By Eija Pehu and Cornelis de Haan - The World Bank - 2005

Preface: The strong expansion of the animal products sector in the developing world can pose major threats to global water, soil, and air quality, the livelihood of smallholders, and public health, if no preventive and mitigating measures are taken. Dramatically growing demand for meat and milk, and the growing concentration of production, processing, and retailing have already led to excessive stock density in several middle-income countries, causing major imbalances between animals and their surrounding natural and human ecosystems. Without appropriate public policies, these trends are expected to continue.
This paper is aimed at informing decision makers involved in public policy in the developing world and in the international donor community with an overview of the main issues involved, and their possible solution, and trade-offs, to give this important issue a higher profile in the policy debate, and avoid some of the policy errors made in the industrialized world.
Currently this paper is most relevant to middle income countries with a rapidly growing livestock sector—such as, Brazil, China, Mexico, Thailand, and several East European countries. However, it should become increasingly relevant to the urban and peri-urban areas of the rest of the developing world, including Sub-Saharan Africa.

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Table of contents

Chapter 1. Setting the scene
describes the emerging patterns of animal product demand and supply, the underlying forces that shape these patterns, and their implications for the structure of animal agriculture.

Chapter 2. Effects of the livestock revolution
summarizes the main impact of these trends, focusing on the changing role of livestock manure from a resource to a waste material that must be managed if negative effects on water, soil, and air quality are to be avoided, and for equity and public health on the concentration of farms and animals, respectively, which can crowd out smallholders and provide a favorable environment for the emergence of diseases.

Chapter 3. Technical solutions
describes some of the technological tools available to prevent and mitigate these negative effects, and describes the main financial, regulatory, and institutional instruments applied in Organisation for Economic Co-operation and Development and middle-income countries, and their applicability to a broader scale of developing countries.

Chapter 4. Policy and Institutional Support Mechanisms
describes existing policy and institutional support mechanisms and nvironmental policy instruments.

Chapter 5. Current activities, rationale for international involvement and the way forward
provides the rationale for public policy involvement and recommends public policy entry points and possible World Bank support for the main tools and instruments described above.

Executive summary

SETTING THE SCENE

Fueled by fast-expanding demand, the production of meat and milk in the developing world has doubled in recent decades, and this trend is expected to continue. This expanding sector can provide income, employment, and high quality nutrition for vulnerable groups, and in many areas of the world, essential soil fertility inputs.

However, as production grows, market forces, often supported by deliberate or unintended government policies, are causing, in particular in the pig and poultry sector, a spatial concentration of larger-size production units, mostly around urban areas, and an economic concentration of production, processing and retailing. This geographical and economic concentration of the livestock sector probably improves the affordability of meat and milk for the urban poor, and might create better-paid employment up- and downstream of the producer, but has significant negative effects on the environment, animal and human health, and social equity.

IMPACTS

Environment
Regarding the environment, the excessive nitrogen, phosphate, and heavy metal levels in the effluent of intensive livestock farms causes environmental pollution and loss of biodiversity. While exact data on the total global environmental impact are not available, some illustrative facts are: More than 130,000 square kilometers of arable land in China and 30,000 square kilometers in Thailand, (together an area about four times the size of the Netherlands), have an estimated annual livestock nutrient waste production of phosphate of at least 20 kilograms per hectare per year in excess of the adsorptive capacity of the surrounding ecosystem. The extent of nitrate nutrient loading is probably even more severe. The resulting eutrophication1 of fresh water, with specific phenomena such as �red tide� or harmful algae blooms in East Asia, is affecting fisheries and some of the most valuable aquatic biodiversity, such as the coral reefs of the South China Sea. The increased cereal requirements to feed the pig and poultry population to meet the increased demand would require over the next two decades an additional area of about 65 million hectares, more than the size of France.

Animal and human health
Regarding animal and human health, multiple factors, such as changes in weather and climate, land use, human behavior, and lifestyles; a growing population of more susceptible, elderly, and immunocompromised individuals; and globalization with increased human-to-human contacts and dietary diversity, play a significant role in changing host�pathogen relationships. However, the accelerating demand for animal products has also increased the geographical density of livestock and the interface between livestock and people, and is leading to genetically uniform but highly vulnerable livestock populations. These trends are also major contributors to the emergence, or reemergence, of animal and human diseases. As in the case of environmental effects, global data are often not available or are unreliable, but some illustrative facts are:
� About every year, an emerging livestock-related disease�such as the Nipah virus, Bovine Spongiform Encephalopathy (BSE), Severe Acute Respiratory Syndrome (SARS), and Highly Pathogenic Avian Influenza (HPAI)�threatens the global human population. Together these diseases have caused over 1,000 deaths.
� Livestock-related and livestock-pollution-induced, food-borne diseases are a major source of child morbidity and mortality, and a major source of acute gastroenteritis, which, for example, has been estimated to cost Dutch society about US$27 million a year.
� Animal diseases have caused extraordinary losses. The economic losses due of BSE are estimated at roughly US$20 billion worldwide, losses due to HPAI are estimated to be at least US$1 billion worldwide, and losses to foot-and-mouth disease in the U.K. alone at US$8 billion. This is accompanied by the destruction of large numbers of animals, often belonging to smallholders, with the subsequent social hardship and animal welfare consequences. Inadequate control and eradication policies and measures are causing these diseases to become endemic and much more costly and difficult to eradicate.

