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• Lessons
  • 1. Review of PRA and Introduction to Risk Assessment
  • 2. Resources Used to Conduct Pest Risk Assessment
  • 3. Conducting Pest Risk Assessment for Trade
  • 4. Practice
  • 5. Module Conclusion
• Topics
  • 1. Initiation
  • 2. Pest Categorization
  • 3. Estimating Likelihood of Introduction
  • 4. Estimating Potential Consequences of Introduction
  • 5. Developing Conclusions and Describing Uncertainty
  • 6. Lesson Summary
• Resources
  • Help
  • Glossary
  • Documents and Videos
  • Acknowledgements

Lesson 3: Conducting Pest Risk Assessment for Trade

Topic 4: Estimating Potential Consequences of Introduction

Approaches to Consequence Evaluation

The next step in the risk assessment process is to determine the extent to which the pest will adversely affect the PRA area. This is assessment of economic consequences.

The introduction and spread of quarantine pests have the potential to cause many important impacts. Examples include plant mortality, yield losses to commercial crops in terms of a reduction in plant production or vitality, and quality/marketability losses. They can also cause indirect impacts, such as losses of export markets and increases in costs of production, or cause impacts to related industries, such as energy and tourism. In addition to commercial impacts, the introduction of new pests can also result in important environmental and social impacts that are not easily measured by the market place. Such impacts are referred to as nonmarket effects. The table below summarizes some of the types of consequences that can result from the introduction of quarantine pests.

The IPPC requires analysts to demonstrate the potential for economic harm caused by a quarantine pest when conducting a PRA. Supplement No. 2 to ISPM No. 5 provides clarification to ensure that economic terms are clearly understood and consistently applied. It is worth noting that what IPPC refers to as economic consequences also include environmental, social, and other nonmarket impacts.

ISPM No. 11 also endorses a broad range of approaches for assessing the potential consequence associated with the introduction of quarantine pests including:

1. No detailed analysis (threshold approach)
2. Determining the value at risk
3. Quantitative analytical techniques

Each of these methods is describe below.

No Detailed Analysis (Threshold Approach)

The first approach is no detailed analysis. ISMP 11 states that in cases where there is sufficient evidence or general agreement the introduction of a pest will have unacceptable economic consequences, detailed analysis of the estimated economic consequences is not necessary. In such cases, the risk assessment would then focus primarily on the likelihood of introduction.

Note that this abbreviated approach assumes a certain tolerance for pest damage. In other words, some pests have acceptable economic consequences. If we use this approach and the predicted pest impacts are below this threshold, or they meet our acceptable level of risk, we would not require phytosanitary measures for that pest. If the impacts are predicted to exceed this level, or the pest is likely to cause unacceptable impacts in the PRA area, and there is general agreement that this is the case, we would be justified in requiring phytosanitary measures based on the likelihood of introduction alone.

Consult the following table to find out when you need more detailed analysis beyond a threshold approach.

Determining the Value at Risk

A second option for evaluating consequences is by determining the value at risk. Section 2.3 of ISPM No. 11, Assessment of potential economic consequences, describes a method for doing this. The purpose of the method is to identify the total potential consequences that could occur as a result of the pest’s introduction. Note that this approach often assumes a hypothetical worst-case scenario where the pest has been introduced everywhere it can survive in the PRA area and is fully expressing all potential economic consequences.

Steps to determining value at risk

1. Identify all potential direct pest effects (market and nonmarket). Consider all hosts in the PRA area and the type and magnitude of damage caused by the pest.
2. Identify potential indirect pest effects, especially potential trade and environmental impacts.
3. Based on biology of the pest, determine the area where the pest is likely to establish.
4. Based on where the pest can establish and the distribution of the pest’s potential hosts in the PRA area, determine the endangered area, which is the portion of the PRA area where ecological factors favor the establishment of the pest AND where the presence of that pest will result in economically, environmentally, or socially important loss.
5. Estimate the total area or number of the hosts in the endangered area and quantify their value.
6. Estimate the value at risk (based on the value of the hosts at risk and the potential identified direct and indirect pest effects).

In determining value at risk, you must consider how the pest being analyzed has behaved in the area where it currently occurs and how a similar pest has behaved in the area being analyzed now.

It is important to note that the value at risk represents the total potential economic impact, but it does not represent likely or actual economic impact. The worst-case scenario is rarely ever realized (at least within a realistic time horizon). This is true for several reasons.

1. Pests are not likely to become established at all places where they can survive.
2. Pests are not likely to cause consistent damage (some hosts will be more resistant than others, some pests more virulent than others).
3. Serious pests are likely to be controlled (either by humans or by adaptive natural predators) before they reach their full pest potential.

Additionally, as mentioned previously, costs will not be constant over time; the rate of spread over time greatly influences actual economic costs associated with the introduction of the pest.  

Not every PRA will use this approach to estimate consequences. Refer to the following table to find out when this option is a good choice and when it isn’t.

Quantitative Analytical Techniques

Economic analysis generally requires a relatively large amount of resources, expertise, and data. Yet an economic analysis is desirable in many cases. Environmental and other nonmarket consequences are often very difficult and controversial to monetize, so an analyst might prefer to focus assessments on market impacts that are more easily quantified. Analysts might wish to quantify only one or two important consequences to show that those consequences are high, or greater than a certain amount, and then address nonmarket impacts qualitatively.

Even when using economic analytical techniques, it is not always necessary (or even possible) to do a complete economic analysis.

So how do you decide when a detailed economic analysis is needed?

There are many economic models and methods, and a discussion of the various quantitative analytical techniques that can be used for estimating economic impacts is beyond the scope of this module. It is worth noting, however, that an economist is generally needed in order to implement these techniques.

Let’s return to our analysis of Pestis horribilis. In this fictional situation, the greatest consequences are commercial or market impacts. In real-life situations, you would also consider possible environmental and social impacts. Could the pest escape into nearby ecosystems? Will people go hungry if your country loses its principle food crop? Environmental and social consequences are more difficult to quantify than market impacts, but you should be able to use words to describe those potential consequences.

Think about the three broad approaches for assessing the potential consequences of introduction. Given what you know, what approach would you take? Because the pest would obviously cause unacceptable impacts in Importland and because there is probably general agreement that the pest would cause unacceptable impacts, there is no need for detailed analysis in this situation.

By the end of Stages 1 and 2, you should have done the following:

• Identified all pests and pathways for analysis
• Identified the PRA area and any endangered areas
• Identified quarantine pests
• Assessed the potential for the entry and spread of any identified quarantine pests
• Assessed the potential economic consequences of any identified quarantine pests

The final stage of a PRA (Stage 3, pest risk management) is covered in Module 6.

To continue, select Topic 5 from the Topics menu above or click here.