The economic impact of BSE: a regional perspective

Abstract

A regional input-output model, detailing agriculture and its ancillary sectors, is used to quantify the effects of a BSE-induced reduction in final demand for beef on the economy of Northern Ireland, a region with heavy dependence on beef exports. The long-run regional output, income and employment effects are estimated assuming no market stabilization measures and taking account of substitution effects in final demand. Predicted net losses in regional income are 0.5% of regional GDP with job losses of up to 0.6% of regional employment. About 77% of the income losses and 87% of the job losses are in the beef sector, primarily beef production. Compensating gains due to demand substitution effects occur mainly in meat processing sectors, other than beef, and are relatively small. Adverse intra-regional distributional effects are likely due to the concentration of beef production in the more disadvantaged areas. The importance of appropriate policy responses is highlighted.