This item was published during the term of a previous administration that ended in April 2007
Listen
Report on costs of Foot and Mouth
29/07/2003
The Foot and Mouth Disease (FMD) Economic Impact
Assessment Group today published its
final report which showed that the overall impact of
FMD on the Scottish economy as a whole was a fall in GDP of
between £13.6m and £29.8m (or between -0.02% and - 0.05% of
GDP).
The report's other main findings were:
- overall GDP in the infected rural areas of southern
Scotland fell by around £37m. Primarily this was due to
the cull of animals and the export ban.
- overall GDP in non-infected rural areas fell by
around £65m as a result of reduced tourism
- conversely GDP in urban areas increased by around
£71m. Primarily this was due to an increase in both
city breaks and household consumption
The report builds on analysis carried out during the
crisis to inform relief and recovery assistance. It is the
first piece of research to quantify the economic costs of
the outbreak at a sub-Scotland level providing estimates at
both regional and sectoral levels.
Commenting on the research, Ross Finnie, the Minister
for Environment and Rural Development said:
"From the earliest stage of the outbreak it was clear
its impact would be wider than the livestock sector. The
understanding of these wider effects provides invaluable
insight for our work to minimise the risk and impact of any
future outbreaks.
"Although the analysis shows that FMD had a minimal
impact on the Scottish economy as a whole, it is important
not to understate its impact on Southern Scotland.
"Looking forward, to complement our significant
programme of work aimed at preventing animal disease from
entering the country, we have undertaken substantial work
to put in place effective contingency plans in the event of
a disease outbreak."
The Impact Assessment Group was established soon after
the outbreak of FMD to inform policy and provide an
evidence base for relief and recovery measures. Comprising
representatives from the Scottish Executive, Enterprise
Networks, VisitScotland, local partners and sectoral
experts, the group's previous work include business surveys
and case studies of infected sectors and regions.
This work was produced by a collaboration of Fraser of
Allander Institute, Macaulay Land Use Research Institute
and Arkleton Centre for Rural Development Research,
University of Abdereen.
Using a computable general equilibrium model, the
research estimated the impact of the outbreak on the
economy at a Scotland, sub-Scotland rural/urban and
sub-sectoral basis. The regional analysis was performed
using Area Tourist Boards based broadly on the Infected, At
Risk and Provisionally Free designations used throughout
the 2001 outbreak. The approach adopted calculates the
direct, indirect and induced effects of the initial
economic shock and produces an economic analysis not a
financial one.
The findings showed that the shock to the agricultural
sector led to a fall of £33m in GDP overall with the large
majority of the impact felt in southern infected rural
areas (GDP falling by £37m) offset by slight gains in
uninfected rural areas partly as a result of livestock
restocking. Urban areas also faced losses as the EU imposed
export ban hit meat processors, predominantly in the
central belt. The economy in the northern uninfected rural
region gained slightly (GDP increasing by £9m) as a result
of increased livestock trade to replace stock culled under
the compulsory slaughter policy.
Although FMD had a negative impact on tourism
expenditure, the overall impact on GDP was positive. The
total impact on GDP was influenced by the declines in
tourism, though there was a significant increase in
household consumption. Consequently overall GDP increased
by some £12m as a result of the tourism shock.
Using sensitivity analysis to vary the scale of each
shock, the headline figure of the report shows that the
impact of FMD on the Scottish Economy was a fall in GDP of
between £13.6m and £29.8m (or between -0.02% and -0.05% of
GDP). This suggests that FMD had minimal impact on the
economy as a whole but the significance of the localised
impacts should not be understated.
This was the fifth and final piece of discrete research
produced by the Impact Assessment Group.