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Tracing the Costs and Benefits of Improvements in Food Safety

by Elise Golan, Stephen Vogel, Paul Frenzen, and Katherine Ralston

Agricultural Economic Report No. (AER-791) 35 pp, November 2000

The level and distribution of the costs and benefits of the Hazard Analysis and Critical Control Point (HACCP) regulatory program for meat and poultry change dramatically once economywide effects are included in the analysis. Using a Social Accounting Matrix Model, we find that reduced premature deaths had a strong positive effect on household income, with economywide benefits almost double initial benefits. Contrary to expectations, reduced medical expenses resulted in a decrease in household income, while HACCP costs resulted in an increase. Net economywide benefits were slightly larger than initial net benefits, with poor households receiving a proportionally smaller share of the increased benefits than nonpoor because of their weak ties to the economy. Our SAM analysis provides policymakers useful information about who ultimately benefits from reduced foodborne illnesses and who ultimately pays the costs of food safety regu-lation. This analysis also sheds light on a number of issues central to cost-benefit analysis involving health, highlighting the danger of equating changes in income with changes in well-being.

Keywords: costs, benefits, Hazard Analysis and Critical Control Point (HACCP), food safety

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Last updated: Wednesday, January 30, 2013

For more information contact: Elise Golan, Stephen Vogel, Paul Frenzen, and Katherine Ralston

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