An optimal quarantine measure: OJD and the sheep industry in Western Australia

Abstract

Quarantine programs have generally provided an essential protection against the importation of exotic diseases, thus protecting both consumers and producers from major health concerns and pests that can potentially destroy local agricultural production. However, quarantine measures also impose costs in the form of expenditures on the quarantine program itself and the welfare losses that are associated with such trade restrictions. This paper develops a simple model to determine the optimal level of quarantine activity for imported livestock by minimizing the present-value of the direct costs of the disease, the cost of the quarantine program and any resulting welfare losses. The result defines an upper-bound on the optimal number of infected livestock that may potentially enter a region in a given year. The model is then applied to the case of Ovine Johne's Disease (OJD) and its potential entry to the sheep industry in Western Australia (WA). Since all parameter values are subject to random variation, a further simulation determines an expected optimal quarantine activity for WA, up to a ninety percent likelihood of a disease incursion of less than the expected optimal upper-bound, with calibrated (random) normal distributions on all parameters.