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Optimal Tracking and Testing of U.S. and Canadian Herds for BSE: A Value‐of‐Information (VOI) Approach

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  • Louis Anthony Cox
  • Douglas A. Popken
  • John J. VanSickle
  • Ranajit Sahu

Abstract

The U.S. Department of Agriculture (USDA) tests a subset of cattle slaughtered in the United States for bovine spongiform encephalitis (BSE). Knowing the origin of cattle (U.S. vs. Canadian) at testing could enable new testing or surveillance policies based on the origin of cattle testing positive. For example, if a Canadian cow tests positive for BSE, while no U.S. origin cattle do, the United States could subject Canadian cattle to more stringent testing. This article illustrates the application of a value‐of‐information (VOI) framework to quantify and compare potential economic costs to the United States of implementing tracking cattle origins to the costs of not doing so. The potential economic value of information from a tracking program is estimated to exceed its costs by more than five‐fold if such information can reduce future losses in export and domestic markets and reduce future testing costs required to reassure or win back customers. Sensitivity analyses indicate that this conclusion is somewhat robust to many technical, scientific, and market uncertainties, including the current prevalence of BSE in the United States and/or Canada and the likely reactions of consumers to possible future discoveries of BSE in the United States and/or Canada. Indeed, the potential value of tracking information is great enough to justify locating and tracking Canadian cattle already in the United States when this can be done for a reasonable cost. If aggressive tracking and testing can win back lost exports, then the VOI of a tracking program may increase to over half a billion dollars per year.

Suggested Citation

  • Louis Anthony Cox & Douglas A. Popken & John J. VanSickle & Ranajit Sahu, 2005. "Optimal Tracking and Testing of U.S. and Canadian Herds for BSE: A Value‐of‐Information (VOI) Approach," Risk Analysis, John Wiley & Sons, vol. 25(4), pages 827-840, August.
    • Handle: RePEc:wly:riskan:v:25:y:2005:i:4:p:827-840
    DOI: 10.1111/j.1539-6924.2005.00648.x
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    References listed on IDEAS

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    1. Jin, Hyun Joung & Skripnitchenko, Anatoliy & Koo, Won W., 2004. "The Effects Of The Bse Outbreak In The United States On The Beef And Cattle Industry," Special Reports 23072, North Dakota State University, Center for Agricultural Policy and Trade Studies.
    2. Fumie Yokota & Kimberly M. Thompson, 2004. "Value of Information Analysis in Environmental Health Risk Management Decisions: Past, Present, and Future," Risk Analysis, John Wiley & Sons, vol. 24(3), pages 635-650, June.
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    Cited by:

    1. Louis Anthony (Tony) Cox, 2007. "Does Concern‐Driven Risk Management Provide a Viable Alternative to QRA?," Risk Analysis, John Wiley & Sons, vol. 27(1), pages 27-43, February.
    2. Sang Hyeon Lee & Ji Yong Lee & Doo Bong Han & Rodolfo M. Nayga, 2015. "Are Korean consumers willing to pay a tax for a mandatory BSE testing programme?," Applied Economics, Taylor & Francis Journals, vol. 47(13), pages 1286-1297, March.

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