Assessing the economic costs of a foot and mouth disease outbreak on Brittany A dynamic computable general equilibrium analysis

Gohin, A.; Rault, A.

Outbreaks of animal diseases such as foot and mouth disease (FMD) are of great concern for agriculture. In this paper, we quantify the potential dynamic impacts of such a disease on Brittany, a French region with an important livestock sector. In order to do this, we develop a dynamic computable general equilibrium model that allows us to measure the impacts on the livestock sectors and downstream food industries. We study the impacts of a FMD outbreak including the culling infected animals, a temporary decline in demand, and restrictions on movements of live animals and meats during the FMD outbreak period. Our results show that economic losses following this disease are spread over many periods even with a one-time shock. We also find that the impacts on the various primary sectors and downstream food sectors are quite different, depending on their initial trade position. Our general equilibrium results show the great incidence of potential constraints affecting factor markets. Capital and wage constraints severely increase the aggregate costs of such disease. These results challenge the definition of a simple efficient management policy for this disease. Computable general equilibrium framework including livestock dynamics. Market effects of an outbreak of foot and mouth disease at a regional level. Lasting consequences on the livestock farms, linked sectors and downstream firms. Imperfections on labour and capital markets increase the estimated aggregate costs.