The (Economic) Invasion of the Fire Ant

According to the BBC, fire ants are on the march across Australia.

Their economic impact is far larger than we would expect from an ant.

Fire Ant Economics

In the past we’ve admired the fire ant. Demonstrating the power of the law of diminishing returns. fire ants construct underground tunnels with 30% of their workforce. Others, unneeded, relax. For them, less is more because more workers reduce extra productivity.

However,  as they march across Australia, the fire ant also has a dark side.

In one scenario, economists at Central Queensland University estimate annual damages of as much as $1.2 billion if the ants advance between 5km to 48km a year. At that point, spending would focus on pesticides, veterinary bills, short-circuited electrical lines, hundreds of thousands of noxious stings, and a shrinking livestock population. During government testimony, one official that worked on the eradication program said, “it’s the equivalent of putting man on the moon.” And success, so far, has been erratic.

In this brief video, you can see how fire ants built rafts to navigate Australia’s flood waters:

Our Bottom Line: Opportunity Cost

The battle against the Australian march of the fire ant can only be won by acknowledging its opportunity cost.

Rewinding to 2005 and Hurricane Katrina in the U.S., we paid the consequences of ignoring the opportunity cost of adequate preparation. Then, the Army Corps of Engineers designed and installed levees that could not possibly withstand a Category 5 hurricane. At the time, the opportunity cost of the spending, design, and maintenance (from local government) requisites were too high. Indeed, because of the opportunity cost, their decisions might have made sense before the storm. But after, the fatalities and cleanup expense illustrated how wrong they were. The damage and death toll from Katrina far exceeded appropriate levee cost.

Similarly, Australia has to decide if fire ant eradication has too high an opportunity cost. But then, the consequence could be far greater. Indeed, we are talking about much more than invasive fire ants. Making decisions, all of us need to know when we have to accept a massive opportunity cost.

My sources and more: Hearing about fire ants from the BBC, I knew it was time to return–but this time on the dark side. Looking for more about this invasive species, I discovered these Guardian articles, here and here, and this Center for Invasive Species Report from the U.S.