animal health
and welfare burden (losses) can be used as a basis
for outcome measures
For specific animal health programmes it would be
possible to develop a library of cost‐effectiveness
measures and cost benefit analyses
• A potential production surface to examine optimality?
52
At a sector level
Animal health & welfare burden (losses) by
country and by region will highlight the level of
problems in the animal population
Linking these to overall costs of animal health
systems should help to identify where resource
use is ineffective and inefficient
Assessment of the effectiveness of the overall
animal health system should be possible
53
Key messages
At best we are being reactive and at worst drifting
with what is seen as a given
Animal health decision making could be
We need to move to being more proactive in the
improved by better use of economics to
use of economics in decision making
This requires data and the generation of
meet the current challenges and
information on burdens and costs
confront the future ones
Sounds like an ideal world, but human health are
working towards it
54
Reflections on educational needs, research
needs and policy challenges
55
Understanding and meeting the education
challenges in the health system
Much of the animal health education at present is
following the money – small animal clinician work
We need a cadre of people who are capable of
Veterinarians need awareness of
understanding and describing change in our use of
economics and social science skills to
animals, the health of these animals and our
understand and influence change
responses to their health and welfare
And this cadre also need to be able to identify
poor allocations of resource and communicate
these to people with power to change the
allocation
56
Understanding and meeting the research
challenges in the health system
Research is needed on metrics for animal health
and welfare burdens, the capture and analysis of
cost data and the associations between health
Economists and social scientists are
inputs and outputs
needed to support and engage in this
• This needs to be in social and economic terms
research
A combination of burden information with costs of
the specific programmes will facilitate the
identification of weaknesses in the system that
need to be addressed by research
57
Understanding and meeting the policy
challenges in the health system
A systematic process of collecting, capturing and
analysing animal health and welfare burdens will
Policy could become a mix
allow prioritising of demand
and re‐prioritising of these issues
driven responses, and where market
• Imagine a flexible list of notifiable diseases
Information on the associations between burdens
failure exists, supply led responses to
and costs and who bears the costs and burdens
address poor resource allocation
will provide evidence for public policy on:
•Policy
Legislationneeds to become more
• Programmes
evidence
• Coordination
based
58
Recommendations
59
Recommendation
– Veterinary education
Veterinary education at undergraduate,
postgraduate and continuing professional
development should include the use of economics
in animal health and welfare
The economic materials should be focused on very
practical and applied use, and the understanding
the underlying economic concepts of resource
allocation
60
61
Recommendation
– Global Burden of Animal Disease
A pilot project is established to initiate global
burden of animal disease estimates
Such a project should determine the diseases to
be included – transboundary and endemic ‐ and
needs to include the production losses, control
costs and trade impacts of these diseases
Data collection, capture and analysis methods
would need to be established
A full project would mirror the global burden of
human disease
62
http://www.who.int/health‐accounts/methodology/sha2011.pdf
63
Recommendation
‐ Costs of national veterinary services
A pilot project is established to collect and
summarise data on the costs of national
veterinary services
Where possible this should include investments of
governments, NGOs and private sector in animal
health education, research and key infrastructure
A full project would mirror the human health
accounting system, that was initially published by
OECD in 2000 and updated in 2011, and be guided
by the OIE PVS system
64
Rational & Proportionate Develop & Assess
Disease Control Measures Vaccines & Diagnostics
Analysis Pathogen Banks
Data Disease
Agent
Surveillance System
Active
Disease Improved
Search Diagnostics
Socio- Livestock
Pets Wildlife Disease
Economic Sector
“Passive” Surveillance Network
Producers & Hunters Collectors
Susceptible Animal Population
A new society
International Society for Economics and Social
Science of Animal Health
We will hold a first meeting for a day before
SVEPM in Inverness in March 2017
We will be inviting papers and posters to cut
across the animal health, economics and social
sciences
We want to create a bridge
66
Further information
For more information on NEAT please look at
• www.neat‐network.eu
For information on NEOH please look at
• http://neoh.onehealthglobal.net
For information on the work we are involved in with
agriculture and health please look at
• http://www.lcirah.ac.uk/home
For courses offered at RVC please look at
• http://www.rvc.ac.uk/Postgraduate/Distance/Index.cfm
• http://www.atp‐ilhp.org
67
