An expensive critter.

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The Economic Cost of Zika Virus

Mac Margolis writes about Latin America for Bloomberg View. He was a reporter for Newsweek and is the author of “The Last New World: The Conquest of the Amazon Frontier.”
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People are scrambling as the scary, mosquito-borne virus Zika winds its way through 26 (and counting) countries and territories in the Americas. The commotion is understandable: The virus may be linked to an alarming spike in microcephaly, a birth defect, in Brazil, and a neurological disorder elsewhere, and there's nothing like the prospect of a generation maimed to trigger panic.

But amid alarm over the public-health emergency is a quieter menace -- economic loss and hardship. There's an important, albeit still crude, question underlying Zika's spead: How much will the virus cost?

Zika Virus

It's too soon to calculate. Until last year Zika, which is transmitted through the Aedes mosquito, was known for only scattered outbreaks and mainly mild symptoms. But some idea of the potential financial havoc the disease might wreak can be gleaned by looking at another sickness spread via the Aedes mosquito: dengue.

Putting a dollar figure on a global scourge is no simple matter, given the spotty reporting from countries with precarious health care. But Donald Shepard, a health economist at Brandeis University, ran the numbers and concluded that in 2013 dengue cost the global economy $8.9 billion.

That figure represents the price of caring for the 58.4 million dengue victims worldwide that year, plus the cost of lost time and productivity. Unsurprisingly, the burden was heavy on developing countries: The 10 countries (nine of them developing) with the highest aggregate cost from dengue bore 82 percent of the global cost in 2013. The disease was most expensive in Indonesia at $2.2 billion. Brazil came in third at $728 million, but add in the cost of prevention and the estimate rises to $1.2 billion.

True, the comparison with Zika is not perfect. Dengue has a greater global reach; Shepard's research looked at 141 countries and territories where there were signs of transmission. There are various strains of dengue virus, which can lead to the severe, and potentially fatal, dengue hemorrhagic fever. According to Shepard's calculations, dengue took 13,586 lives in 2013; that's a relatively small share of the total number of victims, but those deaths represented 11.9 percent of the disease's global economic burden.

Then there's the price to pay as worry over a new, little known scourge spreads. As devastating as Shepard's findings are, they do not include the toll on tourism. Health officials in Australia, Denmark, the U.K. and the U.S. have already reported Zika infections in people returning from Latin America and the Caribbean. "When outbreaks occur, people stay away," said Duane Gubler an infectious-disease expert at Duke-NUS Graduate Medical School in Singapore, who used to write travel advisories for the U.S. Centers for Disease Control and Prevention.

The fallout from other scourges can offer some insight. Tourist arrivals in Hong Kong were down 68 percent two months after the World Health Organization issued a warning about the SARS epidemic in 2003, and 54 percent in South Korea two months after the 2015 alert about the MERS outbreak, according to Bloomberg Intelligence.

With Zika, stocks of travel companies have already slumped "after U.S. health officials warned pregnant women and those planning pregnancies against visiting affected areas such as Brazil, Puerto Rico and Barbados," according to Bloomberg Intelligence. That's bad news for recession-ridden Brazil, currently hosting its foreigner-friendly Carnival festivities and expecting as many as half a million tourists for the Olympic Games in August, during the cooler, drier, less mosquito-friendly tropical winter.

One modicum of financial hope within all of this may be for the travel-insurance industry: Reuters reported that RoamRight, a leading U.S. travel-insurance provider, has seen orders for policies covering trips to areas hit by Zika climb almost 10 percent since December.

But that's not much to celebrate. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Mac Margolis at mmargolis14@bloomberg.net

To contact the editor responsible for this story:
Zara Kessler at zkessler@bloomberg.net