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<ol> <li>Analyze ongoing competitive changes in the international beef market due to changes in consumer incomes, production technology, and sanitary regulations,
<li>Analyze the effects of Foot and Mouth Disease (FMD) or other exotic animal disease on the prices and quantity of beef traded internationally,
<li>Examine the expected domestic and international effects of eradicating exotic animal diseases like FMD and Bovine Spongiform Encephalopathy (BSE) in important beef-producing countries where they exist or have recently existed,
<li>Examine the potential economic effects of an outbreak of exotic animal disease like FMD and BSE on the US (California) economy and on international markets,
<li>Analyze how the design of domestic policy and international agreements can mitigate the expected economic damage from an exotic disease outbreak in any country.</ol>
The project will analyze how exotic animal diseases affect international trade flows of meat and will examine alternative policies for disease management so that, by improving management of exotic diseases, economic welfare in livestock exporting and livestock importing countries can be improved.
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<ol> <li>Collection of data on beef prices and quantities traded for all major beef exporters and importers,
<li>Construction of models to examine whether beef prices from major exporters are converging,
<li>Construction of two stage panel data models to estimate the effect of FMD on access to different markets and the determinants of beef prices in different models, which will then be used to estimate the effect of FMD on the price received for beef in international markets,
<li>Construction of models to estimate the dynamic effects of changing Argentine and Uruguayan exports on the international beef market and their use to study these effects under different plausible scenarios,
<li>Use of existing model of FMD effect to simulate effect of changing industry procedures to reduce FMD effects,
<li>Collection of US and European data on BSE effects,
<li>Review of national and international sanitary regulations that affect trade of live animals and animal products, starting with the agreement on SPS but focusing mainly on detailed regulations that become in-effect embargoes on imports or limit or facilitate export potential,
<li>Simulation modeling for evaluating the impacts on consumers and producers in both exporting and importing countries and regions that result from SPS-based embargoes or other regulatory policies on international trade of animals and animal products,
<li>Evaluation of policy alternatives under different possible scenarios incorporating various degrees of trade liberalization and sanitary policies, and finally
<li>Extending our analysis into the case of other exotic diseases such as Asian avian flu and Newcastle disease (END) by drawing implications of our findings for the similar outbreak of avian diseases. </ol>
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Finally, in the case of BSE, we will use a standard static trade model to analyze the economic costs of different monitoring and control strategies, particularly as they relate to international trade. To study how policy can mitigate the international trade costs of disease outbreaks, we will estimate the welfare effects of the trade embargoes applied under current Sanitary and Phyto-Sanitary international agreement (SPS) for invasive animal diseases management, estimate the welfare effects of regulatory policies that limit import access or affect export potentials under current SPS framework for invasive animal diseases management, evaluate alternative regulatory options that would increase domestic and global welfare, and provide insights onto how to improve international standards for animal disease management that would enhance global welfare. A major difficulty in interpreting the implications of the December 2003 BSE finding in the United States is distinguishing potential supply and demand shifts induced by the event from other background changes in prices and quantities that would have occurred in any case. Using a combination of detailed examination of data trends, econometrics with monthly data and building on plausible assumption from industry experts, we are attempting to disentangle the various shifts in supply and demand to measure how consumers and producers reacted to BSE.