Evaluating the uncertainty in estimates of the economic impacts of Bovine-Leukosis virus in U.S. dairy cows

An examination of the economic impacts of Bovine-Leukosis virus indicated that reduced milk production, attributed to the presence of Bovine-Leukosis virus in dairy cows, reduced consumer surplus by 2.7 � 2.3 billion US$(bUS$), and resulted in a total partial equilibrium loss of 720 � 560 million US$(mUS$) to the U.S. economy in 1996. Most of the economic surplus lost by consumers was transferred to producers, whose economic surplus increased by 2.0 � 1.8 bUS$as a result of reduced milk production attributed to the presence of Bovine-Leukosis virus in dairy cattle. Uncertainty analysis showed that an estimate of the milk-production decline per percent increase in the prevalence of Bovine-Leukosis virus in dairy cows accounted for most of the uncertainty in the economic-impact estimates. If Bovine-Leukosis virus had not been present in U.S. dairy cows, then milk production would have increased by 2.0 billion � 1.5 billion kg, the price would have fallen by 3.8 � 3.2 cents/kg, and the value of the milk produced would have decreased by 2.1 � 1.9 bUS$. Guidelines delineated by the International Organization for Standardization, for evaluating and expressing uncertainty in measurement, are discussed and proposed for use in the context of broad national estimates, for which the economic impacts of Bovine-Leukosis virus serve as an example. The principal advantages of the methodology are the clarity and transparency of results, and the ability clearly to identify major uncertainty contributors. Copyright 2006 International Association of Agricultural Economists.