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Behavioral Incentives, Equilibrium Endemic Disease, and Health Management Policy for Farmed Animals

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Abstract

We develop a dynamic capital valuation model in which each farm can take an action with farm-varying cost to increase the probability of not contracting a disease. In the presence of infection externalities, circumstances are identified under which multiple equilibria exist and where the one involving the most extensive set of action takers is socially optimal. It is suggested that costly capital markets are one factor in determining the extent of endemic disease in a region. The introduction of frictions, such as dealing with a cumbersome veterinary public health bureaucracy, can enhance social welfare by encouraging precautionary biosecurity actions. Some technical innovations can reduce social welfare. The model is also extended to study a voluntary herd depopulation scheme. Moral hazard in the biosecurity action will dampen the scheme's welfare effect.

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  • David A. Hennessy, 2005. "Behavioral Incentives, Equilibrium Endemic Disease, and Health Management Policy for Farmed Animals," Center for Agricultural and Rural Development (CARD) Publications 05-wp418, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:cpaper:05-wp418
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    Cited by:

    1. Benjamin M. Gramig & Richard D. Horan & Christopher A. Wolf, 2008. "Livestock Disease Indemnity Design When Moral Hazard Is Followed by Adverse Selection," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 627-641.
    2. Ma, Meilin & Delgado, Michael S. & Wang, H. Holly, 2024. "Risk, arbitrage, and spatial price relationships: Insights from China's hog market under the African Swine Fever," Journal of Development Economics, Elsevier, vol. 166(C).
    3. David A. Hennessy, 2013. "Biosecurity Externalities and Indemnities for Infectious Animal Diseases," Center for Agricultural and Rural Development (CARD) Publications 13-wp539, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    4. Rat-Aspert, Olivier & Krebs, Stephane, 2013. "Économie des actions collectives de maîtrise des maladies animales endémiques. Proposition d’un cadre d’analyse," Économie rurale, French Society of Rural Economics (SFER Société Française d'Economie Rurale), vol. 338(November-).
    5. Cariappa, A G Adeeth & Chandel, B S & Sankhala, Gopal & Mani, Veena & R, Sendhil & Dixit, Anil Kumar & Meena, B S, 2022. "Anionic mineral mixture prevents milk fever and improves farmer income: evidence from a randomized controlled trial," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 35(1), June.
    6. Boni, Maciej F. & Galvani, Alison P. & Wickelgren, Abraham L. & Malani, Anup, 2013. "Economic epidemiology of avian influenza on smallholder poultry farms," Theoretical Population Biology, Elsevier, vol. 90(C), pages 135-144.
    7. Niemi, Jarkko K. & SahlströmJonna, Leena & Lyytikäinen, KyyröTapani & Sinisalo, Alina, . "Farm characteristics and perceptions regarding costs contribute to the adoption of biosecurity in Finnish pig and cattle farms," Review of Agricultural, Food and Environmental Studies, Institut National de la Recherche Agronomique (INRA), vol. 97(4).
    8. Tong Wang & David A. Hennessy, 2015. "Strategic Interactions Among Private and Public Efforts When Preventing and Stamping Out a Highly Infectious Animal Disease," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(2), pages 435-451.
    9. Gramig, Benjamin M. & Horan, Richard D., 2011. "Jointly determined livestock disease dynamics and decentralised economic behavior," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(3), pages 1-18, September.
    10. K. Aleks Schaefer & Daniel P. Scheitrum & Steven van Winden, 2022. "Returns on investment to the British bovine tuberculosis control programme," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(2), pages 472-489, June.
    11. Wang, Tong, 2012. "Essays on the Economics of Disease, with Particular Reference to Livestock," ISU General Staff Papers 201201010800003982, Iowa State University, Department of Economics.
    12. Xie, Fang & Horan, Richard D., 2008. "Disease and Behavioral Dynamics for Brucellosis in Elk and Cattle in the Greater Yellowstone Area," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6404, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. A. G. Adeeth Cariappa & B. S. Chandel & Gopal Sankhala & Veena Mani & Sendhil R & Anil Kumar Dixit & B. S. Meena, 2021. "Prevention Is Better Than Cure: Experimental Evidence From Milk Fever Incidence in Dairy Animals of Haryana, India," Papers 2106.03643, arXiv.org.
    14. Jarkko K. Niemi & Leena Sahlström & Jonna Kyyrö & Tapani Lyytikäinen & Alina Sinisalo, 2016. "Farm characteristics and perceptions regarding costs contribute to the adoption of biosecurity in Finnish pig and cattle farms," Review of Agricultural, Food and Environmental Studies, Springer, vol. 97(4), pages 215-223, December.
    15. Tong Wang & Seong Cheol Park, 2014. "Livestock Disease Indemnity Design under Common Uncertainty: A Multi-agent Problem," Economics Bulletin, AccessEcon, vol. 34(3), pages 1396-1409.
    16. Xie, Fang & Horan, Richard D., 2009. "Disease and Behavioral Dynamics for Brucellosis Control in Elk and Cattle in the Greater Yellowstone Area," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(1), pages 1-23.
    17. Hennessy, David A. & Rault, Arnaud, 2023. "On systematically insufficient biosecurity actions and policies to manage infectious animal disease," Ecological Economics, Elsevier, vol. 206(C).

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    More about this item

    Keywords

    biosecurity; continuous time; multiple equilibria; Nash behavior; reinfection.;
    All these keywords.

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • H4 - Public Economics - - Publicly Provided Goods
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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