Equity
While the East Asian experience shows that smallholders using family labor are reasonably efficient, factors�such as, economies of scale in waste management, disease control and biosecurity, consumer demand for uniform products, and biased policies�lead to increasing farm sizes and the danger of smallholders being crowded out. The overall effect of this trend is unclear, although it might lead to increased employment in other parts of the supply chain.

CURRENT STATUS OF TECHNOLOGIES AND INSTITUTIONS

Environment
Countries in the Organization for Economic Co-operation and Development (OECD), particularly the United States and Western Europe, have experienced a similar expansion and concentration of the livestock sector over the last three decades. Much can be learned from their experiences, often based on trial and error. Obviously, except for very radical solutions, such as prohibiting livestock production, there is no �silver bullet� for solving these problems. Some major aspects include:
� There are many technologies available to mitigate the waste burden. A more balanced ration and better feeding technology can reduce nitrogen and phosphate production by 10-50 percent depending on the species. Separating solids from liquids, and using different aeration techniques can reduce organic and even the heavy metal content. Bio-digestion to produce energy becomes also increasingly interesting, as the prices of fossil fuels rise. Finally, GPS technology, combined with soil and crop nutrient analysis can greatly improve the accuracy of balancing crop requirements and total nutrient application, thus reducing leaching and runoff of surplus nutrients into surface water. All these technologies bring livestock waste production more in line with the absorptive capacity of the surrounding ecosystem. However,few of these technologies are �win�win,� so their general adoption would need to be accompanied by an appropriate set of regulatory, financial, and communication instruments, which includes the costs and benefits of the environmental and public health externalities.
� Regulation has been the instrument of choice in most OECD and other high-density livestock countries. It covers zoning to improve the spatial distribution of intensive livestock production, and restrictions on livestock numbers and livestock waste application methods and timing. It has faced with enforcement problems. Financial instruments have mainly focused on subsidizing pollution mitigation or reduction in livestock numbers, with only limited experience with more market-based instruments such as tradable quota systems.

Animal and human health
For the main direct and indirect impacts of increasing livestock densities on animal and human health and treatment options, the �state of the art� is as follows:
� There is a wide range of treatment options available to reduce the microbial load of manure, and hence the incidence of livestock-waste food-borne diseases. Storage systems, longer-term composting, biodigestion, or aerobic treatment greatly reduce most bacteria, but more drastic and expensive treatment systems using disinfectants, such as lime, or heat, will be required for complete safety.
� Tools for early diagnosis of emerging zoonoses3 and other pathogens are available, or, with some exceptions such as BSE, can be reasonably quickly developed. The early reporting of disease outbreaks is hampered by lack of infrastructure and skilled staff in the public sector; inadequate use of the private sector (for example, para-veterinary and para-health) resources; and inadequate cooperation between animal and human health service providers, where the human health services focus on the human-to-human transmission, and the veterinary services on the animal-to-animal transmission, leaving a major gap for the animal-to-human transmission. Conflicts of interest among different sectors and services (veterinary and health services, trade, and tourism) often also delay the official declaration of an emerging disease. Finally disease surveillance systems are almost exclusively managed at the national level, whereas there are major economies of scale to work at multi-country levels.
� �Stamping out,� which includes destruction of diseased and suspected animals and strict quarantine measures, has been the preferred measure for eradicating emerging animal diseases, but has major social and ethical drawbacks. Moreover, experience with the management of, for example HPAI, shows that in the absence of adequate enforcement and compensation, compliance with stamping out is very weak. A much greater use of vaccination seems to be preferable on these social, ethical and efficiency grounds, but is met with trade restrictions as the OECD countries have generally adopted a non-vaccination policy. These trade restrictions are based in part on the difficulties in distinguishing between vaccine and disease induced immunity, although modern technology is making it now possible to make this distinction.

Equity
Vertical integration, contracting producers for the supply of uniform standard products against guaranteed forward pricing, has been the main strategy for providing smallholders access to this expanded market, and surveys in East Asia show a major positive effect on producer income. However, in a situation of weak enforcement and regulation, monopolies and collusion become major dangers of farmers losing independence and income share.

AN ACTION PLAN FOR THE INTERNATIONAL COMMUNITY

The Livestock Revolution poses major environmental and public health threats, but it can also contribute to pro-poor growth and improved livelihoods for urban and rural poor. The many externalities involved provide a strong justification for public policy involvement. Key recommendations for governments, donors, including the World Bank and other international and regional institutions are described below.

