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Economists Use Computer Models to Size up Costs of Pandemic Flu

Health experts fear that a major influenza pandemic could kill millions of people worldwide and cripple the global economy. Since 2003, the highly pathogenic H5N1 virus has spread to nine countries, largely in Asia and Africa. It has wreaked havoc on the poultry industry and killed 150 people. But should the virus mutate and spread more easily among humans, the consequences are difficult to predict.

What plans should a country make and how can a nation prevent widespread death and economic collapse? New computer models based on a history of 20th century pandemics are helping to answer those questions.

Brookings Institution economist Joshua Epstein works with a specialized information network known as MIDAS, short for Modeling of Infectious Disease Agent Study.

He says its computer models - a project of the National Institutes of Health - provide an orderly framework in which to understand how global pandemics play out in the real world. "We need models to try to capture the global flow of people by air and other means, the transmission within large cities, and we can calibrate these models to historical cases. We can reconstruct true epidemics in these models and claim some credibility for them" says Joshua Epstein.

Since 2004, the MIDAS network has been focused on an outbreak of pandemic influenza in Southeast Asia. Its findings show that a variety of public health strategies -- including distribution of antivirals, school closings and quarantine -- if implemented early - could contain an outbreak at its source.

Warwick McKibbin with the Lowy Institute for International Policy in Australia has developed another model that explores the effect a flu pandemic would have on the global economy. He says spread of the deadly H5N1 virus would lead to a number of severe economic shocks. "When people get sick or die, the labor supply changes. That disrupts production," he says and adds, "industry has to take some sort of action and that usually raises cost." McKibbin says the models must also account for changes in people's behavior. "They will stop going to open areas where they may interact with infected people. They shift what they spend, where they spend. They stay at home more often," he says.

McKibbin says that in terms of gross domestic product, or G.D.P., a global pandemic could spark staggering economic losses. "For the U.S. - .6% of GDP (Gross Domestic Product) - for the mild case, for the world .8% of GDP."

That's approximately 330 billion dollars in lost economic output. McKibbin says as the scale of the pandemic increases, so do the economic costs. "For the most severe - the ultra scenario - we had over 4.4 trillion dollars wiped off the world economy, 140 million people killed."

McKibbin says developing countries would be hardest hit. "They don't have the capacity to respond. Their conditions … density of populations, living conditions, health systems are unable to respond. And these are the countries that don't have the economic resources to prevent an economic outbreak in their own economies."

McKibbin says the enormous cost of a global pandemic raises the question whether enough is being spent to prevent an outbreak. "I don't think we are. We certainly are not spending enough in developing countries in public health systems, for example. Because by the time this pandemic influenza breaks out and most likely breaks out in Asia, you can't stop it at the border."

McKibbin says based on his model, the resources needed to contain the spread of avian influenza are far less than the costs that will be incurred after a pandemic strikes.