Predicting future costs of High-Pathogenicity Avian Influenza epidemics: large versus small uncertainties

Abstract

Every five years, the Dutch government and the poultry sector agree on how the direct costs of epidemics in poultry, should they occur, will be shared. In the agreement for 2005–2009 the maximum amount to be paid by the poultry sector was set considerably higher than in the 1999–2004 agreement. This increase was caused mainly by the expected financial risks associated with High-Pathogenicity Avian Influenza (HPAI) epidemics. In this paper we focus on elucidating the uncertain and the less uncertain aspects of the HPAI financial risk problem. We distinguish between (1) the probability of an introduction of HPAI in the Netherlands, (2) the transmission potential of HPAI in the Netherlands, and (3) the costs and financing issues resulting from HPAI epidemics. We argue that whereas current understanding allows relatively precise answers to the question ‘If there is an epidemic, how many farms will be affected and what will be the direct costs?’, much larger uncertainties are associated with the questions ‘What is the chance of an HPAI epidemic in the Netherlands?’, ‘How large will be the long-term government share in the direct costs?’, and ‘How large will be the indirect costs?’.

Additional keywords:

• financial risk
• risk analysis
• modelling an epidemic