Avian Flu: Economic Issues

Leila Bengali, Jill Hagey, David Silver, John Williford

What will happen after the avian flu strikes?

• The outbreak of the disease will cause a massive deduction of trade and travel as people attempt to prevent the spread of the disease
• The reduction of trade and the unwillingness of many to go to work will cause many non-necessary industries to suffer or close
• Many everyday commodities (food, soap, paper, etc.) will be in short supply as their manufacturing decreases and people attempt to “stockpile” goods
• People will attempt to avoid activities involving human contact (school, going to restaurants, etc.) in an attempt to avoid becoming infected
• With the increase in number of patients and the slowing trade and manufacturing, medical supplies will almost immediately fall into short supply
• Medical masks, currently made by two companies using parts made internationally, would be especially affected. Their lack will make nurses and doctors more prone to infection
• U.S. poultry industry would fare much better than others because of biosecurity measures in the U.S.
• The U.S. poultry industry minimizes contact between poultry and outside materials, putting the poultry at less of a risk of disease infection
• Asia’s poultry industry much more at risk because their markets proved more opportunities for chickens to infect one another
• Taiwan, Japan, Hong Kong, and the U.S. have banned poultry imports from countries with outbreaks of the disease

What is currently happening with the tourism industry?

• In 2004, tourism was a $622 billion industry around the world
• During the SARS outbreak, tourism went down by 9% worldwide, and the Avian flu will likely produce a similar effect
• According to travel experts, preplanned trips to Southeast Asia have been cancelled; extra precautions are being taken on planes (air filters, etc.)
• Optimists say that the decrease of tourism in China will be temporary because of China’s safe reputation

• http://www.cdc.gov/travel/other/avian_influenza_se_asia_2005.htm

What are we need to do in preparation for the avian flu?

• Industries must stockpile raw materials and make plans to transport goods and services when flu strikes
• Nations must stockpile vaccines once they have been made. The World Health Organization (WHO) recommends each nation have enough vaccine for 25% of their population
• Similarly, it is very important that nations develop the means to produce additional vaccines when the time comes

• http://healthyamericans.org/reports/flu/FluBrochure.pdf
• http://www.who.int/csr/resources/publications/influenza/FluCheck6web.pdf

What is the cost going to be to help stop the avian flu?

• President Bush’s newest plan for preparing the U.S. for the possible pandemic consists of a $7 billion grant from Congress. He’ll use the money this way:
• $2.8 billion for methods to decrease the time necessary to produce the vaccine
• $1.52 billion to purchase flu vaccines
• $1.03 billion to store all the vaccines and antiviral medications
• $800 million to develop new vaccines and treatments
• Annual cost of bird flu in terms of global GDP would be about 5%, or $2 trillion
• Tourism would account for 4% of GDP
• Health issues will cut economic output by 1% of GDP
• Leading economist for East Asia, Milan Brahmbhatt, believes the world GDP would drop by 2% or more ($800 billion US dollars)

• http://www.cnn.com/2005/HEALTH/conditions/11/07/bird.flu.china.ap/

 

What is happening with the poultry industry?

• A member of the China Association of Animal Husbandry predicted $12.1 billion in financial losses 
• As of February 2004, 50 million birds (1.2 million poultry) were killed for fear of infection
• Animal husbandry accounts for 31% of China’s agricultural industry ($96.71 billion in 2004)
• In 2003, China was the world’s top egg and meat exporter (68.5 million tons and 25.35 million tons, respectively)
• In 2002, China exported 15.7% of the world’s chickens
• Beijing’s chicken egg sales have decreased by 50% since 2004

• http://www.chinadaily.com.cn/english/doc/2005-11/11/content_493939.htm
• http://www.usatoday.com/news/nation/2005-11-13-farmers-birdflu_x.htm?csp=N009

What happened during the SARS pandemic?

