The role of the public sector in the development and implementation of animal health policies.

Although it is widely accepted that both the public and private sectors have a role to play in improving animal health, the debate centers on the balance between the two. The comparative advantages of each sector depend on: (i) whether the targeted disease can affect humans; (ii) its degree of contagiousness; (iii) whether it is endemic or exotic; and (iv) the economic costs associated with the disease. The rationale for public intervention is weaker for non-contagious than for contagious diseases; governments, though, can play a support role in several areas: e.g. generation and dissemination of information on health management, fostering participation of producers' organization in the eradication of endemic diseases, or helping private research institutions and funders to overcome the hurdles posed by widespread uncertainty and high costs associated with basic research. Control and eradication of contagious diseases in characterized by strong externalities; bio-security measures implemented by any producer affect his/her neighbors. A major factor affecting the design of appropriate health policies for contagious diseases is whether the disease is endemic or exotic in a particular population. The externality exists for endemic diseases--but for exotic diseases there is only the possibility of an externality (which materializes solely in the case of an outbreak). For exotic diseases, therefore, the perception of the risk of an outbreak is a major determinant of producers' behavior and of public prevention policies. The perception by producers and policy makers of the probability of occurrence of an outbreak of an exotic disease depends on the time elapsed since the last outbreak in the country or in neighboring countries. In general, perception of the risk of an outbreak will be lower than the true risk for most exotic diseases that have been absent for many years--but might be higher than the true risk if an outbreak was recently reported in the region. Taxes and private insurance have been proposed to internalize the externality; however, these policies cannot solve the health externality. Alternative programs (such as joint public-private eradication campaigns) are proposed as a means to minimize the externality.