The economic effect of the Canadian BSE outbreak on the US economy

Christine Wieck and David Holland

Applied Economics, 2010, vol. 42, issue 8, 935-946

Abstract: Before the discovery of the first Bovine Spongiform Encephalopathy (BSE) cow in May 2003, Canada was the most important exporter of live cattle into the US with a share of 74% of US total live cattle imports. With the outbreak of BSE in Canada, the US ceased imports of Canadian cattle and beef products. This study analyses the short to medium-term effect of the import trade ban for the US economy using a 20 sector, economy wide Computable General Equilibrium (CGE) model. Uncertainty about exogenous elasticity values was addressed using Monte Carlo techniques. Beneficiaries of the trade ban are the cattle industry and related sectors, such as feed production and agricultural service providers. The US economy as a whole, however, is negatively affected with a loss of ∼$-1.7 billion in gross domestic product and -11000 jobs. The model shows how the restriction on Canadian cattle imports generates income losses for both rich and poor households in the US.

Date: 2010
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DOI: 10.1080/00036840701721125

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