An Economic Assessment of the BSE Crisis in Canada: Impacts of Border Closure and BSE Recovery Programs

Using a static, multi-market, partial equilibrium model this paper assesses the economic consequences three alternative government responses to the BSE crisis in Canada: 1) expansion in slaughter capacity, 2) partial destruction of the cattle herd, and 3) deficiency payments. Each of these policies is evaluated under four different border situations 1) free trade in young beef only, the 2004 baseline situation; 2) autarky; 3) free trade in young beef and cattle; and 4) complete free trade. The results of the policy analysis are quite sensitive to the border assumptions employed making it impossible to select a "best" policy without perfect foresight with respect to the timing and the degree of border opening.