Assessing Regional Risks From Pandemic Influenza: A Scenario Analysis

• Author: Pane Stojanovski,James Giesecke,Gordon Woo,George Verikios,Maura Sullivan
• Date: 01 August 2016
• DOI: http://doi.org/10.1111/twec.12296
• Published date: 01 August 2016

Assessing Regional Risks From Pandemic

Influenza: A Scenario Analysis

George Verikios

1

, Maura Sullivan

2

, Pane Stojanovski

3

, James Giesecke

4

and

Gordon Woo

2

1

KPMG, Brisbane, Queensland, Australia,

2

Risk Management Solutions, Washington DC, USA and

London, UK,

3

Risk Management Solutions (Asia Risk Centre), San Francisco, California, USA, and

4

Centre of Policy Studies, Victoria University, Melbourne, Vic., Australia

1. INTRODUCTION

INFECTIOUS diseases are a leading cause of death worldwide, accounting for a quarter to

a third of all mortality.

1

In most industrialised countries, infectious disease ranks after

cancer and heart disease as a leading cause of mortality. Despite developments in pharmaceu-

ticals, infectious disease rates are rising due to changes in human behaviour, larger and denser

cities, increased trade and travel, the inappropriate use of antibiotic drugs, and the emergence

of new and resurgent pathogens (Dobson and Carper, 1996).

Infectious disease outbreaks can easily cross borders to threaten economic and regional sta-

bility, as has been demonstrated by the HIV, H1N1, H5N1, and SARS epidemics and pan-

demics (Dixon et al., 2001, 2010; Fan, 2003; Chou et al., 2004; Hai et al., 2004; Lee and

McKibbin, 2004; Jonung and Roeger, 2006; Keogh-Brown et al., 2010; Verikios et al., 2012).

The threat to stability derives from a number of features of infectious disease outbreaks. One,

the nature of emerging diseases is that, by definition, they are not commonly encountered by

physicians and are thus capable of generating widespread infection and mortality prior to

identification of the aetiologic agent (e.g. HIV/AIDS). Two, drug development and approval

timeline lags the emergence of these diseases such that the initial infection can result in sig-

nificant mortality. Three, the constant adaptation of microbes, along with their ability to

evolve and become resistant to antibacterial and antiviral agents, ensures that infectious dis-

eases will continue to be an ever-present and ever-changing threat. Our interest is to assess

the threats to economic and regional stability from infectious disease outbreaks; we focus on

pandemic influenza as it is a regularly recurring form of infectious disease in history. We

assess these risks by modelling the effects of a range of influenza pandemic scenarios by li nk-

ing epidemiological and economic models. The nature of the scenarios covers a broad spec-

trum of possible pandemic events. As such, our results provide policymakers with information

on the orders of magnitude and qualitative effects across regions of possible future pandemi c

influenza outbreaks.

The infectious disease model (IDM) we apply is designed to provide a probabilistic view

of the number of deaths that could result from a range of possible and plausible infectious

disease pandemics. Scientific understanding from the disciplines of virology, epidemiology

This work was partly funded by the Singapore Government Investment Corporation. Thanks go to

Marnie Griffith and Mark Picton for research assistance. We also thank Yi Jin and a referee for helpful

comments on this paper. The views expressed here are the authors’ and do not necessarily represent

those of the financing institutions or their affiliates.

1

See WHO (2004, p. 121, annex table 2) and WHO (2012).

©2015 John Wiley & Sons Ltd 1225

The World Economy (2016)

doi: 10.1111/twec.12296

The World Economy

and mathematical biology is used to build an event set that allows the model to capture the

characteristics of influenza and non-influenza emerging infectious disease pandemics.

2

The

event set, consisting of several thousand scenarios, represents the potential range of pandemic

scenario characteristics and their likelihood of occurrence. Mortality and morbidity rates per

age cohort by region are the output for each event. Using the IDM outputs and related data,

two diverse scenarios were developed, which together provide the basis for subsequent

economic modelling.

The economic model we apply takes an economy-wide approach to estimating the eco-

nomic impacts of the pandemic events. Lee and McKibbin (2004), Smith et al. (2005) and

Beutels et al. (2008) argue convincingly that econom ic analysis of public health emergencies

of international concern should not take a partial equilibrium approach by focusing on only the

health sector (or parts of the health sector) and forgone incomes resulting from disease-related

morbidity and mortality, while ignoring effects in other parts of the economy (Sander et al.,

2009). Illness and death due to public health emergencies raises the perceptions of risk, lead-

ing to risk-modifying behaviour (such as prophylactic absenteeism from work and public gath-

erings) in an effort to reduce the risk of contracting illness. Risk-modifying behaviour affects

consumption and reduces labour productivity. Deaths due to illness reduce the availability of

workers. Both of these effects will affect all parts of the economy to a greater or lesser extent.

Further, Lee and McKibbin (2004) and Smith et al. (2005) show that in the case of SARS and

antimicrobial resistance, the effects on the non-health sectors are larger than the effects on the

health sector. Thus, an economy-wide approach is the ideal framework for properly evaluating

the economic impacts of public health emergencies such as pandemic influenza.

As far as we are aware, McKibbin and Sidorenko (2006) is the only previous study that

estimates the risks to regional economies from pandemic influenza. They apply a global com-

putable general equilibrium (CGE) model with annual periodicity to estimate the effects of

four pandemics of varying severity. As McKibbin and Sidorenko state, the assumptions under-

lying their pandemic scenarios, which draw heavily on the work of Lee and McKibbin

(2004), are necessarily arbitrary due to the inherent uncertainty surrounding the nature of

future pandemics. One contribution of our work is to reduce this uncertainty using an IDM to

provide a probabilistic view of the number of deaths and infections that could result from a

range of possible and plausible infectious disease pandemics. We further build on McKibbin

and Sidorenko’s work by applying an economic model with quarterly, rather than annual,

periodicity. This is important so as to capture the short, sharp duration of past influenza pan-

demics. Annual periodicity is inappropriate in these circumstances as it will smooth out short-

term effects leading to potential underestimation of disruption.

2. THE NATURE OF INFLUENZA PANDEMICS

a. Overview

Influenza mortality, which can be highly variable from year to year, is a contributor to the

variability in the annual mortality rate of industrialised countries. Influenza is a contagious

disease and most often affects the upper airway and lungs of birds and some mammals. It

causes seasonal epidemics globally and is a leading cause of infectious-disease-related deaths

2

It is desirable to have a model that includes influenza and non-influenza pandemics because lethal

viruses tend to displace each other.

©2015 John Wiley & Sons Ltd

1226 G. VERIKIOS ET AL.