The macro-economic impact of a foot-and-mouth disease incursion in New Zealand

Abstract

The 2001 outbreak of Foot-and-Mouth Disease (FMD) in the United Kingdom heightened public concern in New Zealand about the economic consequences of an outbreak of FMD, and resulted in the Reserve Bank and Treasury conducting an assessment of the macro-economic impact of a small FMD outbreak in New Zealand. The study was based on a relatively small outbreak in which 50 properties were infected over a period of two months. Cumulative losses calculated over two years from the beginning of the hypothetical outbreak were estimated at around NZ dollars 10 billion, a figure twice as large as the initial Ministry of Agriculture and Forestry estimate. The main reason for this difference is that the Reserve Bank study included the additional macro-economic effects of a slump in domestic demand. The study also demonstrated that in New Zealand under the conditions of the current OIE Terrestrial Animal Health Code for FMD, the economic impact of any programme to control FMD by vaccination in which vaccinated animals are not slaughtered, is significantly worse than rapid eradication by stamping out.