Economic Impacts of Huanglongbing Disease in São Paulo State

The main objective of this paper is to estimate the potential impacts of the increasing dissemination of the Huanglongbing (HLB) disease in citrus orchards in São Paulo State, Brazil, which is the largest world producer of orange juice and to discuss the importance of phytosanitary programs in order to control the disease’s spreading in the territory. The methodology applied to evaluate the impacts and to discuss the importance of phytossanitary programs is the Cost-Benefit Analysis approach. A model has been used to project the orchard size and production along 20 years as well as to estimate the costs of production and disease control for the same period. Some assumptions have been made about the disease spread, prices and other variables for two basic scenarios: one considering the presence of an official phytosanitary program to eradicate and control the HLB, jointly implemented by Fundecitrus, which is a private institution; and the second one without the official program. The revenues for each scenario have been estimated and accumulated for 20 years, likewise the costs. The losses caused by the HLB considered to evaluate the avoided losses in the scenarios comprised basically those related to production reduction (yield) and reduction of the orchards’ size. Cost-benefit ratios have been calculated for both scenarios. Regarding the CBA results for economic impacts, we found that for each Real invested by government and by Fundecitrus in the phytosanitary program, there is an avoided loss that amounts to R$ 57.3, which consists on a very high benefit-cost ratio for this kind of investment. When the additional costs imposed to farmers to manage the HLB is computed in the CBA analysis, the ratio falls to 4.6, however it is still higher than one, indicating that this phytosanitary “investment” is recommendable. Despite criticisms on this approach and the assumptions made, it provides elements to decision making, for both public and private actors and it allows having some approximation of impacts. Estimating those impacts is relevant to prove policy makers that phytosanitary policy has a high net benefit for society. It is worth-mentioning that other economic and social losses might be incorporated in the analysis.