Irreversible decision making in contagious animal disease control under uncertainty: an illustration using FMD in Brittany

Olivier Mahul and Alexandre Gohin ()
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Alexandre Gohin: ESR - Unité de recherche d'Économie et Sociologie Rurales - INRA - Institut National de la Recherche Agronomique

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Abstract: The concept of irreversible investment is applied to highly contagious animal disease control when uncertainty about the spread of the disease is resolved over time. In comparison with the strategy of destroying infected herds, the vaccination programme causes additional losses that cannot be recovered. These sunk costs are thus irreversible. Therefore, the gain from waiting for new information, namely the quasi-option value, should induce animal health authorities to delay the decision to vaccinate if the probability of a widespread epidemic is not too high. A numerical example is developed for foot and mouth disease (FMD) in Brittany.

Keywords: gain from waiting; foot and mouth disease; irreversible control strategy; contagious animal disease (search for similar items in EconPapers)
Date: 1999
Note: View the original document on HAL open archive server: https://hal.science/hal-01952087v1
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Citations: View citations in EconPapers (22)

Published in European Review of Agricultural Economics, 1999, 26 (1), pp.39-58. ⟨10.1093/erae/26.1.39⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01952087

DOI: 10.1093/erae/26.1.39

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