Assessing the Approach to Cost-Benefit Analysis of Controlling Livestock Diseases of McInerney and Others

Outlines the basic cost-benefit analysis of Mcinerney of the optimal control of livestock diseases and presents it in a different and more readily understood form. Furthermore, this analysis is extended to discussions about the control of several diseases, for example, how to allocate available funds between the control of several diseases if net benefits are to be maximized. McInerney assumes that there is diminishing marginal net benefit from increased expenditure on the control of any livestock disease. However, this is too restrictive. It is possible that marginal net benefit at first increases and then decreases with increased expenditure on the control of some livestock diseases, and other possibilities also cannot be ruled out. The consequences of relaxing McInerney’s assumption about the nature of this net benefit curve are considered. Although it is true that indiscriminate use of benefit-cost ratios about the economics of control of livestock diseases, can lead to misleading policy advice as McInerney has claimed, they play a useful role in determining whether it is economical to control a livestock disease at all and in allocating priorities to the control of different livestock diseases. Priority should be given to controlling those diseases that are capable of yielding the highest benefit-cost ratios but it does not follow that the benefit-cost ratio of any disease targeted for control should be maximized.