The COVID-19 pandemic is far from over, but it cannot blind policymakers: COVID-19 is only one of hundreds of thousands of undiscovered microbes that exist in nature and can infect people.
Even more alarmingly, the rate at which these diseases are spilling over into our population is increasing each year.
COVID-19, the first truly global high-impact pandemic of the 21st century, is a warning siren to the risks that continue to grow because of environmental change, globalized travel and trade, and the lack of effective prevention policies. It could finally motivate wise investments and effective risk management measures to avoid future catastrophes.
We’ve looked closely at this issue and explored what these investments should look like, as well as the economic gains they could generate for the U.S. The Biden administration clearly needs to invest much more money to prevent and prepare for another pandemic.
A National Research Council report after the 2014 Ebola outbreak emphasized the lack of preparedness and the need for investments in preparation. In the wake of COVID-19, multiple reviews suggest that preparedness deficiencies were a significant factor in the economic and health impacts experienced in developed countries.
In the U.S., preparedness deficiencies were exacerbated by an uncoordinated federal response early in the pandemic, which led to inefficient use of existing resources. While a pandemic plan existed, it was designed in response to smaller-scale outbreaks that had previously been the modern experience. Additionally, the pandemic response was undermined by a politicized and patchwork state-by-state response.
In President Biden’s recent American Jobs Plan, $30 billion was proposed in “infrastructure” spending to prevent future pandemics, as well as other major investments in research and caregiving that could provide additional support. For example, $400 billion were earmarked for caregiving to the elderly, and $40 billion to upgrade research infrastructure and laboratories.
The U.S. Should invest far more in building capacity to both prevent pandemics and be able to adapt to them should they occur. These additional resources would help to prevent the next pandemic by making it possible to detect novel outbreaks early on and use contact tracing to target and rush a response.
We can also reduce the cost of a pandemic, should it occur, by ensuring sufficient hospital capacity and public health resources to manage a large outbreak. These resources would be available for other public health needs outside of pandemics.
Under reasonable assumptions, our analysis predicts maximum gains arise from an initial investment of $511 billion, followed by a steady increase of up to $829 billion and supported by annual investments to maintain capacity. The returns to these investments would range between $9-$15 in benefits per dollar invested. Altogether, our proposed investments in capacity could generate up to $10.4 trillion in expected avoided damages to society, as well as avoiding immeasurable human suffering.
These investments generate returns that can be broken down into three different sources. The first is considered a risk-free rate of return, in the sense of a return generated from healthcare capacity that can be used before a pandemic. For example, healthcare facilities, doctors, nurses, beds, labs, and other resources help society outside of pandemic events.
The second source is from reductions in the probability of a pandemic occurring. Self-protection–the ability to detect outbreaks early on, perform contact tracing, and rush response to outbreaks–would allow the U.S. To avoid future pandemics. The third source is self-insurance: reducing the costs of a pandemic if it does occur. This involves having sufficient hospital capacity, the ability to quickly develop vaccines and therapeutics, and lower the cost of a pandemic that does occur.
As background risks increase with continued environmental change and globalization, the relative importance of self-protection increases. These prevention investments would give us the capacity to detect and respond to outbreaks early while they’re small.
As the risk of future pandemics increases over time, we believe each of these three different returns provides ample incentive to invest more in health preparedness capacity in the U.S.
Kevin Berry is an associate professor of economics at the University of Alaska Anchorage. David Finnoff is a professor of economics at the University of Wyoming. Richard Horan is a professor of economics at Michigan State University. Peter Daszak is the president of EcoHealth Alliance.
