5. PRACTICAL APPROACHES TO VALUING SEAFOOD SAFETY

5.1 Measuring Risks
5.2 Data Problems
5.3 Data Policy Issues

Most current major health risks associated with seafood safety originate in the environment and should be dealt with by control of harvest or at the point of capture. With minor exceptions, risks cannot be identified by an organoleptic inspection system. Inspection at the processing level is important to maintain the safety of seafood, but there is little evidence that increased inspection activities at this level would effectively reduce the incidence of seafood-borne disease (Ahmed 1991). However, when quality considerations are taken into account, seafood inspection, and training and process monitoring programmes from producer to consumer can be expected to reduce the number of illnesses resulting from seafood.

While the economic theory which guides the estimates for valuing seafood safety still needs major development, at the same time it is necessary to proceed with practical estimates needed to evaluate current programmes and practices (Curtin and Krystynak 1991). First, the health risks of various diseases must be converted to a common monetary value, with these costs, or the amount they are reduced, representing the benefits of disease reduction. Second, the costs and effectiveness of control strategies must be determined. Third, the costs of disease must be compared to the costs of controlling it to determine worthiness to society of implementing the control.

Costs must be defined at three levels. Society level costs are defined as hospital and medical costs, loss of productive output, disease surveillance and investigation costs and loss of life. Private level costs which are specific to the affected individual include loss of leisure time, travel of caretakers to hospital, willingness-to-pay and pain and suffering. Finally, firm level costs are measured by such items as loss of sales and consumption, product recall or discarding and legal costs and settlements. In order to be useful, all these costs must be translated into monetary values, which is a very difficult task. The interested reader can follow this technique using Salmonella and the Canadian poultry industry (Curtin and Krystynak 1991).

To define costs and benefits at all levels, it is useful to demonstrate an example of a regulation imposed by a country for the purpose of improving the safety of a fish product caught and processed by industry in that country. Within the country of the regulation, input suppliers, fishermen, fish processors, fish distributors, consumers and government incur costs and benefits. In other countries, fishermen, fish processors, fish distributors, consumers, governments of the countries, and any relevant union of governments incur costs and benefits. Examples of the kinds of costs and benefits that would be incurred at each impact level both within the country where the regulation is implemented and outside the regulated area are shown in Table 7.

Table 7. Example of potential short-run benefits and costs of a fish safety regulation that changes fishing/processing practices

Source: Adapted from Caswell (1988)

5.1 Measuring Risks

One major problem in using any estimation technique is the identification and measurement of risks of contracting a food-borne disease (Roberts and Foegeding 1991). Another major problem is that it is difficult to make a direct connection between the econometric model using actual data and the theoretical base on which the model is built. Several consumer demand models for food safety exist and many economists are working hard to overcome the data problems in current studies (Smallwood and Blaylock 1991). An excellent summary of the theoretical considerations of valuing food safety and comparison of the COI and WTP methods exist as summarized here (Roberts and Marks 1995). Comprehensively, they maintain that theory that evaluates social preferences for food safety should contain six elements: (1) preferences for collective action as well as preferences for self-protection by industry and consumers, including the cost of choices avoided; (2) determination of the optimal level of food safety and the demand for governmental intervention to administer and enforce the "optimal" level of food safety; (3) the costs of all participants in the marketplace and regulatory agencies to keep informed of the latest scientific developments linking diseases with food, identifying high risk individuals and high risk consumption practices, and identifying high risk food production and marketing practices; (4) the benefits to society of reduced human illness costs at the current level of food safety for microbial contaminants; (5) the willingness of high-risk and risk-averse individuals to pay for safer food as well as risk neutral consumers; (6) the willingness of society to pay for the safety of others.

Probably the greatest amount of activity by economists concerned with food safety economics in recent years has dealt with improving the various methods of estimating the benefits resulting from reducing the health risks from food, instead of estimating the actual costs and benefits. Until all theoretical questions can be adequately answered, backed with data sources and techniques that make WTP questions reliable, then the COI is the best method of evaluating the value to society of food safety (Roberts and Marks 1995). COI estimates also are usually lower than WTP estimates, and are more conservative estimates. The interested reader is referred to the article for detailed comparisons of the uses of COI and WTP at the government, industry and individual levels (Roberts and Marks 1995).

5.2 Data Problems

Data sources and reliability create major problems in the estimation of the value of food safety. Statistics on food-borne disease in developed countries represent only a small amount of the actual numbers of illnesses resulting from food. In developing countries, food-borne illness is recognized as a widespread problem (Abdussalam and Grossklaus 1991) with estimates of unreported cases that approach 90 percent in non-industrialized countries. Data problems can be summarized into three areas (Steahr 1995). First, it must be assumed that food-borne illness can be distinguished from other types of illness and the transmission method of contracting the disease. Second, it must be assumed that the types of food-borne illnesses are known which then provides the basis for counting the persons contracting the disease. Third, no data base exists which contains all cases of food-borne illness. The available data sources and the way they are categorized in the United States are available (Steahr 1995). In addition to these costs, it is usually necessary to collect primary data from the fishing, processing and distribution level private firms in order to estimate the costs incurred by those firms. These data are time-consuming and expensive to collect.

5.3 Data Policy Issues

Four aspects of food safety relate to data used to inform public policy (Jensen et al. 1995). First, food safety data present a bad news/good news problem. In the short run, "bad news" must be endured while data are collected to document the severity of the problem. In the long run, data can document that food safety improvements are being made. Second, complete and well-integrated information bases on which to make food safety public policy decisions do not exist. Third, the costs of acquiring food safety data are high. Fourth, resource distribution among producers and consumers will be an issue. Cutting through all these issues is the situation that academic and agency structures do not always foster cooperation to solve these issues, not only within countries, but also among them.