Pham Van Ha

The Economic Payoffs from Marine Reserves: Resource Rents in a Stochastic Environment

In this paper we analysed the economic payoffs from marine reserves using a stochastic optimal control model, with a jump-diffusion process. The results show that even if the reserve and harvested populations face the same negative shocks, harvesting is optimal, the population is persistent and there is no uncertainty over current stock size, a reserve can increase resource rents. Using fishery data we demonstrate that the payoffs from a reserve, and also optimum reserve size, increase the larger is the magnitude of the negative shock, the greater its frequency and the larger its relative impact on the harvested population.

Cod today and none tomorrow: The Economic Value of a Marine Reserve

Using data from what was once one of the world’s largest capture fisheries, the northern cod fishery, the economic value of a marine reserve is calculated using a stochastic optimal control model with a jump-diffusion process. Counterfactual analysis shows that with a stochastic environment an optimal-sized marine reserve in this fishery would have prevented the fishery’s collapse and generated a triple payoff: raising resource rents even if harvesting was “optimal”; decreasing recovery time for the biomass to return to its former state, smoothing fishers’ harvests and resource rents; and lowering the chance of a catastrophic collapse following a negative shock. (JEL Q22, Q57)

Food and biosecurity: livestock production and towards a world free of foot-and-mouth disease

A key challenge for global livestock production is the prevalence of infectious animal diseases. These diseases result in low productivity in meat and dairy production, culled animals, and significant barriers to trade and lost income from meat and meat products. Foot-and-mouth disease (FMD) affects both developing countries, where it is often endemic and very costly, and developed countries where incursions result in considerable economic losses in the order of billions of dollars per year. In some cases, production levels of pork meat in developed countries have still not recovered to levels prior to past disease incursions, more than a decade ago. In developing countries, the export of animal products has exhibited sluggish growth for decades, constrained by ongoing animal disease problems. We make three contributions. First, we provide an overview of worldwide meat production, consumption and trade in the context of FMD. Second, we provide insights into the economics of biosecurity measures and how these activities should be optimally designed to enhance livestock production. Third, we analyse a case study of an FMD-endemic country, Vietnam, which has been trying to achieve FMD-free status for some time. Lessons learnt from this case study shed light on the challenges in achieving FMD-free status in developing countries, which is useful for a global FMD control strategy and the promotion of world food security.

Early Decision Indicators for Foot-and-Mouth Disease Outbreaks in Non-Endemic Countries

Disease managers face many challenges when deciding on the most effective control strategy to manage an outbreak of foot-and-mouth disease (FMD). Decisions have to be made under conditions of uncertainty and where the situation is continually evolving. In addition, resources for control are often limited. A modeling study was carried out to identify characteristics measurable during the early phase of a FMD outbreak that might be useful as predictors of the total number of infected places, outbreak duration, and the total area under control (AUC). The study involved two modeling platforms in two countries (Australia and New Zealand) and encompassed a large number of incursion scenarios. Linear regression, classification and regression tree, and boosted regression tree analyses were used to quantify the predictive value of a set of parameters on three outcome variables of interest: the total number of infected places, outbreak duration, and the total AUC. The number of infected premises (IPs), number of pending culls, AUC, estimated dissemination ratio, and cattle density around the index herd at days 7, 14, and 21 following first detection were associated with each of the outcome variables. Regression models for the size of the AUC had the highest predictive value (R2 = 0.51–0.9) followed by the number of IPs (R2 = 0.3–0.75) and outbreak duration (R2 = 0.28–0.57). Predictability improved at later time points in the outbreak. Predictive regression models using various cut-points at day 14 to define small and large outbreaks had positive predictive values of 0.85–0.98 and negative predictive values of 0.52–0.91, with 79–97% of outbreaks correctly classified. On the strict assumption that each of the simulation models used in this study provide a realistic indication of the spread of FMD in animal populations. Our conclusion is that relatively simple metrics available early in a control program can be used to indicate the likely magnitude of an FMD outbreak under Australian and New Zealand conditions.

Comparison of alternatives to passive surveillance to detect foot and mouth disease incursions in Victoria, Australia.

This study aimed to evaluate strategies to enhance the early detection of foot and mouth disease incursions in Australia. Two strategies were considered. First, improving the performance of the current passive surveillance system. Second, supplementing the current passive system with active surveillance strategies based on testing animals at saleyards or through bulk milk testing of dairy herds. Simulation modelling estimated the impact of producer education and awareness by either increasing the daily probability that a farmer will report the presence of diseased animals or by reducing the proportion of the herd showing clinical signs required to trigger a disease report. Both increasing the probability of reporting and reducing the proportion of animals showing clinical signs resulted in incremental decreases in the time to detection, the size and the duration of the outbreak. A gold standard system in which all producers reported the presence of disease once 10% of the herd showed clinical signs reduced the median time to detection of the outbreak from 20 to 15days, the duration of the subsequent outbreak from 53 to 42days and the number of infected farms from 46 to 32. Bulk milk testing reduced the median time to detection by two days and the number of infected farms by six but had no impact on the duration of the outbreak. Screening of animals at saleyards provided no improvement over the current passive surveillance system alone while having significant resource issues. It is concluded that the most effective way to achieve early detection of incursions of foot and mouth disease into Victoria, Australia is to invest in improving producer reporting.

Optimal surveillance against foot-and-mouth disease: the case of bulk milk testing in Australia

Previous foot-and-mouth disease (FMD) outbreaks and simulation-based analyses suggest substantial payoffs from detecting an incursion early. However, no economic measures for early detection have been analysed in an optimising framework. We investigate the use of bulk milk testing (BMT) for active surveillance against an FMD incursion in Australia. We find that BMT can be justified, but only when the FMD entry probability is sufficiently high or the cost of BMT is low. However, BMT is well suited for postoutbreak surveillance, to shorten the length of time and size of an epidemic and to facilitate an earlier return to market.