An Economic Analysis of FRDC Investment in Aquatic Animal Health and Pests (biosecurity) (Cluster 13)

Background

Pests and diseases have a significant impact on production costs in both the wild catch and aquaculture fishing industries. These costs are generally in the form of either prevention and treatment costs, or lost production due to pest and disease impact. There are also some concerns that fishing activity (particularly aquaculture) may itself lead to pest and disease problems, through intensity of production or moving species outside of their natural habitat.

Pests and diseases can also negatively impact on biodiversity and environmental and resource condition. FRDC and industry have funded a significant number of projects aimed at understanding pests and diseases, the risks associated with them, and reducing their financial and ecological impact.

In 2001, an Aquatic Animal Health Subprogram was established by FRDC that aimed to provide a cohesive and national approach to animal health research and development in Australia. This cluster includes some projects that were funded through that Subprogram, and also some projects that were funded prior to the Subprogram’s development.
 

Lessons Learnt for Future Investment

There were three lessons leant from this analysis:

• Many of the projects funded in this cluster were fairly ‘basic’ in terms of the level of science targeted. While they were successful in developing knowledge and understanding about various diseases and pests affecting aquatic animals, their outcomes were limited in terms of quickly producing products or practices that can be utilised by seafood producers in the shorter term. Despite this, the analysis has shown that if this type of research has the potential to contribute to future research and development, some significant benefit can be attributed back to this basic research.
• When ‘basic’ research such as this is required, a subprogram structure such as the Aquatic Animal Health Subprogram is of great value in assisting with priority setting across the research – development spectrum, and across different industries and pest problems. The success of the comprehensive priority setting exercise such as that used for the YTK industry further demonstrates the value of this approach.
• Many of the projects funded were also targeted at prevention of disease and pest problems, and benefits in this area can be difficult to demonstrate in the absence of a disease outbreak.

Conclusions

Investment was made in a total of 13 projects within the cluster with the FRDC contribution approximating 31.5% of the total costs involved (nominal terms).

Both private and public benefits have been identified as arising from the investment. On the basis of the 12 benefits identified, and equal weighting for each benefit, it could be concluded that public benefits to Australia could make up half of the total benefits. If the subjective weightings are taken into account, then 38% of the total benefits could constitute public benefits to Australia.

Three benefits have been quantified. Given the framework used and the assumptions made, the investment criteria estimated for the cluster were positive with the total investment of $9.21 million (present value terms) estimated to return an expected present value of benefits of $28.97 million, yielding an expected net present value estimate of $19.8 million and a benefit-cost ratio of 3.1 to 1 (expressed in 2008/09 $ terms and using a 5% discount rate, benefits estimated over 30 years from the final year of investment).

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