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Economics of Environmental, Natural Reource, and Agricultural Supply Chain Crisis Mitigation


The overall objective is to analyze factors which have significant impacts on management of natural resource and agricultural systems in the Pacific Northwest. Economic models will be developed to assist in allocating resources across actions which can be classified into prevention, preparedness, response, and recovery categories. Prevention and preparedness are pre event (ex ante) measures, while response and recovery are post event (ex post) measures intended to reduce welfare losses associated with disturbances in agricultural industry and/or environment.

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NON-TECHNICAL SUMMARY: Whether naturally-occurring, intentionally-orchestrated or unintentionally-caused, disruptions in ecosystem health and stability could have significant consequences on agricultural productivity, on regional and national economic systems, and on the environment. The overarching theme and purpose of this project is to study the elements of ex ante versus ex post allocation of efforts and resources pertaining to mitigation of disruptions in the agricultural industry and in ecosystem health and stability.

APPROACH: Both, analytical and empirical methods are expected be used to address these issues. Empirical methods will be used to quantitatively evaluate the implications of disturbances in agricultural production and environment, and to assess the effectiveness of corresponding mitigation strategies. The set of empirical methods includes, but is not limited to, econometric methods including count data analysis and mathematical programming methods including linear, non-linear and dynamic. <P>

PROGRESS: 2008/01 TO 2008/12 <BR>
OUTPUTS: Organized and chaired a principal paper session entitled "Effects Of Biosecurity Risk and Food Scare Events on Food Prices and Demand" at the annual meetings of the American Agricultural Economics Association, Orlando, FL, July 2008. Topics discussed were "Real Options and Game Theoretical Models of Interdependent Security along the Milk Supply Chain", "How Resilient Is the Demand for Food Products Following a Food Safety Scare", and "How and for how long do the frequency and severity of food scare events affect commodity market prices and volatility". Presented a paper, "Economics Analysis Of Mitigation Strategies For FMD Introduction In Highly Concentrated Animal Feeding Regions" at the Agricultural and Applied Economics Association annual meetings in Orlando, FL, July 2008. Participated as a coauthor with Yanhong Jin and Gabriel Power on a paper, "The Impact of North American BSE Events on Live Cattle Futures Prices" at the annual meetings of the Agricultural and Applied Economics Association, Orlando, FL, July 2008. Presented a paper, "Modeling of Avian Influenza Mitigation Policies within the Backyard Segment of the Poultry Sector" at the Western Agricultural Economics Annual Meetings in Big Sky, Montana, June, 2008 <BR>PARTICIPANTS: Collaborators on the study of the effects of BSE on commodity futures prices were: Yanhong Jin (Rutgers University), and Gabriel Power (Texas A&M University) Collaborators on the study of FMD mitigation in highly concentrated animal feeding region are Bruce McCarl (Texas A&M University), Michael Ward (University of Sydney), Linda Highfield (Texas A&M University), Bo Norby (Texas A&M University). This study was in part funded by the National Excellence Center for Foreign Animal and Zoonotic Disease Defense housed at Texas A&M University. <BR>TARGET AUDIENCES: Target audiences for these studies were livestock industry, government agencies responsible for animal health management and control of infectious animal disease outbreaks, and academic professionals involved in related research. The results of these studies were presented at the annual meetings of Agricultural and Applied Economics Association, and Western agricultural Economics Association. <BR><BR>IMPACT: 2008/01 TO 2008/12<BR>
The session on "Effects Of Biosecurity Risk and Food Scare Events on Food Prices and Demand" at the AAEA produced discussion which helped the attendees understand the risk related food scare events and market behavior. Implications for market demand and for commodity prices were discussed. Suspension of trade between US and Canada, caused by BSE outbreaks in Canada, was identified and discussed as a cause of structural change in commodity prices. In the study on the effects of BSE events on daily live cattle futures prices we learned that live cattle futures market experienced a structural break detected in October 2003. Several factors which could have potentially caused this structural break were identified. The study examined the effects of all sixteen North American BSE cases on live cattle futures prices by contract maturity month. More distant futures prices were shown to be affected lees than nearer contract prices. In the study on mitigation strategies for Foot and Mouth Disease (FMD) introduction in highly concentrated animal feeding regions we examined the effectiveness of enhanced surveillance, early detection, and enhanced vaccination strategies. It was discovered that early detection is the most desirable strategy for minimizing overall regional economic losses inflicted by FMD. These results contribute to the preparedness of US livestock industry to potential outbreak of FMD with the goal of minimizing total mitigation costs and induced damages. The study on mitigation of Avian Influenza showed that efforts to reduce the length of asymptomatic and symptomatic periods and efforts to reduce inter flock contact rates function as substitute strategies in the context minimizing costs of mitigation. The results indicate that for shorter asymptomatic periods the efforts to control inter flock contact rates should concentrate on symptomatic flocks, while for longer asymptomatic periods the control of inter flock contacts should be focused on asymptomatic flocks. These results provide an additional guidance principle for agencies responsible for preparedness and response measures against infectious livestock disease outbreaks.

Elbakidze, Levan
University of Idaho
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