New Zealand has just shut its borders to foreign visitors for the first time in history in an attempt to mitigate the impact of COVID-19. In what follows, I outline the case for border closure, the conditions under which it is rational, and then note that this is merely one measure against one catastrophe. Moving forward, we should get used to analysing and preparing responses to such large-scale risks.
Closing the border in a pandemic
Pandemics impose costs on society. These costs include up front hospital costs, ICU costs, lost productivity due to illness, and death, and downstream costs including human and emotional toll and long-term productivity loss.
Closing the border also imposes costs, these include disruption, visitor revenue forgone and more than likely reductions in trade and business downturn. But importantly, closing the border can also fail, if a significant amount of disease gets into the country anyway (eg from returning kiwis), and if there is a substantial outbreak despite border closure then the costs of closure and the costs of the pandemic are incurred.
Keep the border open in a pandemic or keep the border closed, it’s a lose-lose situation. However, previous research has demonstrated that provided a pandemic is serious enough, meaning that a sufficiently large proportion of the population are likely to get sick (say, 40%) and the disease has a sufficiently high case fatality (say, very much worse than Spanish flu of 1918) then the costs of border closure pale in comparison to the costs of the pandemic. Border closure is then a no brainer.
Border ‘filtering’ and border ‘closure’
But there is border closure and then there is border closure. The current New Zealand policy, let’s call it ‘filtering at the border’, allows for the free passage of returning New Zealanders, provided they agree to pass through the ‘airlock’ of 14 day quarantine, and also allows for New Zealanders to leave and then return again (although this is advised against). Both processes could bring disease into the country. A policy of ‘complete’ as opposed to ‘filtered’ border closure would prohibit the movement of kiwis too.
Would ‘complete’ border closure ever be justified. Possibly yes. Imagine if the case fatality rate of COVID-19 was 100% instead of 1%. There could really be no justification for risking anyone entering the country at all until the pandemic was over. If such a case ever arose, then immediately sealing the border and becoming a ‘refuge’ is a completely rational approach.
But back to ‘filtered’ closure. The hope is that by filtering out foreign arrivals, then the impact of COVID-19 will be much less. This could still prove fruitless, either if there is established community transmission from the cases already here, or if returning kiwis bring the virus home and spread it. In our previous research we modelled a scenario where border closure is attempted but fails, resulting in 90% of the unmitigated case-load. For a pandemic of more than 10 times the severity of Spanish flu, this was still a cost-effective measure (minimizing losses) under some assumptions. However, for swine flu (2009) it was never cost-effective to close the border.
How bad is COVID-19?
COVID-19 is an intermediate case. Under the ‘base case’ model of 40% infected, half being asymptomatic and 1% case fatality for the rest, it could cause 1 million symptomatic cases, and 10,000 or more deaths in New Zealand. This is a huge human, social and economic burden with ramifications for our economy for many years. But these costs (the economic ones) only barely balance out the lost visitor revenue from say 6 months of border closure. So, at first glance the case for closure is equivocal.
If trade continues, though curtailed by a policy of border closure, then the numbers become important. If closing the border (successfully) means the pandemic costs you $11 billion less than it would have otherwise (which is the result of modelling 72% infected and 2.3% dying, hospital costs, productivity loss, death, etc), then it is worth closing the border even if there is going to be an $11 billion drop in trade over the period of border closure (about 20% of trade for a six month period).
What is hard to predict, but is becoming clearer, is the global impact of the pandemic on travel and trade. If tourism drops to zero despite our actions, and trade plummets too, then the economic benefits of closure compared to no closure, suddenly appear much greater. You lose nothing by closing the border if there is no tourism and no trade anyway.
These are the numbers that need to be evaluated for a range of scenarios. And on the basis of these numbers COVID-19 looks to be right in the middle, between swine flu and disaster.
This means the decision may come down to factors other than strict economic ones and three factors play a key role: equity, access to care, and the value of a ‘quality adjusted life year’ (basically one year of good health).
