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The impact of federal indemnification on livestock biosecurity

Author

Listed:
  • Andrew Muhammad

    (Mississippi State University)

  • Keithly Jones

    (U.S. Department of Agriculture, Economic Research Service)

Abstract

This paper provided a theoretical framework for analyzing the relationship between federal indemnification and livestock biosecurity. Theoretical results show that the responsiveness of biosecurity to indemnity payments depends on a number of factors. First, the responsiveness of biosecurity will depend on the effectiveness of preventive measures in decreasing the growth in animal susceptibility. Second it was found that the responsiveness of disease abatement to changes in an indemnity was an increasing function of the marginal product of abatement. It was also found that abatement was a decreasing function of the rate at which the marginal product diminishes and that the proportion of damages indemnified has a direct affect on abatement. Lastly, it was shown that losses that extend beyond animals values may decrease the impact of indemnification on abatement levels and under certain conditions the level of biosecurity (with added losses)may exceed the no-indemnity optimal.

Suggested Citation

  • Andrew Muhammad & Keithly Jones, 2008. "The impact of federal indemnification on livestock biosecurity," Economics Bulletin, AccessEcon, vol. 17(10), pages 1-9.
    • Handle: RePEc:ebl:ecbull:eb-08q00001
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    File URL: http://www.accessecon.com/pubs/EB/2008/Volume17/EB-08Q00001A.pdf
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    References listed on IDEAS

    as
    1. Keith H. Coble & Thomas O. Knight & Rulon D. Pope & Jeffery R. Williams, 1997. "An Expected-Indemnity Approach to the Measurement of Moral Hazard in Crop Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 216-226.
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    Cited by:

    1. Kobayashi, Mimako & Melkonyan, Tigran A., 2011. "Strategic Incentives in Biosecurity Actions: Theoretical and Empirical Analyses," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(2), pages 1-21, July.
    2. Wang, Tong & Hennessy, David A., 2010. "Livestock Disease Indemnity Design When Biosecurity Externalities Exist," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 60944, Agricultural and Applied Economics Association.

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    More about this item

    Keywords

    livestock;

    JEL classification:

    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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