An Ex Ante Evaluation of the Economy-wide Effects of an Avian Influenza Outbreak

This paper uses the TARFCOM model to analyze the efffects of an avian flu outbreak on the Philippine economy. It demonstrates the likely impacts of production and consumption shocks caused by an outbreak on the poultry sector and related industries. based on simulation results, the combines effects of the production and consumption shocks are expected to hurt the economy in may ways. First, aside from the obvious decline in the production of the poultry sector, outputs of related industries that provide inputs to the sector -- e.g., animal feeds and corn -- are likely to be adversely affected. Second, the contraction in the poultry sector and other industries is expected to cause a decline in aggregate output and employment. third, an outbreak is expected to reduce meat supply, which threatens food security in the country.

The study also evaluates two policy responses: 1) the import ban on poultry products, which is more of a preventive measure against the disease; and 2) the removal of import tariffs on nonpoultry meat products, designed to stabilize the domestic meat supply.