At the global level
At the global level, the main need is to increase awareness for the opportunities, but also the threats that the livestock revolution entails, and find new policies, technologies, and institutional arrangements in dealing with them. This will require actions in the following areas. Assessing the level of global externalities involved. As emerges from this paper, while there is information on the costs of the environmental and public health effects of the livestock revolution and their mitigation, there is little information on the degree of public goods involved, and even less if these concern global, national, or local public goods. Still, such information is crucial for assessing the possible incentives for private investments and the chance of scaling up, to be able to address these issues on much broader scale, than currently the case. Such greater understanding of the degree of public goods concerned would be an essential element to raise global awareness for these issues. Innovating global disease control. The recent disease outbreaks show that current approaches are no longer effective in this era of globalization. New approaches must be developed with all stakeholders. With the many institutions and some significant vested interests involved, the World Bank could use its global convening authority to facilitate this new thinking. This report proposes establishing a global platform for emerging zoonoses4 and other pathogens that could support ongoing activities�such as the Global Framework for the Progressive Control of foot�and�mouth disease (FMD) and other Transboundary Diseases (GT-TAD)5�but that would broaden its scope through private-sector partnerships with, for example, the pharmaceutical, processor, and/or retail sectors. This platform could promote innovative approaches for the control of zoonoses and advocate for increased funding by, stressing the spillover dangers from the developing to the industrialized world under the current disease situation. Some initial support from the World Bank�s Development Grant Facility is being considered. Promoting innovation could consist of studies on the cost of �business as usual� in animal disease control and its implications for human health. These studies could include:
� Critically assessing current disease control strategies, particularly issues such as, the current status of veterinary services in the developing world, the effectiveness of early global alert systems, and the non-vaccination strategy, among others;
� Assessing what technology introduction and policy changes are needed and what the costs and benefits of alternative strategies might be;
� Researching and developing robust and easy-to-apply disease and immunity level diagnostics and vaccines of the so-called �orphan� diseases;
� Studying the feasibility and eventual implementation of global or regional insurance and compensation systems; and
� Developing models�that promote regional integration of services, in particular�for surveillance and early alert disease systems, for vaccination campaigns and �stamping out� diseases, and for imposing quarantine measures that include adequate compensation for producers.

Enhancing the profile and sustainability of work on livestock environment interactions at the global level. While there is a reasonable level of awareness under the livestock specialists community of the challenges of the livestock revolution, the major importance of these challenges are not yet recognized by the broader global community, and have not yet led to sustainable institutions and funding for the prevention and mitigation of the negative livestock and environment interactions. The following actions are therefore required:
� A greater effort in public awareness creation at global and �hotspot� country levels. Citizens need to realize that local actions that harm the environment can transcend national boundaries, creating negative impacts on regional and global scales.
� Sustainable, long-term integration of livestock�environment interactions work is needed at national, regional, and global institutions. Current programs of the main international organizations, such as FAO and the ILRI, have mostly a project-specific focus.
� Linking livestock waste treatment operations with global public good support initiatives, such as carbon trade in the Prototype Carbon Fund, and payment for other environmental services under the Global Environment Facility; and
� Expanding research on improved livestock waste management and health technologies, described in Chapter 3. Global public support is required for those pro-poor or �orphan� (commercial nonviable) technologies, described above, such as the increase in the efficiency of feed use, and small-scale manure crop and energy recycle systems.

At the national level
With national public goods of environmental sustainability of water, land, air, and biodiversity, poverty reduction, and public health at stake, there are major national and local public policy roles. Chapter 3 outlines a vast array of technologies, but widespread adoption of these technologies needs to be supported by an expanded menu of financial, regulatory, and institutional instruments and support actions. Following the categorization adopted in Chapter 3, the international community, including the World Bank should support:
� Creating greater awareness among decision makers and the public about the major environmental and public health implications of increased livestock density that goes beyond �nuisance� factors to less obvious aspects, such as nutrient loading and emerging zoonoses;
� Preparing national manure management plans in those countries with major current or expected problems�such as Brazil, China, Thailand, Mexico, Philippines, Vietnam, and several ECA countries;
� Developing and implementing regional zonal planning capacities, including the development of GIS technology and its supporting database and the legislation and institutions to implement and enforce a better spatial distribution of livestock production;
� Strengthening the definition and implementation of market-based incentives for sustainable livestock waste management, including a tradable quota system;
� Strengthening national public animal and human health surveillance systems, particularly by promoting closer integration with private grassroots animal and human health systems, and closer collaboration between animal and human health institutions;
� Developing associative forms of livestock waste management�such as, cooperative biodigestion systems, watershed-focused manure management plans, among others; and
� Developing and testing legislation that supports supply chains that adequately protect the interest of all stakeholders, including smallholders, and prevent the monopolies or collusion of the integrators.

The Livestock Revolution will continue, and could have major global negative environmental, public health, and social externalities. As seen, there is no �silver bullet� and experience from the developed world shows that there is not even a proven package of interventions, and trial and error approaches will be needed. Still, the threats are so significant that coordination among all stakeholders involved at the global and national levels is needed.

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