Three Essays on Bio-security

In this dissertation, several essays in the field of bio-security are presented.The estimation of the probability of an FMD outbreak by type and location ofpremises is important for decision making. In Essay I, we estimate and predict theprobability/risk of an FMD outbreak spreading to the various premises in the study area.We first used a Poisson regression model with adjustment dispersion associated withrandom simulation results from the AusSpead model to estimate the parameters of themodel. Our estimation and prediction show that large cattle loss could be concentrated inthree counties-Deaf Smith, Parmer, and Castro. These results are based on approximately70% of the feedlots with over 10,000 cattle located in the three counties previouslymentioned.In Essay II, our objective is to determine the best mitigation strategies in minimizinganimal loss based on AusSpead simulation model. We tested 15 mitigation strategies byusing multiple comparison. The results show that the best mitigation strategies for all fourscenarios are regular surveillance, slaughter of the infected animals, and early detection. We then used the Mixed Integer Programming to estimate costs of disposing of animalcarcasses and transportation. Results show that the unit disposal cost will vary withcarcass scale and the unit transportation cost also varies with the distribution of theinfected premises and disposal locations.FMD seems to have varying impacts on equity markets. In Essay III, we studiedreturns at three different levels of the stock market. We determined results in a structuralbreak, and then estimated the impact of the announcement of confirmed cases of FMDdisease on the volatility of stock market returns by using a GARCH-Mean model. Ourresults show that the structure break occurs on the day with the largest number ofconfirmed cases for meat product firms rather than the day of the first confirmed case.We found that the conditional volatilities over the FMD period are higher than those overthe sample period. The announcement of confirmed cases had the largest marginal impacton meat products. Investors may always consider maintaining a portfolio consisting ofindex funds or hedge funds.