EPPO Bull. 14(3): 337-341 (1W)

Cost /Benefit Analysis as Used in the United Kingdom for Eradication Campaigns against Alien Pests and Diseases'

by R.A. LELLIOlT ADAS, Harpenden Laboratory, Hatching Green, Harpenden (United Kingdom)

The reasons for using, and the methods used for cost benefit analysis of eradication campaigns against alien pests and diseases in the UK are discussed. Details of the cost- analysis for a current campaign against white rust of chrysanthemums (Puccinia horiunu) are given.

Introduction

The general concept of cost/benefit analysis is so common in everyday life that many of us use it half-intuitively. Even in the (( throw-away )) society of the West, most make some attempt, however qualitative, to judge the benefit of replacing some expensive domestic item against the cost of doing so. Thus, when a grower decides whether or not to spray against a pest2 he is usually making a quick, mental cost/benefit analysis whether the likely increase in yield would pay for the costs of spraying.

However, common as this type of mental approach is, it appears to have been surprisingly little used in a formal way until comparatively recently by crop protection services as a basis for the decisions they have to make ; and it is my contention that it should be more widely used. Perhaps we, as scientists, have had a conditioned antipathy to cost/benefit analysis and see it as a commercial exercise outside our concern.

I would suggest that far from being outside our concern, it is a means imposing a discipline on our thinking in this field. It requires us to justify plant health decisions quantitatively rather than qualitatively - it obliges us to do more than merely advise that a pest should be eradicated because it is of major importance overseas. It obliges us to estimate what degree of importance it would have in our own country and whether this would justify the likely cost of attempted eradication of the pest (Lelliott & Aitkenhead, 1979). Certainly, since UK adopted, some six years ago, formal, detailed cost/benefit analysis as a basis for making decisions on eradication campaigns, these have been made more quickly, more incisively and, I would maintain, on a better basis.

Estimation of Cost/Benefit Ratios

Cost/benefit analysis can be used in two rather distinct situations in eradication. In UK, we use it first as a basic tool in deciding whether or not to mount an eradication campaign against an alien pest. Secondly, we use it as a major factor in deciding for how long we should continue an eradication campaign against an alien pest. Similar considerations would be used if we decided to eradicate an established pest, either locally or nationally.

Initial Cost/Benefit Analysis for Campaigns

The first of these two situations is the more difficult to evaluate in terms of cost/ benefit analysis. Taking the hypothetical case of a pest, newly found in the UK, of an agricultural crop of major economic importance, we would make estimates of its potential

1) Paper presented at the EPPO Colloquium for Heads of Aant Protection Services on Cost Effectiveness in Aant

2) The word a pest a is used here to include diseases as well as vertebrate and invertebrate pests unless the Protection, Stockholm, 21-23 june, 1983.

context indicates otherwise.

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for damage to our interests using what information could be obtained from the British outbreak and from a study of all available sources of information in countries in which it is established. We would obtain estimates of losses caused by the pest overseas and the cost of its control ; often such information is not in the published literature but can be obtained from overseas extension or plant health services. We would then recalculate these estimates taking into account the factors that would require their modification for British conditions. Such factors include, where appropriate : differences of climate ; effective competition from native pests; effects of native parasites - their presence or their absence ; presence and incidence of insect vectors of disease ; cultivar susceptibility ; and the potential of a pest for adaptation to a new habitat, which can often be judged from known extensions of its present geographic range. The rationale for this is discussed in detail by Baker & Bailey (1979). These are complex issues which are not easy to evaluate but which need evaluating if a meaningful analysis is to be made.

From these studies we would estimate the likely cost to us of control per unit area of crop. From the estimated area of crop at risk (and this may not be the same as the total crop since some parts of UK may be considered unsuited for the establishment of the pest) we would estimate the national cost of control. To these costs we would add estimates of the value of the residual, uncontrollable crop losses the pest could cause. This estimated annual cost to British agriculture would be calculated as an average based on a judgment of the expected fluctuation in populations of the pest (or its incidence) from year to year under British conditions. The frequency and extent of such fluctuations would be assessed by matching the climatic requirements of the pest to the known climatic patterns of those areas in the UK which would be considered at risk. We would consider damage to non- agricultural land such as private gardens, parks and streets, or uncultivated land. The effects on amenity value should not be over looked, difficult as this is to assess. We would also consider such environmental effects as that of adding pesticides to the environment. Other costs included would be the loss of exports following the establishment in UK of the new pest - the consequence of embargoes or restrictions expected to be placed on exports of the crop pest by countries that do not have it. Extra research and development and advisory costs would also be included.

