Using the economic surplus model to measure potential returns to international livestock research : the case of trypanosomosis vaccine research

This report addresses issues surrounding measurement of the potential productivity gains from new livestock technologies and the returns to international livestock research. The approach, applicable to many livestock production constraints and technologies, integrates a herd simulation model to measure the potential size of impact of a new technology, geographic information systems (GIS) to predict where this impact is likely to be felt, and an economic surplus model to value it. The particular problem examined is trypanosomosis in cattle in Africa, and the potential research product is a multi-component vaccine. The results suggest that the potential benefits of trypanosomosis control, in terms of meat and milk productivity alone, are worth over US$ 700 million per year in Africa. The disease is costing livestock producers and consumers an estimated US$ 1.3 billion annually, without including productivity losses associated with less manure and traction due to the presence or risk of the disease. Given an adoption period of 12 years, a maximum adoption rate of 30%, a discount rate of 5%, and a 30% probability of the research being successful within 10 years, the net present value of the vaccine research is estimated at US$ 288 million, with an internal rate of return of 33%, and a benefit:cost ratio of 34:1. The results of this study will assist in research priority setting and have highlighted the need for further research aimed at better understanding who the beneficiaries of the vaccine will be, and how it will reach them.