Variation In Costs For Animal Disease Prevention

A new report Cost of National Prevention Systems for Animal Diseases and Zoonoses in Developing and Transition Countries commissioned by the World Organisation for Animal Health (OIE) has been published recently. The main conclusions are summarised by Jackie Linden for TheCattleSite. These include that there is a strong relationship between current spending per animal unit and GDP, although this is unrelated to the level of spending required.
calendar icon 1 December 2009
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The OIE commissioned Civic Consulting to conduct a study on the cost of National Prevention Systems (NPS) for animal diseases and zoonoses in developing and transition countries.

The final report explains that the aims of the study were two-fold:

  1. to estimate the 'peace time' costs of Veterinary Services allowing early detection and rapid response to emerging and re-emerging diseases in different regions, economies, animal health systems and eco-systems, and
  2. to develop economic indicators within the OIE-PVS Tool for the Evaluation of Performance of Veterinary Services (OIE-PVS Tool).

The study was based on the results of in-depth research in nine OIE member countries (Costa Rica, Kyrgyzstan, Mongolia, Morocco, Romania, Turkey, Uganda, Uruguay, Viet Nam) and an extensive analysis of possible economic indicators.

The study team, led by Dr Frank Alleweldt (project director) and Professor Martin Upton (lead author of the economic analysis), drew 11 main conclusions.

1. NPS expenditure is related to livestock population

One leading conclusion in the report is that substantial differences in the public expenditure for the National Prevention System for Animal Diseases and Zoonoses exist between case study countries, reaching from 10 million international dollars to 167 million international dollars. The average expenditure on the National Prevention System was 48.6 million international dollars in the baseline year, 2007.

Variations in expenditures between case study countries are clearly associated with differences in livestock population. Operational costs of the National Prevention System, when expressed on a per Veterinary Livestock Units (VLU) basis, therefore give a comparative measure of the level of service provision in relation to the quantitative requirements.

2. NPS expenditure is correlated with GDP

In the case study countries, there is a close relationship between Gross Domestic Product (GDP) and the total public expenditures for the National Prevention System. Differences in GDP explain to a large degree the variation in NPS expenditures.

NPS expenditure appears to be mainly dependent on the country's ability to pay, rather than on the veterinary requirements. This may lead to a significant under-funding of the NPS, most notably in low-income countries.

In these cases, veterinary services require a higher priority in the national budget allocation, and/or sustained external support to be able to effectively address global animal health challenges.

3. Strong relationship between spending per animal unit and incomes

Differences in NPS expenditures between countries on a per VLU basis are, at least partly, explained by differences in per capita incomes, according to the report.

While the overall average NPS cost per VLU for the seven countries amounts to 5.66 international dollars, the average for the three low-income countries – Uganda, Kyrgyzstan and Viet Nam – is only 3.82 international dollars. The average for the two lower-middle-income countries – Mongolia and Morocco – is 5.28 international dollars, while that for the upper-middle-income countries – Costa Rica and Turkey – is 8.79 international dollars.

4. Total cost per animal unit is not affected by the level of centralisation

Sub-national expenditures tend to increase relative to the centralised expenditures with increasing size of the national territory. Operating expenditures associated with the National Prevention System are incurred either centrally, in or near the main centre of government, or dispersed more widely in provincial, regional or district locations.

A high central expenditure in Costa Rica is clearly associated with a centralised structure in a relatively small country, whereas Turkey, Morocco and Vietnam, three of the largest countries in area, spent about three-quarters of the total NPS operating expenditure at the sub-national level.

Provided that both central and regional elements are included, the average total cost per VLU may be unaffected by the extent of decentralised expenditure, say the report's authors.

5. No explanation found for differences in spending patterns

Spending patterns for different categories of expenditures varied between the case study countries, however, this provides little explanation for differences in overall NPS expenditures. Levels of staff costs and expenditures such as travel costs appear to be directly related to levels of per capita income of case study countries.

Considerable differences in spending that depend on other factors are related to three categories:

  • fees for private veterinarians conducting public service mission (up to 0.96 international dollar/VLU)
  • expenditures for vaccines (up to 1.57 international dollar/VLU), and
  • compensation of livestock holders (up to 0.74 international dollar/VLU).

In some other countries, spending for these items is zero or close to zero.

6. Public NPS expenditure is not related to the strength of the private sector

There is no evidence that a stronger private veterinary sector reduces public NPS expenditures in the case study countries. The relative strength of the private veterinary sector, expressed as the ratio of public to private veterinarians, appears to be related to the income level of the country.

In the case study countries, both NPS expenditures and the relative importance of the private veterinary sector increase with a higher GNI per capita.

7. GDP does not correlate with NPS requirement

The strong linear correlation between GDP and NPS expenditures for the case study countries can be used to estimate current National Prevention System expenditure. However, this approach provides a rough estimation of the likely current level of funding of the NPS only, and does not in any case determine the optimal level of NPS expenditures in a given country.

The only reliable and accurate method of obtaining data on NPS expenditures in other countries currently available is by means of direct measurement, using the methodology developed for this study.

8. System to quantify results is needed

The report's authors suggest that a quantitative expression of OIE-PVS Evaluation (OIE-PVS Tool for the Evaluation of Performance of Veterinary Services) results would be helpful for assessing the degree of compliance with OIE International Standards on Quality of Veterinary Services in a systemic perspective.

In future refinements of the PVS Tool, the introduction of a more quantitative approach could be considered. Also, due to the cross-cutting character of several of the critical competencies used for the PVS Tool, it is currently difficult to correlate the costs for key NPS elements (e.g. veterinary diagnostic laboratories) to the results of a sub-set of PVS critical competencies related to this NPS element.

It could therefore also be considered to refine and group critical competencies to allow a more direct correlation of PVS results and costs for key elements of the NPS.

9. Governments to keep a record of PVS staff

OIE member countries should collect data on staff numbers of the public Veterinary Services across all levels of government.

Although collection of such data would require additional efforts by member governments, this would hugely improve the basis for any future economic assessment of the National Prevention System, as staff costs account for up to three-quarters of NPS operating expenditures in the case study countries. This could be encouraged by revising the reporting format for the annual OIE World Animal Health Report.

A possible reporting format, suggested in this study, would differentiate between public and private veterinary personnel, differentiate the categories of veterinary personnel paid from the public budget and differentiate the type of activity of the personnel.

10. Standards should be established for future comparisons

A 'gold standard' or quality benchmark figures are needed from the OIE for comparison of NPS expenditures between countries, but assessments may be more effective if focused on key elements rather than on the total NPS expenditure at national level.

The authors says that the results of their study suggest a gradual approach to derive benchmark values that provide guidance to countries for allocating their NPS expenditures effectively and efficiently, focusing on key elements of the National Prevention System (such as cost of surveillance, border inspection, diagnostic laboratory facilities).

11. Benchmarking of costs would aid budgeting

Finally, the authors recommend that consideration should be given to the development of a database of benchmark cost data concerning specific components of NPS expenditures. The necessary data could be obtained during the PVS Evaluation or PVS Gap Analysis visit or, alternatively, through a visit of a specialist expert team.

Benchmark cost data concerning key elements of the NPS would create a better basis for the design and budgeting of desired improvements in the NPS provisions in developing and transition countries, creating both a better basis for the budgeting process of specific countries and more transparency for donors.

Further Reading

- You can view the full report by clicking here.

December 2009

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