An Economic Evaluation of the Footrot Eradication Program in the New England Region of New South Wales

An assessment is presented of the costs and benefits of a scheme in the New England region of New South Wales for the control of footrot in sheep. An ex post evaluation is presented of the operation of the scheme since its inception in 1960 to the present, and also an ex ante appraisal is made of the proposed continuation of the scheme in the future. Data were collected from the implementing agencies and from samples of sheep farmers in the target area and in another area where the disease is endemic. Some coefficients not otherwise available were estimated by a panel of experts by use of a Delphi procedure. Net benefits from the scheme were estimated directly as producers' surpluses less administrative costs, assuming no effects on output prices. Relatively large positive net present values and benefit-cost ratios were obtained for both the past and future operation of the scheme. The findings are shown to be robust under sensitivity analysis. It is argued that any reduction in the price of wool caused by the supply shift would not offset the advantages to producers in the region of the scheme. Producers in other regions, however, would suffer losses from a price fall, although the net benefit to Australia as a whole is likely to be positive.