Animal disease incidence and indemnity eradication programs

There are many options for controlling the spread of animal diseases. Some diseases have been treated as public sector problems and many nations have tried to control disease spread by purchasing sick animals from farmers. Go vernment agencies have purchased breeding stock that might transmit disease s. Government agencies have purchased animals that might otherwise have gon e to the slaughterhouse, thereby keeping pathogens out of the food supply. Our hypothesis is that when it is not immediately obvious to farmers or pri vate sector buyers which animals carry or transmit diseases, a government i ndemnity program's success is not assured. Instead, disease control depends on farmers' ability to respond to the relative prices they face. We examin e the incentives created by prices (indemnity payment levels) government ag encies choose. The scrapie indemnity eradication program in the United Stat es (1952-1992) provides a natural laboratory for measuring the responsivene ss to government-set prices. We show that government-set prices played a ma jor role in determining the program's outcome: the supply of infected anima ls was price elastic. We argue that short-run movements in relative prices and the number of infected animals offer a practical method for assessing p rogram effectiveness, (C) 2000 Elsevier Science B.V. All rights reserved.