The sum of all these costs constitutes the benefit on an annual basis that would accrue from preventing the pest from becoming established in the UK.

The cost of eradication can be divided into cost to the industry and cost to the state. The cost to the industry would, obviously, include loss of crop due to destruction measures that would need to be taken, the costs of treatment with pesticides required by the eradication campaign and any phytotoxic effects of such treatment. Eradication campaigns often interfere with the marketing of crops and the value of loss to the industry from this source would be accounted for, as would that for loss due to land being taken out of production. For example, a compulsory fallow to deal with a soil-borne pest will obviously cause considerable loss of income. If some of these losses could be covered by compensation from the state this would be deducted from the costs to the industry. Losses to the state would be equally obvious : the salaries, travelling costs, subsistence costs of the plant health service together with costs of contracting work to commercial companies, of compensation, of publicity and of research that would be entailed in the campaign.

The cost of a single eradication campaign can, of course, then be offset against the annual benefits from absence of the pest. But if there is, as is iusually the case, a risk of re- introduction of the disease, the frequency with which re-introductions will occur needs to be estimated and included in the overall costing. This we would do by dividing the estimated cost of a campaign by the estimated interval between re-introductions to obtain an annual eradication cost to compare with an annual benefit, the ratio of which would, obviously, be the codbenefit value.

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Certain comments on the costjbenefit ratio need to be made. First, the accuracy of many of the inputs must be in doubt and in some cases they can be no more than guesses. In view of this I think it helps to consider these uncertain inputs in terms of the probable range of cost or benefit. One can therefore arrive at costjbenefit ratios expressed as a range within which one can be reasonably certain that the actual costjbenefit ratio will lie. This seems a far more useful concept than a straight mean of the input figures which can be so misleading that it is not trusted by those whose task it is to make decisions based on it. Secondly, despite the inaccuracies and guesses associated with most, if not all, such analyses, it seems unarguable that cost effectiveness is the best criterion for deciding whether, or for how long, eradication should be attempted.

Total

Cost/Benefit Analysis for Continuing Campaigns

We have so far only considered costjbenefit ratios in relation to the initiation of eradication campaigns in UK, but continuing costjbenefit analysis, which can be updated every year, is also used to consider the advisability of continuing campaigns for eradication, particularly when a pest has been re-introduced into our country after its initial eradication. When used in this way, costjbenefit ratios are usually far more accurate since we have better estimates of potential losses and of eradication costs, more accurate information on the likely frequency of re-introduction and since we can also modify estimates of the benefit side of the equation from actual knowledge of the behaviour of the pest in the field in the UK.

Obviously, if the cadbenefit ratio falls below unity, one is spending more money than one is gaining by keeping a pest out and consideration needs to be given to abandoning eradication attempts. Normally we would not base such a decision on the analysis for only one year’s results and, as a general rule, use a rolling, 5-year ratio so that if the costjbenefit ratio for the previous 5 years falls below unity we accept that the campaign should probably be abandoned. The easiest way, perhaps, to illustrate this use of cost/benefit analysis is to give a comparatively simple example, that of white rust of chrysanthemums (Puccinia horiana P. Henning), using the figures that we have obtained in the UK. It is simple because, being a glasshouse disease controllable to a large extent by fungicide spraying, assessment of benefit is comparatively easy : it is largely the expense of the fungicides, and of their application, that would be needed for its control if the disease became established in the UK.

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Table 1. Average estimated annual cost (1978-1982) of campaigns to eradicate white rust of chrysanthemums (Pumhia horiand from the UK.

Salaries, travelling etc. Publicity Research and development

Cost to State =

Crop loss Sprays phytotoxjcity

75 8 2

I Cost to Industry = I 85 I 85

Cost /Benefit Analysis for the Campaign against White Rust of Chrysanthemums (1983)

The methods we use to eradicate outbreaks comprise destruction of crops that are more than lightly affected and intensive spraying of other crops on the same nursery. In crops that are lightly infected, infected plants and plants within 2 m of an infected plant are removed. There are also limitations on marketing until the nursery has been free of infection for a period which, if a full fungicide regime has been used, is 15 days.

