Our goal is to analyze how differently pig farms may contribute to societal costs of an animal disease outbreak, how valuable this information is to different stakeholders, and how it can be used to target risk management measures. For clarity, we focus on a single disease, FMD, but limit our analysis solely on the pig sector. The effects are simulated
conditional on the first infected farm by using numerical dynamic epidemiological and economic models. This approach allows us to study how a certain farm contributes to disease losses, including consequential effects due to disease spread and export distortions, when it is the first farm which becomes infected in the country. It was found that outbreak costs depend heavily on market effects of the disease. Market effects further depend on export distortions and their duration, price elasticity of demand and volume of production affected by restrictive measures. Results also suggest that it can be rational to consider the targeting of surveillance systems and other risk management measures according to the risk category. If risk management is stratified according to the risk posed by a farm, a high-risk farm could be required to ensure higher than average effort for disease costs, because society could benefit from the
reduction of risk class. Low-risk farms, consumers and society can be able to accrue further benefits over time when differentiated liability decreases outbreak costs and re-allocates production to farms with reduced costs. If the elevated liability cost would be imposed on high-risk farms, it could reduce their profits and production. However, farms do not belong to the most risky class only because of their own actions but also because of actions taken by other stakeholders, including their slaughterhouse, animal trading partners and other farms located in the vicinity. The rationale behind differentiating liability is to motivate high-risk farms and other stakeholders which influence their risk to take measures which would reduce their risk exposure. In conclusion, further research based on risk classification offers opportunities to design more cost-efficient preventive measures to combat contagious animal diseases. In particular, it can increase stakeholder engagement in disease prevention by providing more detailed economic criteria to stratify preventive efforts and economic bonuses or fees according to the risk exposure factors.