The Boundary of the Market for Biosecurity Risk.

Publisher: Blackwell Publishers Country of Publication: United States NLM ID: 8109978 Publication Model: Print-Electronic Cited Medium: Internet ISSN: 1539-6924 (Electronic) Linking ISSN: 02724332 NLM ISO Abbreviation: Risk Anal Subsets: MEDLINE

Publication: 2002- : Malden, MA : Blackwell Publishers
Original Publication: New York : Plenum Press, c1981-

Biosecurity* ; Economics*; Fish Diseases/*prevention & control ; Risk Assessment/*methods; Animal Husbandry ; Animals ; Australia ; Commerce ; Consumer Behavior ; Costs and Cost Analysis ; Environmental Monitoring ; Humans ; International Cooperation ; Models, Economic ; Musa/microbiology ; Palaemonidae/virology ; Plant Diseases ; Politics ; Risk ; Security Measures

Imported goods create value in destination countries but also create biosecurity risk. Although widely used in other domains of the economy, risk markets have not been created to manage losses that occur when exotic pests and diseases are introduced with traded goods. In this article we show that not all biosecurity risks are insurable. Losses arising from effort needed to detect and respond to exotic pests and diseases that breach national borders appear to be insurable because entry of these threats and consequent response costs, can be regarded as random events. As pests and diseases establish and spread, however, loss of access to export markets and productivity losses display systematic risk and appear to be uninsurable. Other insurability criteria support this definition of the boundary of biosecurity risk markets. We use the Australian biosecurity system as an example, although the framework described in this study will be applicable to biosecurity systems worldwide. We argue that biosecurity risk insurance could be incorporated into the current biosecurity system but would require legislation mandating importers to purchase insurance. Advantages of actuarial pricing of biosecurity risk are: (i) an increase in economic efficiency to the extent that importers respond to the price of biosecurity risk; (ii) financial sustainability would improve because actuarial pricing creates a structural link between funds available for biosecurity activities and risk exposure; and (iii) equity issues evident in the current biosecurity system could be addressed because risk creators (importers) would fund response activities through the purchase of insurance.
(© 2020 The Authors. Risk Analysis published by Wiley Periodicals LLC on behalf of Society for Risk Analysis.)

Ecol Appl. 2007 Sep;17(6):1832-40. (PMID: 17913144)

Keywords: Actuarial pricing; biosecurity risk; insurance

Date Created: 20201030 Date Completed: 20220214 Latest Revision: 20220214

20240628

PMC8519074

10.1111/risa.13620

33124753