Table 1 gives the last, 5-year average, annual cost of the eradication campaign in UK in thousands of pounds. Costs of the state are mainly in salaries and travelling of the Plant Health Inspectorate and the Headquarters staff (including scientists from Harpenden Laboratory) and in publicity and research and development. Costs to the industry are the value of direct crop loss due to destruction, losses due to marketing restriction, the cost of fungicide sprays that are required to be applied and the costs of reduction in value of crop due to phytotoxicity caused by these sprays. The total cost averaged over the last 5 years at 1982 costs and prices has been f153,300 ayear. Looking at the benefit (again at 1982 costs and prices) and assuming that spray schedules in this country would need to be the same as those advised in the Netherlands (30 sprays a year for all-the-year-round and pot- chrysanthemum crops and 10 sprays a year for natural-season crops) and assuming the use of the most effective fungicides known at present, we find that the cost of materials to the industry would be of the order of 5289,000 and of labour to apply them 528,000 - giving 2317,000 as the cost of fungicide applications (table 2). In addition to this, we have assumed that fungicide treatment would not be completely effective and that the consequent loss would be equivalent to 5-10 % for the least efficient 5-10 % of growers. This gives a range of 280,000 to 2341,000 a year with a mean of 5200,500 a year. We estimate that losses due to phytotoxicity if spraying were routine would be within a range of 520,000 to 280,000 a year - a total crop loss on average of 5250,000. Research and development and advisory work we estimate at 5% 1,000 if the disease became established. The estimated mean total benefit a year is di648,OOO with a range of about aO0,OOO to 5%00,000.

Fungicide use Materials Labour

f f (thousands) (thousands)

289 28

317 317

Crop loss Disease (80-32 1 ) phytotoxicity (20-80)

Research and development Advisory work

Total 648 Range 498-819

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Table 3. Estimated cost/benefit ratios for the eradication campaign against white rust of chrysanthemums in the UK.

1:15.5 - 1:23.9 1:32.1 - 1:49.5 1:16.3 - 1:25.2 1:l.O - 1:1.5 1:4.0 - 1:6.2

5-year ratio’ 113.3 - 15.2

Total costs : total benefit 1978-1982

Because this desease is re-introduced into the UK comparatively frequently, the actual cost/benefit ratio varies very much from year to year depending on how successful the eradication of these re-introductions has been (table 3). In 1978, 1979 and 1980 the ratio was high because the previous, major re-introduction had been nearly or actually eradicated, but in 1981 we only just about broke even because infected material was imported by a propagator and there was, consequently, wide distribution of white rust on cuttings ; this re-introduction was only dealt with by the end of 1982 so the ratio for that year was also low. The 5-year ratio of total costs 1979-1982 to total benefits 1979-1982 (not the average of the ratios), using the concept of range, is about 1 to 3.3 to 1 to 5.2, indicating that the campaign is cost-effective. However, if the ratios for 1983, 1984 and 1985 are only little less than unity, we would be approaching the point at which the cost of eradication becomes equal to or less than our estimate of the benefit from not having white rust in the country.

Acknowledgments

their updated cost/benefit analyses for white rust. I thank Mr P. W. Sellar and Mr A.W. Pemberton who have made available to me

Type d’analyses utilistks au Royaume-Uni pour ‘determiner I’int6ret des campagnes d’eradication de ravageurs et de maladies exotiques

Le type danalyses auquel il est recouru au Royaume-Uni pour evaluer l’interCt dune campagne d’eradication des ravageurs et maladies exotiques est examine. Reference est faite en detail a l’analyse des co5ts de l a campagne en cours contre l a rouil le blanche des chrysanthemes (Puccinia horiana).

REFERENCES

BAKER, C.R.B. &BAILEY, A.G. (1979). Assessing the threat to British crops from alien diseases and pests. h :Plant

LELLIOlT. R.A. & AITKENHEAD. P. (1979). The eradication of diseases and pests from the United Kingdom : its Health. Ed. D.L. Ebbels & J.E. King. Blackwells : 43-54.

practice and management. In : Plant Health. Ed. D.L. Ebbels & J.E. King. Blackwells : 185-179.