Plant Biosecurity Policy Evaluation: The Economic Impacts Of Pests And Diseases

The Economic Impacts of Pests and Diseases

David Cook, Rob Fraser;Andrew Wilby;;

• Publisher: WSPC (EUROPE)
• Year: 2017
• eBook ISBN: 9781786342171
• Topic: Sciences biologiques
• Subtopic: Science générale

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Good biosecurity policy decisions, particularly in relation to plant industry protection, are of ever increasing importance. Growth in the speed and diversity of trade, the effects of climate change and the resultant spread of pests and diseases continue to highlight this. This book contains an introduction to the issues confronting plant biosecurity policymakers and how the economic risks of invasive species can be assessed over time. It describes both probability models that show what might happen if species 'invade' a region and values models that help decide what management actions should be taken.

As the first book of its kind focusing on a comprehensive range of policies, case studies and applications, Plant Biosecurity Policy Evaluation is perfect for biosecurity policy makers, decision-support specialists, advanced students of agricultural studies, public policy and invasive species research.

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CHAPTER 1

BACKGROUND AND OBJECTIVES

1.1 Analysing Invasive Alien Species (IAS) Risk

This book acknowledges that we can never know enough about agro-environmental systems to maintain them perfectly; nor can we know enough to respond perfectly to changes in these systems induced by invasive alien species (IAS). IAS are organisms that have or could potentially have a net negative effect on societies and are capable of reaching new areas via natural or human-aided means. The debate about how best to control their impacts on society is a battleground of ideologies that on the one hand wants governments to pay for IAS management, and on the other wants private ‘beneficiaries’ to pay for it. We refer to activities related to the prevention and management of IAS damage as ‘biosecurity’.

Biosecurity is plagued (please pardon the pun) by measurement problems. We know IAS can cause a lot of damage, but no amount of measurement or experimentation can tell us how large a problem it presents day-to-day, or year-to-year. Social, ecological and economic systems are, after all, complex.

Uncertainty within agro-environmental systems is a problem for both markets and governments alike. Instances have and will always occur where third parties are affected by economic activity, and there can be no better example of this than IAS damage. It represents a negative externality caused by industries and governments in the business of moving host material from place to place, and agriculture, environment and society are the affected third parties.

Box 1. ‘Invasive Alien Species’ Defined

An IAS is a species that does not naturally occur in a specific region and whose introduction does or is likely to cause a net loss in social, economic or environmental welfare. Various terms have been used to describe or categorise problematic species, including alien, exotic, invasive, noxious, non-indigenous, non-native, nuisance, pest and weed. This array of adjectives has sometimes led to confusion and misunderstanding between scientists and policymakers. Use of the word invasive, in particular, has been problematic as ecologists often use it to describe species that spread quickly from an initial site of introduction, whereas in policy and legal documents it tends to imply negative effects caused to societies. A major source of confusion lies in the fact that a species’ invasiveness does not necessarily imply it will cause large impacts (Ricciardi and Cohen, 2007).

Because it is difficult to measure, we cannot expect the price mechanism to include a social or environmental externality when balancing the supply and demand of transported goods. If the externality is negative, not including it necessarily means the price of the product concerned is too low, and demand for it is too high.

It is sometimes easy to overlook the fact that price does capture a plethora of other sophisticated information. In fact, price is so effective in conveying so much to markets that it is rather ominous that it cannot internalise IAS externalities all by itself. It hints at an imposing information problem; one that is also faced by government should it intervene in IAS-related issues.

We make no distinction between a decision support person working for a government agency or a private industry. Our interest is purely in IAS preparedness and response decisions. These are made on a regular basis by different tiers of government and private industry, and to the extent possible are informed by analytical information. In terms of economics, the most common form this information takes is cost–benefit analyses that determine net financial gains or losses from taking certain courses of action, be they responses to incursions when they happen or risk-reduction measures before they happen.

Box 2. What is a Negative Externality?

