Three Essays on Bio-security




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In this dissertation, several essays in the field of bio-security are presented. The estimation of the probability of an FMD outbreak by type and location of premises is important for decision making. In Essay I, we estimate and predict the probability/risk of an FMD outbreak spreading to the various premises in the study area. We first used a Poisson regression model with adjustment dispersion associated with random simulation results from the AusSpead model to estimate the parameters of the model. Our estimation and prediction show that large cattle loss could be concentrated in three counties-Deaf Smith, Parmer, and Castro. These results are based on approximately 70% of the feedlots with over 10,000 cattle located in the three counties previously mentioned. In Essay II, our objective is to determine the best mitigation strategies in minimizing animal loss based on AusSpead simulation model. We tested 15 mitigation strategies by using multiple comparison. The results show that the best mitigation strategies for all four scenarios are regular surveillance, slaughter of the infected animals, and early detection. We then used the Mixed Integer Programming to estimate costs of disposing of animal carcasses and transportation. Results show that the unit disposal cost will vary with carcass scale and the unit transportation cost also varies with the distribution of the infected premises and disposal locations. FMD seems to have varying impacts on equity markets. In Essay III, we studied returns at three different levels of the stock market. We determined results in a structural break, and then estimated the impact of the announcement of confirmed cases of FMD disease on the volatility of stock market returns by using a GARCH-Mean model. Our results show that the structure break occurs on the day with the largest number of confirmed cases for meat product firms rather than the day of the first confirmed case. We found that the conditional volatilities over the FMD period are higher than those over the sample period. The announcement of confirmed cases had the largest marginal impact on meat products. Investors may always consider maintaining a portfolio consisting of index funds or hedge funds.