Question

Consider a trace-and-monitor program in the Waterloo Region that would monitor whether international travellers arriving into the region respect the mandatory COVID-19 quarantine requirements. Analysts estimate that over one year the tracing costs to be $4 million, the monitoring costs to be $22 million, and the inconvenience costs to these patients to be $18 million. The annual benefits of this program are estimated to be $35 million indirectly avoided infections costs in the Waterloo Region, $7 million in indirect health costs savings in the Waterloo Region from avoiding hospital overcrowding, and $28 million in avoided infections costs in the rest of the province. From a strictly regional (WR) perspective, does the program have positive net benefits? If it does not, what fraction of the benefits accruing in the rest of the province would have to be taken into account for the program to have positive net benefits?

Answer 1

Total cost = tracing costs + monitoring costs +inconvenience costs

=[$4 +$22 +$18] million = $44 million

Total benefit = $35 million

[$7 million in indirect health costs savings in the Waterloo Region from avoiding hospital overcrowding, and $28 million in avoided infections costs in the rest of the province]

As total benefit is less than total cost so, the funds right now are not positive.

fraction of the benefits accruing in the rest of the province would have to be taken into account for the program to have positive net benefits are :

44-35 = 9

thus [9/28]*100 = 32.14% part of rest of the province benefits are more required to make net benefit zero and more than 32.14% will lead to positive results.

*********PLEASE UPVOTE AS SMALL TOKEN OF APPRECIATION*******