The economics of livestock disease: Farmer choices

1
The economics of livestock disease Farmer
choices

• Governance of Livestock Disease
• SVEPM
• 01 April 2009

2
Why do farmers manage disease the way they do?

• The conventional view (rational choice)
• Resource endowment and optimum choice
• Farmers as autonomous decision makers who take
  the world around them as given
• Implication Behaviour and choice viewed as
  equivalent

3
Why, contd.

• Behavioural view
• Farmers decision making subject to influences
  from outside (e.g., peers, Vets, legislation...)
• The psychology of economic decision making
• farmers own belief, compliance with social
  convention and degree of control over resources
  and circumstances.
• Implication divergence between choice and
  behaviour

4
Why, contd.

• A network view
• Individual farmers are linked with each other in
  a network of relationships
• A farmers decision to link with others or not to
  made on cost-benefit considerations
• a three-way network interaction assumed among
• Structure- e.g., of contact
• Behaviour e.g., mode of disease management
• Epidemiology e.g., prevalence,

5
Evaluation

• Each view has a contribution to make to the
  understanding of farmers current disease
  management
• Veterinary drugs and medicine e.g., Every
  disease management associated with a certain cost
  of drugs (what is question)
• Issue of disease management adoption can be
  viewed an econo-psychological/network problem
  (why and how questions)
• How much drug to buy can be viewed as an
  optimization problem

6
Economic models of infectious animal disease
lit. audit

• Conventional modelling costs and benefits of
  disease incidence and management, growth models,
  partial/general equilibrium, etc
• Game-theoretic models, e.g., Incomplete
  information uncertainty, herding
• Public goods and other externalities - market
  response, reputation effects, risk
  (re)allocation
• Nash equilibrium impossibility of eradication
  under self-motivated behaviour inefficiency of
  outcome
• Network structures
• Key questions efficiency vs. stability,
  multiplicity, dynamics

7
Conceptual frameworks at GoLD

• Economic epidemiologys thesis the cyclicality
  of disease prevalence, an example
• Environmental factors increase disease
  prevalence
• Increased prevalence places a burden on farmers
  initially
• Farmers influence the level of disease prevalence
  ultimately
• Behavioural laxity leads to resurgence of
  disease, and the cycle repeats

8
Conceptual frameworks at GoLD

• 2 Biosecurity and Network structure
• The natural view of this model is of animals
  becoming ill and recovering
• An alternative centres on farmers as animals
  fall ill, farmers
• Notice illness and respond with treatment
• e.g. susceptible farms drop links with infected
  farms (inward biosecurity) and vice versa
  (outward biosecurity)
• This influences the distribution of disease
  prevalence (of endemicity) within a country

9
Current Empirical frameworks at GoLD

• Testing whether public incentive mechanisms are
  compatible with farmers incentives for disease
  control
• Testing for farmers behavioural response to
  changes in disease prevalence
• Testing for the existence of networks using
  bio-economic data

10
Research plans

• Panel estimates of three-way interaction
• Policy impact assessment
• Agent-based simulation
• Model-supported scenario development and gaming

11
What and how much do we know about farmers?

• Are farmers autonomous in their decision-making?
• Do social networks influence farmer behaviour?
• Do farmers respond to changes in endemic disease
  prevalence rates?
• Do compensation mechanisms influence the degree
  of farmers disease control?