Forsythe KW


An economic model for routine analysis of the welfare effects of regulatory changes--draft



Publication type

Tech report


2014-04-24 19:16:19+00:00


2016-07-27 18:40:31.209332+00:00


Extended information


The purpose of developing the economic model discussed herein is to have and maintain a routine systematic method of analyzing the “relative cost” or “cost-effectiveness” of different strategies or control measures of Veterinary Services program diseases (e.g., brucellosis and pseudorabies). The economic model provides a means of evaluating:

(1) Benefits and costs of control programs for the foreseeable future under current program policies and activities; and

(2) Provides methods for analyzing changes in policies and activities. A key goal for the model is reducing turnaround time for analyses.

As stated in Lichtenberg and others, “To be useful in policy assessments, welfare methodologies must meet certain requirements. First, they must provide estimates of the efficiency impacts of
alternative policies, measured by changes in net social surplus. Second, estimates of the distributional effects of proposed policies must be provided. Third, they must be able to utilize data constructed without regard to economic needs by engineers and natural scientists (e.g., entomologists or agronomists). Finally, they must be capable of producing results on short notice.”

Market and equity effects of policy or activity changes can be measured with the model. The net benefits and costs of these changes can be determined from estimates of

(1) The yield or unit cost effects of the changes on affected livestock operations,

(2) How market prices and quantities adjust to these effects,

(3) How consumers and producers are affected by the adjustments, and

(4) Government expenditures required to make the changes.

There are many potential applications for the model. The model can be used to evaluate changes in the efficiency of surveillance systems, diagnostic tests, cleanup programs, etc. The model is focused primarily on domestic Veterinary Services disease programs but has more general applications, such as in regulatory impact analyses for measuring the effects of changes in regulations governing trade in animals and animal products. The model is equally applicable to plant pest issues.

The documentation that follows is written for an audience that includes both economists and biological scientists who may be interested in employing the model as part of an evaluation of regulatory programs related to plant and animal health.