Managing dynamic epidemiological risks through trade.
There is growing concern that trade, by connecting geographically isolated regions, unintentionally facilitates the spread of invasive pathogens and pests - forms of biological pollution that pose significant risks to ecosystem and human health. We use a bioeconomic framework to examine whether trade always increases private risks, focusing specifically on pathogen risks from live animal trade. When the pathogens have already established and traders bear some private risk, we find two results that run counter to the conventional wisdom on trade. First, uncertainty about the disease status of individual animals held in inventory mayincreasethe incentives to trade relative to the disease-free case. Second, trade may facilitatereducedlong-run disease prevalence among buyers. These results arise because disease risks are endogenous due to dynamic feedback processes involving valuable inventories, and markets facilitate the management of private risks that producers face with or without trade.
Michigan State University, Department of Agricultural, Food and Resource Economics, Morrill Agriculture Hall, East Lansing, MI 48824, USA.
Richard D
RD
Horan
Yale University, School of Forestry and Environmental Studies, USA.
Eli P
EP
Fenichel
University of Wyoming, Department of Economics and Finance, USA.
David
D
Finnoff
Michigan State University, Department of Agricultural, Food and Resource Economics, Morrill Agriculture Hall, East Lansing, MI 48824, USA.
Christopher A
CA
Wolf
Arbitrage; Bioeconomics; Infectious disease; Joint determination; Thresholds