Bio-era Presents Expert Testimony before the Senate Foreign Relations Committee on the Economic Risks of Bird Flu Pandemic

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Warns Congress about the effects of fear, and recommends increased investment in global disease surveillance and response.

From a policy perspective, our analysis of these risks underscores the message that

James Newcomb, Managing Director of Bio Economic Research Associates (bio-eraTM) presented testimony today before the Senate Foreign Relations Committee regarding the economic consequences and risks associated with the emergence of a highly virulent pandemic influenza virus.

The Avian influenza crisis in Asia has already caused more than $15 billion dollars in damage in the economies of the most-seriously affected countries, but this is just the tip of the iceberg compared with the possible global economic consequences of a human influenza pandemic, which the World Bank and others have estimated at potentially causing up to $850 billion in damage to the world economy.

“The bottom line is that a pandemic could affect our highly integrated global economy in a way that has no real precedent in recent decades” Newcomb told the Committee. “The first wave of economic impacts would result from fearful anticipatory reactions to the spread of the disease; these effects include shocks to financial markets, reductions in consumption and investment, and disruptions of trade and travel… Reactive and uncoordinated national actions to close borders or embargo trade could be exactly the wrong prescription in the early days of pandemic emergence. These could inadvertently fuel fears at the point of emergence and compound the challenges of disease management on the ground. Shutting down transportation hubs, such as airports and ports, would disrupt key supply chains and create unpredictable secondary effects that would compound the effects of the initial outbreak. These feedbacks, coupled with growing fears about the disease itself, would be increasingly difficult to manage as the pandemic spreads globally.”

“The second wave of economic impacts would be experienced as a result of the spread of the disease itself, with potentially large impacts on the workforce and the flow of goods and services as well as the overburdened medical system. While these direct economic impacts of the disease could be quite significant, these costs are almost certainly manageable from a macroeconomic perspective, even in the case of a moderate pandemic, provided they are not overly compounded by fear-driven reactions.”

“From a policy perspective, our analysis of these risks underscores the message that “an ounce of prevention is worth a pound of cure.”

The bio-era testimony summarizes and interprets the latest economic analysis relevant to the current outbreak of Avian influenza (H5N1) in Southeast Asia, including the economic burdens imposed so far by the disease, and the risks and potential impacts should the current outbreak develop into a global influenza pandemic.

“We’ve been looking at how things might unfold under six very different but highly plausible scenarios for the evolution of the outbreak,” said Stephen Aldrich, President of bio-era. “In the process, we’ve made assessments of potential outbreak risk by country, the relative economic exposure by country -- and how selected industries and companies are likely to be affected.”

This on-going work is a part of bio-era’s recently launched service “Thinking Ahead: Anticipating Early Impacts of an Avian Influenza Pandemic”, designed to support business and investment planning efforts in advance of a possible influenza pandemic.

To discuss the Senate testimony, please call James Newcomb, at 303 247-1711, or Steve Aldrich at 617 876-2400. The full testimony is available at http://www.bio-era.net.

Bio Economic Research Associates (bio-era™) is a leading provider of independent research and advisory services on the emerging bio economy. Bio - era’s mission is to help decision-makers understand and respond to the risks and opportunities arising from the economic and societal impacts of human-induced changes to biological systems. The firm’s practice areas include biosecurity, bioenergy, and biotechnology.

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