Equity, access and value of life
COVID-19 differentially impacts the elderly. They suffer more severe illness on average and bear the brunt of deaths. This may also be true of other minority groups in New Zealand, we don’t know this yet. Our health system places a lot of weight on equitable treatment and prioritising ventilators is not equity. The best strategy to make sure everyone has a fair chance might be to simply close the border and keep it out.
COVID-19 places an immense burden on critical care facilities, and our modelling suggests that with an infinite supply of ICU beds COVID patients could occupy enough of them to cost the health system $1.9 billion or more. However, we only have enough beds that $270 million worth could ever be continuously in use over a six-month period. So, the analysis suggests costs well in excess of those that would be realised (ie the outbreak seems to get cheaper). But this results in unmet health need. And likely would result in preventable deaths. Which have a long-term cost themselves. Again, these are the factors on the scales that need to be weighed.
The modelling research we did used Treasury figures for the value of a year of good health, which are derived from Pharmac funding decisions. Basically, how much does Pharmac spend on medicines that lead to a gain in one year of good healthy life?
It may be that we New Zealanders decide to put much more value on healthy life than this (double? triple? it can’t be infinite or there would never be such a thing as a health budget, it would be a blank cheque). But this new valuation, if imputed in the models, can change the outcome of these economic analyses.
So, closing the border to protect vulnerable populations, to ensure fair access to care, or to save lives can be a very reasonable decision, even when it is not strictly an economically rational one.
Border closure can still fail
Bear in mind that border closure could still fail and the probability of failure should be built into economic modelling. We could still end up with just as many cases as in the no closure scenario. Many other variables in this equation (such as the exact epidemiological parameters of COVID-19 in certain contexts) also remain unknown.
Given the high degree of uncertainty, it may be rational to close the border to assess the situation. This is because, although borders can be re-opened at a later date (even re-opened almost immediately), we may lose the window of opportunity to close them if we don’t act now. This decision and the precise timing are very difficult, and although detrimental economically, it may be wise to move fast, as the government has in fact done.
But now we risk a very long waiting game. The virus is likely to be controlled in some regions of the world and not in others, resulting in a patchwork of ‘hot’ and ‘cold’ zones and severe travel disruption until a vaccine is available. There is almost a paradox in being too successful. If we keep it out then we must sustain our vigilance for the long haul or risk an outbreak every bit as bad as it can be, just down the track.
Global Catastrophic Risks
COVID-19 is a very harmful event, but it is not a global catastrophic threat. There are worse scenarios waiting in the shadows, and we must be prepared for them. Our experience with COVID-19 and the substantial fall-out will hopefully now prime decision makers to be receptive to the idea of building resilience against catastrophic risk. There are far more devastating biological threats that could arise, whether naturally or through biological manipulation, there are threats from other technologies, such as artificial intelligence (AI), geo-engineering, nuclear technologies, as well as threats from climate change, supervolcanoes, near earth objects, and others. COVID-19 has shown us how fragile our just-in-time systems are, how pursuit of a point of extra return can leave us undercapitalised, without cash flow, without inventory, at the mercy of global forces.
The government ought to take a risk portfolio approach to global catastrophic threats, and invest in assessing the probability of various risks, their magnitude and how to build resilience against them.
There is no reason why we can’t have an EQC-style fund to protect against risks that hit only once per generation, but hit hard. There is no reason why we couldn’t have walked through scenarios like COVID-19 with all sectors collaborating to identify the bottlenecks such as ventilator availability, testing locations, health workforce, data systems to track those in quarantine and so on.
The current event involves a biological virus, what if the next event involves a digital threat, would we close our internet borders? What is the case for doing so or for not doing so? This all needs to be scenario-ized.
In fact, in a paper published last week, we made this call with respect to AI, and urged the government to address global catastrophic risk in a systematic and pragmatic fashion.
The first significant step is to institutionalise the learnings from COVID-19, the phrase ‘global catastrophic risk’, and a commitment to undertake research, analysis, planning and systems testing much more often and more robustly.
Adapt Research Ltd 