Week 9- Animal Health Economics

define economics

the science which studies human behaviour as a relationship between ends and scace means which have alternative uses to see how scarce resources should be allocated

why are we interested in economics applied to animal health

animals are resources which create value such as food, wool, power, transport, protection, company, culture etc, when disease is introduced resources must be increased but goods and services will decrease

how can value be created

resource transformation- raw product to product increases in value due to processes in the transformation adding value

role of animal health economics

-explains the value of animal health and welfare

-translates biological relationships into value relationships

-provides methods to quantify and capture values

-describes how human behaviour and relationships impact hoq we make decsisons

define value

the importancem worth or usefulness people attatch to somethign, reflecting their judgement of what is important in life

scarcity

resources are finite and limited: water, land, labour, service provision, seasonality

rational choice

individuals always make a prudent and logical decisions that provide them with the greatest benefit or satisfaction

assumptions vs reality for rational choice

-assumptions: indivudlas behave to obtain the most value from their action and it will benefit the economy overall

-reality: spontinaeity, adventure and unpredicability may influence human behaviour

trade off

the decision to choose one option over another giving up the alternative

oppertunity cost

the cost of what you sacrafice when choosing one option over the other in a trade off scenario and the lost value of other alternatives when one option is chosen

production possibility frontier

illustrates the trade-offs facing an economy that produces only two goods. It shows the maximum quantity of one good that can be produced for any given quantity produced of the other

marginal

refers to an additional or incremental unit of something

marginal benefit

the extra benefit resulting from a single use of increase in a paerticular activity e.g. added number of cakes made from another baker

marginal cost

the additional cost resulting from a single unit of increase in a particular activity e.g. employing another baker

net benefit

total benefits-total costs

change in net benefit

marginal benefit-marginal cost

marginal analysis

if the marginal benefit from another unit of activity exceeds its marginal cost, you should undertake that extra unit of activity

why is marginal analysis useful

-helps people allocate thier scarce resources to maximise benefit

-determine behaviour to maximise profit and minimise cost

economic actors

Individuals or entities making economic decisions, hey may have different objectives such as lowering costs, maximising profits, maximising utility or animal welfare

private sector

part of the economoy that is run by individuals and companies for profit and is not state controlled

public sector

part of the economy that is run by the federal, state or local government to provide infrastructure and public gods

private good

something that must be purchased to be consumed and consumption by one individual from consuming it

public good

something that is non-exculdable, non-rivalrous e.g. law enforcment, national security, national infrastructure, clean air, water

externalities

cost or bennefit arising from an economic transacrion that falls on a third party and is not taken into account by those who undertake the transaction e.g. farmer not vaccinating their animals may have effects on neighbouring farms

economic impact assessments

look at the value loss caused by the diseases and cost of surveillance, prevention and disease control interventions

Disease Loss - Expenditure Frontier

output losses on the y axis and control expenditures on the x axis

point m= where TC is tangential with L and E

animal health impact

-visable losses: dead animals, thin animals, poor quality products

-invisable losses: fertility problems, public health costs change in herd structure

-additional costs: medicines, vaccines, insciticide

-revenue forgone: access to better markts denied, suboptimal use of technology

wide impacts of health impacts

-trade

-movement of people

-limit peoples ability to work and do buisness

-limit animal production

-death of people and animals

costs with eliminated disease

even though elimination eliminates disease losses and disease treatments and response costs costs still remain for survellance for detection and a capacity to respond in case of an outbreak

options for disease mitigation

-vaccination

-movement control

-testing and culling

-quarentine

-selective breeding

economic evalutation

compares at least two options to identify if there is a net economic benefit or cost where avoidable losses are greater than costs of a change in disease status, the investment is worthwhile

what should be considered whilst looking at options for disease mitigation

-is it effective

-is it acceptable

-is it cost-effective

cost-benefit-analysis

expresses both the costs and the outcomes in monetary terms to find a method that porduces the highest net benefit

cost effectiveness and utility analysis

estimates the costs and outcomes of a stratagy of intervention in natural units

cost effectiveness ratio

(cost programme-cost alternative)/(effect programme-effect alternative)

cost-utility ratio

(cost programme-cost alternative)/(utility programme-utlility alternative)

disability adjusted life years

A measure of burden of disease, one DALY equals one year of healthy life lost due to premature death and time lived with illness, disease or injury causing reduced quality of life

DALY equation

healthy life years x disability weight of full health (0) + life years with disability x disability weight for deafness + life years lost x the weighting of death (1)

DALY equation broken down

(years lived without disability)+ (years lived with disability)+(years lost due to disability)