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Catastrophic risk and risk management, what do we know about livestock epidemics? State of the art and prospects

Author

Listed:
  • Arnaud Rault
  • Stéphane Krebs

Abstract

The economic consequences of livestock epidemics have been long studied for purposes of estimating the costs of preventive and curative veterinary measures. In this paper, we show that this catastrophic risk may have wide market consequences, and that the risk management systems are quite limited to compensate long term impacts in the European context of growing trade. Through a detailed literature review, we present the main developments of the economic research aiming at highlighting the economic consequences of animal epidemics such as Foot and Mouth Disease. We acknowledge that a very few studies have focused on the economic dynamics and on the long-run effects occurring after an epidemic disease outbreak. We discuss the relevance of a dynamic approach to reveal that the de-structuring of livestock markets affects the production dynamics as well as the whole agricultural sector. Financial implications and market constraints remain poorly studied in the livestock epidemics literature. We emphasize the growing interest of a dynamic Computable General Equilibrium approach to reveal the overall effects of epidemic outbreaks on the whole economy. This innovative research raises important challenges for the assessment and implementation of risk management policies.

Suggested Citation

  • Arnaud Rault & Stéphane Krebs, 2011. "Catastrophic risk and risk management, what do we know about livestock epidemics? State of the art and prospects," Working Papers SMART - LERECO 11-05, INRA UMR SMART-LERECO.
  • Handle: RePEc:rae:wpaper:201105
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    animal epidemic outbreaks; catastrophic risk; risk management;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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