‘Leveraging relevance’ is a great phrase that I saw used a few weeks ago. One of the best ways to get students to understand the operation market forces of supply and demand and their effect via competition (or lack there-of) is to explore a current ‘real world’ event. The impacts of health issues and natural disasters are good examples to use (whilst acknowledging the human pain and suffering involved).
Below is some information that you can use when discussing with your students the economic impacts of the bushfires in Australia this summer and the coronavirus outbreak in China (and subsequently in other countries where people from the affected part of China have traveled to).
The extensive bushfires this summer have impacted on the people involved (both residents and those involved in fighting the fires) and the environment (both natural vegetation and native animals and birds). They have also on impacted on the Australian economy through the damage to crops and pastures, the loss of livestock and the destruction of infrastructure (such as, fencing, sheds and machinery on farms). The resulting reduction in agricultural production adds to the existing impact of ongoing drought.
Examples of Australian industries affected include: lamb and beef, timber, honey and grapes and other fruit such as apples, pears, and nashi. Dairy farmers in heavily burned areas in East Gippsland in Victoria and on the New South Wales south coast were also impacted by the disruption to transport - with milk tankers unable to reach dairies, farmers had to tip out hundreds of thousands of litres of milk.
The fires have also reduced the number of both local and overseas tourists to regional areas where the fires have burnt the bushland that tourists come to see. Even the number of tourists to cities, such as, Canberra, Sydney and Melbourne have decreased due to smoke from the fires.
The recent coronavirus outbreak in China is described by the WHO as a public health emergency of international concern (an extraordinary event that constitutes a public health risk to other countries through the international spread of disease and will potentially require a coordinated international response). The outbreak occurred during Lunar New Year when normally many Chinese residents take the opportunity to travel overseas or to travel domestically. It is a time to meet family members to celebrate.
The virus has impacted on Australian economy - showing a negative impact of the increasing dependence on trading partners. The initial reduction in the number of Chinese tourists traveling to Australia and the subsequent travel ban imposed by the Australian Government is particularly significant as China is the largest source country of short-term visitor arrivals (1.43 million in 2018-19). Travel restrictions imposed by the Australian Government have also affected Chinese students returning to Australia to study - mainly at university or TAFE - which is significant as China is Australia’s largest source of international students (more than 255,000 Chinese students enrolled in Australian education institutions in 2018).
The virus has also reduced Chinese demand for some Australian exports - particularly agricultural products. As people in the worst affected areas in China stay in their homes there has been less eating out with family and friends. Examples of Western Australian industries affected by the decrease in restaurant meals are ‘high end’ products including rock lobsters and Wagyu beef. For Australian grain growers there is expected to be a ‘lagged’ effect on the demand for barley (used in the production of beer). With less eating out this Lunar New year there has been less alcohol consumed. It is predicted that the decrease in the quantity of beer sold will create a build-up in stock for Chinese brewers. As a result, there is expected to be a decrease in Chinese demand for Australian grown barley next season (this season’s crop has already been harvested and sold).
With many large workplaces in China shutdown stockpiles will build and there will be reduced demand for inputs sourced from Australia, such as iron ore, gas and coal - another lagged effect.