• Many governments dealt with containing SARS the following ways:
• Strict regulation in airports
• Controlling of hospital visits
• Encouraging vaccination
• Regularly check for symptoms in school children
• Increased cleaning in public places
• Tourism industry during SARS dropped 14% in Southeast Asia (17% in Thailand)
• After outbreak of SARS, government officials are working on how to deal with quarantines when traveling to other countries
• During the SARS outbreak, it was often hard to track down everyone who had been in contact with people who later contracted SARS – it took about 10 days to find the people and only 2 days for them to develop symptoms
• CDC has a new proposal, which includes keeping lists of passengers from ships and airplanes online for up to 60 days after travel to be able to track down passengers if an outbreak occurs
• Hong Kong’s occupancy rate dropped from 82% to 15%
• Singapore’s visitor numbers dropped by 67-72%
• Ontario needed to take $400 million from its reserve funds to pay for costs induced by SARS, in addition to borrowing an additional $600 million from a contingency fund due to the drop in sales tax revenue
• SARS cost Canada almost $1 billion in tourism revenue
• Cost of SARS per South Asian country:

• China: $2.2 billion
• Hong Kong: $1.7 billion
• Indonesia: $400 million
• South Korea: $2 billion
• Malaysia: $660 million
• Philippines: $270 million
• Singapore: $950 million
• Taiwan: $820 million
• Thailand: $490 million
• Vietnam: $15 million
• Japan: $1.1 billion

• http://www.who.int/csr/sars/en/
• http://www.info.gov.hk/info/sars/pdf/checklist-e.pdf
• http://unpan1.un.org/intradoc/groups/public/documents/APCITY/UNPAN009483.pdf
• http://www.economist.com/agenda/displayStory.cfm?story_id=1792351

Steps We Can Take to Prevent Sick People from Slowing the Global Economy

1. Check that emergency plans deal with pandemics
2. More specifically, make sure the companies can operate with some sick people missing
3. Plan to adjust to the governments wishes on power usage, water usage, sanitation, etc.
4. Begin hiring replacements so that if 25-30% of the company is unable to work, business will continue
5. Keep a healthy work environment, post informative signs on germ spreading, demand hand washing, and distribute alcohol products like Purell among the office
6. Make sure that the most important employees have replacements
7. Start to promote tools where employees can work from home, so when sick, employees can still work
8. Increase size of online databases so people can access their job material if they aren’t able to make it to the office
9. Inform the workforce about the pandemic, the steps the company is taking, and what to do in case of an emergency
10. Allow sick leave and family and medical leave policies, tell workforce of the importance of staying at home when sick so that other employees don’t become infected

Bibliography

Osterholm, Michael.  "Preparing for the Next Pandemic." Foreign Affairs. July/August 2005. Available from: foreignaffairs.org <http://www.foreignaffairs.org/20050701faessay84402-p10/michael-t-osterholm/preparing-for-the-next-pandemic.html> (accessed 10 November 2005).

McGraw, Michael. "Bird flu causes worries in Europe, Asia, EU restricts bird market" The AvionOnline. October 25, 2005. Available from avionnewspaper.com  <http://www.avionnewspaper.com/media/paper798/news/2005/10/25/NationalNews/Bird-Flu.Causes.Worries.In.Europe.Asia.Eu.Restricts.Bird.Market-1032419.shtml> (accessed 10 November 2005).

Hepeng, Jia. “Bird Flu Argo in Year of Monkey.” China Daily. 2 November 2004. Available from: China Daily.com <http://www.chinadaily.com.cn/english/doc/2004-02/11/content_305152.htm> (accessed 29 November 2005).

Seattle Times staff. “Fear of bird flu may hurt global tourism, UN warns.” Seattle Times.   21 October 2005. Available from: Seattle Times.com <http://seattletimes.nwsource.com/html/travel/2002571531_travelupdate23.html?syndication=rss> (accessed 29 November 2005).

“Tourism sector well prepared to face bird flu.” Bernama: Malaysian National News Agency. 9 November 2005. Available from: Bernama.com     <http://www.bernama.com.my/bernama/v3/news.php?id=163935> (accessed 29 November 2005).

“World’s travel industry braces for bird flu.” USA Today. 9 October 2005. Available from: USA Today.com      <http://www.usatoday.com/travel/news/2005-10-27-bird-flu_x.htm?csp=34> (accessed 29 November 2005).