Management of farm animal diseases is increasingly important in view of the threats they pose to farm incomes and sometimes even to the viability of farm enterprises, wildlife and humans. This report analyses the incentives for individual farmers to manage such risks and the governments' role to align farmer incentives with public objectives. Identifying and assessing animal disease risks, as well as understanding their financial implications, are central to decisions made by farmers. The report examines the economic drivers of farmer decisions and government economic instruments, such as compensation related to livestock epidemics. It further discusses a spectrum of psychological and social drivers of farmer behavior and emphasizes the importance of government's more extensive role in the areas of information, communication and education related to disease management. Finally, farmer collective action in various areas of disease management is considered, such as capacity building, risk insurance, surveillance, and responses to disease outbreaks. The case studies of livestock disease management in Australia, Chile and Korea complement this analysis.