It is said that economists know the price of everything but
the value of nothing. Nevertheless, such
sentiment like this does not stop economists from looking at costs and as Ontario’s
COVID-19 pandemic declines and enters a lull, it is worth assessing what the
cost of the pandemic to date has been.
As the accompanying figure illustrates, after just over 200 days since
the first case in Ontario, we appear to be on a downward trend in terms of new
daily cases. Indeed, the daily growth
rate is currently at 1/10 of one percent but relapses
are likely. As of August 14th,
we are at a total of 40,459 cases with 2,788 deaths - with over 80 percent of
them early on in the province’s long-term care homes.
Everyone is pretty much aware of the economic and fiscal
impact of COVID-19 on the country given the estimates of the annualized drop
in Canadian GDP this year ranging from 6 to 8 percent, the 13 percent
unemployment rate and the $343 billion dollar federal deficit. Ontario this week released its first quarter
finances and the picture was grim with a projected deficit for 2020-21 of $38.5
billion and a drop in real GDP of 6.6 percent this year.
The provincial government’s revenue is actually only
projected to be $5.7 billion lower from the March update at $150.6 billion (though
it was at $156.7 billion in 2019-20) but program expenses, COVID-19 assistance
and contingency funds are up dramatically – reaching a total of $186.7 billion to
deal with the pandemic. From total
spending of $161.1 billion in 2018-19 with a deficit of $7.4 billion, to total
spending of $165.7 billion in 2019-20 and a deficit of $9.2 billion, there has
been a large provincial fiscal cost. Ontario’s
nominal GDP was expected to be $909 billion in 2020-21 but is now expected to
be $844 billion.
Here is an interesting way to look at the cost to date of
this pandemic in Ontario. For the period
2019-20 to 2020-21, GDP is projected to be lower by $65 billion dollars while
government spending will be up. Total
spending is up $30 billion - from $156.7 billion to $186.7 billion. So, one measure of the direct fiscal and economic
cost in Ontario of the pandemic to date given the anticipated loss in GDP and
the projected spending increase is to combine the two for a total of $95
billion. If you take Ontario’s population
in 2020-21 (14.831 million) and divide, the per capita cost in Ontario this
year is expected to be $6,406.
While that sounds like a lot – and it is - there is another
way to look at the numbers. With total
cases at 40,459, the cost per case to date in terms of additional spending and output
loss is $2,348,056. And if you want a quick
back of the envelope calculation of the value of a life – yes, economists (and governments) do
that too – then given the number of deaths to date at 2,788 – we get a cost of
$34,074,605. A per capita cost of $6,496
dollars, a per case cost of $2.3 million and a per life lost cost of $34.1
million – anyway you look at it, this has been expensive.
