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A Rational Risk Policy for Regulating Plant Diseases and Pests

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  • Glauber, Joseph W.
  • Narrod, Clare A.

Abstract

Diseases and pests pose risks to U.S. agriculture and forests, but regulations and quarantines to control these risks are costly. The U.S. Department of Agriculture issues rules to control these risks based on economic analyses that do not take adequate account of links between risks and policy outcomes. A benefit-cost analysis that fully incorporates both the risk of a disease outbreak and the effect of regulations and quarantines on such risk can yield quite different conclusions. We apply methods that combine probabilistic risk assessments with economic analysis. We show that if USDA had incorporated risk into its benefit-cost analysis of Karnal bunt, a disease affecting wheat, it would have reached different conclusions about the impact of its actions. We estimate that suboptimal regulatory decisions in the case of Karnal bunt cost between $350 million and $390 million per year. We recommend that USDA incorporate risk assessments into its economic analyses of proposed regulations.

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Bibliographic Info

Paper provided by Regulation2point0 in its series Working paper with number 408.

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Date of creation: Jun 2001
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Handle: RePEc:reg:wpaper:408

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Web page: http://regulation2point0.org/

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  1. Brennan, John P. & Warham, Elizabeth J. & Byerlee, Derek & Hernandez-Estrada, Julio, 1992. "Evaluating the economic impact of quality-reducing, seed-borne diseases: Lessons from Karnal bunt of wheat," Agricultural Economics, Blackwell, vol. 6(4), pages 345-352, April.
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Cited by:
  1. Olson, Lars J. & Roy, Santanu, 2008. "Dynamic Sanitary and Phytosanitary Trade Policy," Working Papers 43395, University of Maryland, Department of Agricultural and Resource Economics.
  2. Turvey, Calum G. & Mojduszka, Eliza M., 2005. "The Precautionary Principle and the law of unintended consequences," Food Policy, Elsevier, vol. 30(2), pages 145-161, April.
  3. Anderson, Jock R., 2003. "Risk in rural development: challenges for managers and policy makers," Agricultural Systems, Elsevier, vol. 75(2-3), pages 161-197.

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