Analysing Incentive and Cost Sharing Issues in Livestock Disease Management

TY - BOOK

T1 - Analysing Incentive and Cost Sharing Issues in Livestock Disease Management

AU - Biira, Juliet

PY - 2016

Y1 - 2016

N2 - This PhD thesis tackles two main issues in livestock health management: a) the incentives foranimal disease prevention on Danish livestock farms and b) allocation of costs of animal diseaseoutbreaks and animal disease preparedness, among stakeholders involved in the livestock sector.The main contributions of this thesis are firstly the investigation of incentives for Danish livestockfarmers to prevent animal diseases at the farm level and recommendations on how they could beimproved. Secondly, the exploration of a mutual fund as a possibility for risk pooling amongfarmers and how it can be arranged and lastly, a theoretical contribution to how diseasepreparedness costs could be shared.An exploration of literature on issues regarding animal disease prevention in the Danish livestocksector is used in paper 1, while an empirical approach is used in paper 2, 3 and 4. A theoreticalapproach is used in paper 5. The thesis consists of two parts; first is the introduction section where Iintroduce the thesis in general and provide an overview of the objectives and main theories and thesecond part includes the 5 papers which address the thesis objectives.Paper 1 uses existing literature to elaborate on the private and public incentives that influenceDanish farmers to prevent animal diseases. The paper reveals that public incentives could beimproved by clearly stating repercussions for not following certain regulations and the currentcompensation strategy could be adjusted in a way that there is a balance between incentivizingfarmers to report suspicion of animal diseases but to also have strong enough incentives to preventdiseases.Paper 2 investigates factors affecting farmers’ willingness to participate in a hypothetical mutualfund for contagious animal disease losses and reasons for not participating for those not willing toparticipate. The research is based on data from a survey of 325 Danish pig farmers sent out in May2014. The results reveal that factors significantly affecting the deciding to participate are famers’knowledge on animal diseases, risk attitude and SPF classification of the farm. One key take awayfrom this study is that many farmers would accept risk based premium payments.Paper 3 builds upon paper 2 by analysing the willingness to pay for the hypothetical mutual fundusing a choice experiment. Results of the mixed logit model show heterogeneity among farmerpreferences and the Latent class model reveals two distinct classes where one class has a positivewillingness to pay and another has a negative willingness to pay. For both classes, farmers arewilling to pay the most for losses related to restocking.Paper 4 seeks to explore a possibility of risk profiling Danish pig farms according to their risk withrespect to introduction of animal diseases. This study uses an empirical methodology of conjointanalysis to quantify the importance of different risk factors. Both expert and farmer opinion wasstudied. Results indicate that importation stands out as the most important factor followed by thefrequency of contact with other farms and agricultural entities and both experts’ and farmers’opinions are generally similar. Risk profiling of the sample farms shows that majority of the farmsare low risk farms and reveals the possibility of risk profiling for future use.Paper 5 uses a theoretical approach to analyse the normative foundation of allocation rules that canbe used in sharing costs related to animal disease preparedness. We assume that effort incurred bythe relevant government authority cannot be observed by the farmers and construct a liability indexthat describes to what extent each farmer is liable for the total cost. We set several axioms to befulfilled by this index and finally, we argue for the practical relevance of this index and show how itcould be used in practice.

AB - This PhD thesis tackles two main issues in livestock health management: a) the incentives foranimal disease prevention on Danish livestock farms and b) allocation of costs of animal diseaseoutbreaks and animal disease preparedness, among stakeholders involved in the livestock sector.The main contributions of this thesis are firstly the investigation of incentives for Danish livestockfarmers to prevent animal diseases at the farm level and recommendations on how they could beimproved. Secondly, the exploration of a mutual fund as a possibility for risk pooling amongfarmers and how it can be arranged and lastly, a theoretical contribution to how diseasepreparedness costs could be shared.An exploration of literature on issues regarding animal disease prevention in the Danish livestocksector is used in paper 1, while an empirical approach is used in paper 2, 3 and 4. A theoreticalapproach is used in paper 5. The thesis consists of two parts; first is the introduction section where Iintroduce the thesis in general and provide an overview of the objectives and main theories and thesecond part includes the 5 papers which address the thesis objectives.Paper 1 uses existing literature to elaborate on the private and public incentives that influenceDanish farmers to prevent animal diseases. The paper reveals that public incentives could beimproved by clearly stating repercussions for not following certain regulations and the currentcompensation strategy could be adjusted in a way that there is a balance between incentivizingfarmers to report suspicion of animal diseases but to also have strong enough incentives to preventdiseases.Paper 2 investigates factors affecting farmers’ willingness to participate in a hypothetical mutualfund for contagious animal disease losses and reasons for not participating for those not willing toparticipate. The research is based on data from a survey of 325 Danish pig farmers sent out in May2014. The results reveal that factors significantly affecting the deciding to participate are famers’knowledge on animal diseases, risk attitude and SPF classification of the farm. One key take awayfrom this study is that many farmers would accept risk based premium payments.Paper 3 builds upon paper 2 by analysing the willingness to pay for the hypothetical mutual fundusing a choice experiment. Results of the mixed logit model show heterogeneity among farmerpreferences and the Latent class model reveals two distinct classes where one class has a positivewillingness to pay and another has a negative willingness to pay. For both classes, farmers arewilling to pay the most for losses related to restocking.Paper 4 seeks to explore a possibility of risk profiling Danish pig farms according to their risk withrespect to introduction of animal diseases. This study uses an empirical methodology of conjointanalysis to quantify the importance of different risk factors. Both expert and farmer opinion wasstudied. Results indicate that importation stands out as the most important factor followed by thefrequency of contact with other farms and agricultural entities and both experts’ and farmers’opinions are generally similar. Risk profiling of the sample farms shows that majority of the farmsare low risk farms and reveals the possibility of risk profiling for future use.Paper 5 uses a theoretical approach to analyse the normative foundation of allocation rules that canbe used in sharing costs related to animal disease preparedness. We assume that effort incurred bythe relevant government authority cannot be observed by the farmers and construct a liability indexthat describes to what extent each farmer is liable for the total cost. We set several axioms to befulfilled by this index and finally, we argue for the practical relevance of this index and show how itcould be used in practice.

UR - https://soeg.kb.dk/permalink/45KBDK_KGL/fbp0ps/alma99122224947505763

M3 - Ph.D. thesis

BT - Analysing Incentive and Cost Sharing Issues in Livestock Disease Management

PB - Department of Food and Resource Economics, Faculty of Science, University of Copenhagen

ER -