Modeling Economic Resilience and Animal Disease Outbreaks in the Texas High Plains

Foot and Mouth Disease (FMD) could have a significant impact on the U.S. agriculture industry and the welfare of U.S. producers and U.S. consumers. In order to address the potential impact from animal disease outbreaks, this project is designed to utilize a combined epidemic and economic modeling framework to evaluate animal disease management strategies which can be used to reduce the potential losses in an unusual event such as FMD outbreaks. In this study, we compare the welfare changes among three different parties with different strategies using, 1) ANOVA analysis; 2) cost benefit analysis; and 3) Risk Aversion Coefficient (RAC) analysis. Four types of index feedlots are selected in the study including, Feedlot Type 1 (> 50,000 heads of animals), Feedlot Type 4 (backgrounder feedlot), Large Beef Grazing (>100 heads of animals), and Backyard (<10 heads of animals). Results suggest that early detection of FMD events has the advantage in reducing risk as shown in the epidemiological impacts. Enhanced surveillance is found to be a preferred mitigation strategy for U.S. consumers in the scenario of smaller feedlot disease introductions (e.g. Large Beef Grazing and Backyard) and for U.S. producers in the larger feedlot disease introduction scenarios (e.g. Feedlot Type 1 and Feedlot Type 4). Adequate vaccination is not cost effective when seeking to minimize average loss but becomes a preferred strategy when the risk aversion rises. Risk modeling with stochastic programming adopted in this study also confirms the importance of incorporating risk evaluation into decision making process. It offers another option for us to evaluate the mitigation strategies. Two portfolio models are adopted in this study including, E-V model (mean variance portfolio choice model) and Unified model. The results show that the preference for control strategies depends on risk attitude. Early detection proves to be preferable for U.S. consumers and is also preferred by U.S. processors and producers as Risk Aversion Parameters (RAP) rises. Adequate vaccination strategy can benefit U.S. consumers but does not give U.S. processors a better outcome. Adequate vaccination provides a better choice for U.S. producers when the RAP rises. Enhanced surveillance is preferred for U.S. consumers. For U.S. processors, enhanced surveillance does not give a better risk/return outcome. U.S. producers are likely to switch their preferences from regular surveillance to enhanced surveillance as their RAP rises.