Son	Hey Dad, have a look at the skid I did on the gravel by the path!
Father	Very impressive son, now go and clean it up.
Son	Why?
Father	Because there are now stones all over the path, which I often walk on to get the paper in the morning. As a result there is now an increased likelihood I will step on a stone and hurt my foot. In other words, while your play activity has given you a benefit, you have imposed a cost on me called a ‘negative externality’. I may not experience that cost straight away; I might be lucky for a time and not tread on one of the stones. However, in the long run I have a much higher chance of incurring injury by treading on one. Now, if you had saved all of your pocket money and bought this house, you would have what is known as a property right. This would entitle you to do whatever you wish with the house, including doing skiddies on the gravel by the path. I would still be inconvenienced by this behaviour, but I could internalise the externality by offering you an incentive like increased pocket money to clean up the stones and not do any more skids. Unfortunately for you, I happen to own the property right and I require the path to be restored to its former glory, please; that is, unless you’d care to offer me compensation for the externality.
Son	Clayton had a nose bleed at school today.

As we shall see though, there are limits to what conventional cost–benefit analyses can be expected to deliver. Virtually all decision support people are time-pressured. To influence private or government action our methods of calculating benefits and costs must be expedient. Biosecurity staff seldom have the luxury of researching specific species in detail over months or years. Instead, they are usually asked to predict the economic, environmental and social impacts of threatening or newly arrived species in areas they have not been observed in before; all within a matter of hours, days or (at best) weeks. Time is critical, particularly in the case of new species incursions, because the window of opportunity for successfully removing them is usually short. Moreover, the context in which a response effort is to be made constantly changes due to external pressures, like political and economic cycles.

Box 3. What is the Appropriate Role for Government in Biosecurity?

It is difficult to say categorically what biosecurity activities government should be involved in and what it should leave to the market. The authors neither advocate government intervention in all biosecurity matters nor discourage it. Instead we focus on the underlying principle that the contributions of public and private institutions to an intervention should match their relative share of benefits. The problem is that both governments and markets have inadequate information to identify beneficiaries or to internalise IAS externalities. Let’s take the example of an imported good that could act as a pathway for a harmful IAS that can affect ecosystems as well as agricultural crops. While the price of the good includes a host of information about its producer’s comparative advantage, it does not include intangible information about the potential damage caused if importing the good leads to an IAS introduction. There are no easily-accessible prices for non-market assets like native ecosystems, so the market cannot correct the negative externality associated with importing the good. By the same token, governmental intervention to correct the situation faces the same problem. Suppose a government chooses to impose a tax on the good in the form of costly IAS risk-reduction measures that must be undertaken prior to import. Without information on what the IAS might cost if it was introduced, the government cannot know the appropriate tax to impose. Even if it did, the tax would be inequitable as it would inflate the price of the good for all consumers, including those who receive a negligible share of any benefit created. The World Trade Organization (WTO) (itself a form of government influencing global markets) has rules and guidelines that Member countries must abide by when taxing imports, further complicating matters.

This book describes methods the authors have used to estimate the value of IAS externalities on agriculture and, when necessary, to combine them with non-monetary information concerning environmental and social externalities. The ideas put forward move away from scenario-based decision support analyses, concentrating instead on combining probabilistic impact models that show what might happen if species ‘invade’ a region and values models that help to determine what actions are taken given the possible impacts. This approach has evolved from the ground up, as it were, by informing biosecurity decisions predominantly in the State of Western Australia, but elsewhere around the world. This has been done with the help of both private and government institutions.

Examples are used to show how a decision support person might use probabilistic impact models to rapidly predict the economic effects IAS could have without taking too many liberties with regard to biology or economics. All scientific and economic concepts used in these models are relatively simple and well-documented, and when combined form a sufficiently detailed and defendable foundation for financial decisions. However, examples will also be shown where these models can be strengthened through the use of a values model that considers non-monetary components of impact that are also relevant to decision makers. This is an important requirement of any decision support method involving IAS of agricultural and non-agricultural significance.

The ideas put forward in the book are far from a panacea. They are practical and accessible, but are only a snapshot in time. Decision support systems are evolving, and in the course of our discussions we will mention several new developments set to revolutionise the way complex information is delivered to decision makers. Some of these are tantalisingly close to being used in practice. Indeed, the rapid development of interactive map-based technologies and agent-based “games” could make our snapshot age prematurely. We certainly hope so! However, we also hope these future tools can draw on our methods, build on them and remain adaptable to the complexities of agro-environmental systems as well as the constraints faced by decision support people the world over.

