Quentin Grafton is Director of the Centre for Water Economics, Environment and Policy (CWEEP) at Crawford School of Public Policy. In April 2010 he was appointed the Chairholder, the UNESCO Chair in Water Economics and Transboundary Water Governance.
You might also like
Related research centres
Quentin Grafton and Tom Kompas explain why a ‘Hammer’ response, that seeks to eliminate COVID-19 infection, potentially offers the best strategy from both a public health and economic perspective.
Harold Wilson, a former Prime Minister of the United Kingdom, once said that a week is a long time in politics. The same can be said of COVID-19. Although it is too early to be certain, from the available data, it very much looks as if physical distancing and the better control of the borders is working in Australia.
The daily reported growth rate in infections has been falling dramatically recently and, as of Sunday 5 April, it’s now less than three per cent. There were periods during much of March, with arrivals from overseas, and other factors, where the daily growth rate was 24 per cent or more. This is something to be cautiously pleased about, even while the total number of infections are still increasing.
As Australia has moved towards, but not yet implemented a national lockdown, an increasing number of people are speaking out about the high costs of government-imposed physical distancing. Their point is valid. Having the economy shut down for weeks or even months certainly imposes high costs. But is it worth it?
The answer to this question can be found by comparing three possible strategies. One of these, called ‘the Hammer’, according to preliminary analyses, is the preferred strategy to fight COVID-19 in most cases. And yes, it does involve physical distancing, along with comprehensive testing, tracking, and quarantine of the sick.
An alternative strategy to physical distancing is what we call the ‘Scythe’ strategy. The Scythe response to COVID-19 does not impose sufficient mandated physical distancing with the intent to keep the economy running as smoothly as possible and getting people back to work.
According to proponents of this strategy this is achieved by letting the virus ‘take its natural course’. This means COVID-19 ends up infecting a large proportion of the population. According to its proponents, the Scythe would eventually result in ‘herd immunity’ and supposedly impose the lowest cost on the economy, since many people not affected by the virus could still work.
Putting aside the fact the Scythe could be described as involuntary euthanasia of potentially tens of thousands of mainly elderly people, it is premised on at least three false assumptions.
First, that the mortality rate is only a ‘bit worse’ than an influenza epidemic. In fact, the mortality rate in a country with substantial COVID-19 testing, like South Korea, is about one per cent, or about 10 times greater than the common flu. COVID-19 also results in a much higher hospitalisation rate than the influenza we commonly have, with about 20 per cent of confirmed cases requiring hospital treatment. By comparison, the hospitalisation rate for the flu is about one per cent.
Hospitalisation rates really matter when it comes to saving lives. When Intensive Care Units are full, the mortality rate for both COVID-19 and non-COVID-19 patients soars. To get an idea of what the Scythe might look like, check out what is happening right now in New York City and also consider what it means about who gets treated and who does not.
Second, it assumes that removal of mandated physical distancing measures means we can get back to normal more quickly, because the virus ends up infecting most of the population and those who recover cannot infect anyone else. In fact, the virus is mutating so it is possible – but, as far as we know, unlikely – that someone who recovers from one variant of COVID-19 may not be immune to another variant of the virus.
Some of those who recover but who needed to be on ventilators for an extended may period also face long-term health challenges.
Australia would also not be back to normal after the Scythe, because of lower labour force participation and reduced productivity, and key sectors of the economy would continue to suffer.
Third, the Scythe assumes that there are only two alternatives; mandated physical distancing that involves many months of physical distancing, what we call a ‘Slow Burn’, and the Scythe.
In fact, there is a much preferred alternative called the Hammer, that is a ‘go hard and go early’ strategy that suppresses, and ultimately stops, the growth in the rate of infections such that the number of new infections is far less than the number who are recovering.
The Hammer requires sufficient physical distancing for at least three cycles of infections, say for an initial six weeks, and then the gradual relaxation of mandated controls coupled with effective testing and tracing of people with COVID-19. With very low infection rates, after six weeks of sufficient physical distancing, and comprehensive testing, the economy would hopefully recover more quickly as people would be confident to both work and play.
The Hammer is not just about ‘flattening the curve’ it also means potentially shortening the curve. In other words, not only is the total number and peak number of infections dramatically reduced, but so is the time period in which the infection rate is unacceptably high. This saves a lot of lives. It also supports the economy.
There is no pretending that the economic costs of the Hammer strategy are low. COVID-19 has, and will, impose very large economic costs regardless of strategy. But if the Hammer is implemented early enough when the infection rate is still low, the costs will be much lower than the Scythe.
So what is the cost of the Hammer? With the Hammer, economic activity that is severely and negatively affected by mandated physically distancing would occur for roughly 12 per cent of 2020. During that time, even in the most extreme case we can conceive, economic activity would be halved. Thus, the temporary reduction in economic activity is roughly six per cent on an annual basis. Of course, Australia still incurs losses in income and economic activity after this period but can recover faster.
The Slow Burn, in contrast, is a strategy that involves early mandated physical distancing to prevent a high infection rate, but this is not enough to fully control the virus in the population. As a result of the suppression the number of premature deaths is greatly reduced but this is at the expense of an extended period of mandated physical distancing, possibly over several months. This may be a higher risk strategy from a public health perspective and certainly is more costly to the economy than the Hammer.
As of 7 April, it appears Singapore will change its strategy from what was akin to a Slow Burn to what it hopes will be a Hammer. This revised strategy involves an initial four weeks lockdown that includes, for the first time, the closure of all schools and universities, and most workplaces.
Australia, and some other countries, such as New Zealand, are in the best possible position to deliver the Hammer to COVID-19. From admittedly preliminary analyses, this makes sense in terms of both lives saved and the economy.
We do not know yet whether Australia’s current physical distancing will amount to either a Slow Burn or the Hammer. Thankfully, the Australian strategy is certainly not the Scythe. The New Zealand strategy of an early lockdown, now adopted by Singapore, is intended to be the Hammer. Let’s hope it delivers.
If Australia were to successfully arrive at the other side of a flattened and shortened curve with the Hammer then it will need to undertake a lot of testing, tracing of those who are positive and their physical contacts, isolating the affected, and quarantining all new arrivals into the country. It would also need to maintain some less costly mandated physical distancing measures to ensure COVID-19 does not bounce back.
The question is: If Australia has a Hammer, and COVID-19 is a nail, why not use it?