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Abstract
Foot and Mouth disease, like other epizootic outbreaks, can have wide and lasting impacts
exceeding the agricultural field. Within Europe various ad hoc policies exist to cope with these
consequences. In this paper we develop a dynamic CGE model allowing us to simulate a FMD
outbreak, its economic consequences and the effect of the implementation of a mutual fund as a
structural risk management policy. Our results show that a financial support to farmers thanks
to the mutual fund may encourage a quicker recovery from the market losses, especially helping
to rebuild the cattle herds after a period of trade bans. However, counterproductive effects may
be encountered in the case of mandatory participation of farmers to finance the mutual fund.