1.2 Agricultural vs. Environmental Systems: Regulatory Policy on IAS Externalities

Since you had cause to pick up this book in the first place, you are most probably aware that the threats posed by IAS are very real, potentially very damaging and are — now here is where we hit trouble — probably increasing, most likely as a result of trade. As globalisation continues, non-tariff trade barriers safeguarding movements of IAS-host material are being placed under increased scrutiny, and are sometimes difficult to justify given their inflationary impact on consumer prices. While the costs of non-tariff barriers are immediate and relatively certain, the benefits that accrue over time are highly uncertain and are subject to discounting which lowers their value as we move forward in time. Worse, the benefits may not be restricted to agricultural commodities with known values, and may also include environmental, social or cultural assets with unknown values.

Governments have long recognised the threat of global species exchange and it has been relatively easy to develop broad political consensus on IAS problems, as they constitute a shared, external threat which affects many economies. However, when it comes to the technical side of intervening to fix the IAS externality, governments have failed for the same reason that the market created the problem in the first place. There is insufficient information about potential IAS impacts to internalise the externality.

This lack of critical information means that government intervention to fix the problem has largely been underpinned by anecdotal, rather than analytical information about IAS impact and risk. With a large number of biological invasion “horror stories” to draw from, literature on IAS problems has raised awareness of the global nature of this problem (e.g. Bright, 1998; Baskin, 2002). Despite them being, in many cases, vague and non-specific, ‘broad brush’ quantitative economic assessments have been used by policymakers simply because there was no alternative. Perhaps most significant has been work by OTA (1993) and Pimentel et al. (2000), the latter famously estimating that the annual cost to the United States of IAS and their control was $137 billion. The US Executive Order of 2000, by which President Clinton established an interministerial Invasive Species Council, was effectively built around this figure.

Pimentel et al. (2002) have since extended their approach to estimate a global annual loss of $1.5 trillion. These estimates were formed by summing cost data from a series of case studies identified in the IAS literature which were then scaled up to national and international levels using multipliers. As costs include both losses and costs of control, and it is not clear if the aggregate figure represents the impacts of IAS per se or responses to them.

While these studies have been important in raising awareness of the potential magnitude of the IAS problem, they do not provide a solid platform for the development of IAS-specific policy when it is needed. Species introductions today may cause economic, environmental and social problems tomorrow that are different from those anticipated by our current markets and government agencies. So, species or pathway-specific actions somehow need to be informed by forward-looking, multi-faceted decision support tools rather than backward looking, aggregated assessments.

The externality problem with IAS will remain relevant for the foreseeable future. For as long as agriculture has existed insects, plants and pathogens have caused outbreaks that have reduced crop and livestock production in and between regions. Industry self-regulatory and government institutions have emerged to prevent introductions of IAS, yet agricultural losses to IAS have remained considerable.

These losses not only include physical production losses, increased growing costs and prevention of trade, but also include environmental and social losses. Although more difficult to tally than agricultural losses, ecologists have long warned of severe environmental consequences of IAS (Williamson, 1996). This view is reflected in international agreement, embodied in the Convention on Biological Diversity (1991), that countries should prevent, eradicate or control species which threaten local species, habitats or ecosystems. This gives recognition to the dual effects of environmental bioinvasions — reduction of native biodiversity (including the extinction of native species), and the disruption of ecosystem services.

While agricultural and environmental systems both face growing threats from IAS, non-agricultural risks tend to receive less attention due to a lack of credible quantified evidence. For example, following a Canadian request to access Australia’s salmon market in 1994, Australian quarantine authorities commissioned the Australian Bureau of Agricultural and Resource Economics to prepare an economic analysis indicating potential economic damages that could result from diseases considered an importation risk (McKelvie et al., 1994). No environmental risks were considered. Instead, the threat of ...

Table of contents

• Cover Page
• Title
• Copyright
• Dedication
• FOREWORD
• ABOUT THE AUTHORS
• ACKNOWLEDGEMENTS
• Contents
• Chapter 1. BACKGROUND AND OBJECTIVES
• Chapter 2. AN ECOLOGICAL MODEL FOR PLANT PEST AND DISEASE OUTBREAKS
• Chapter 3. A BIOECONOMIC MODEL FOR ANALYSING IAS IMPACTS
• Chapter 4. CASE STUDIES OF IAS AFFECTING PLANT INDUSTRIES
• Chapter 5. VARYING PATTERNS OF IMPACT OVER TIME: THE CHOICE OF TIME HORIZON
• Chapter 6. PREVENTION VS. ERADICATION
• Chapter 7. DEALING WITH NON-MONETISED ENVIRONMENTAL AND SOCIAL IMPACTS
• Chapter 8. SO FAR, SO GOOD ... SO WHAT?
• References
• Index