Economics and Episodic Disease: The Benefits of Preventing a Giardiasis Outbreak

Benefit-cost analysis of public policies designed to protect the environment and the public from environmental contaminants is growing in popularity, whether as the determinative criterion or as an ingredient in a broader assessment of a policy's desirability. Also growing, unfortunately, is the number of poorly executed analyses, which not only degrade the decisions they are meant to inform but cast doubt upon the usefulness of benefit-cost analysis as a decision tool. Harrington, Krupnick, and Spofford display in this work an example of a properly conducted analysis. In the traditional manner of studies conducted at Resources for the Future, they proceed with extreme care and attention to detail in fashioning an appropriate blend of economic theory and innovative empirical analysis to estimate the social costs to a community arising from an outbreak of waterborne disease. The focus of their study is the outbreak of giardiasis---a common diarrheal disease---that raged through Luzerne County, Pennsylvania, just before Christmas 1983, striking 6,000 people ill and forcing some 75,000 residents to obtain an alternative source of drinking water, in some cases for as long as nine months. The results of their study have obvious bearing on the benefits communities can expect to gain from federal and state drinking water standards, and on the decisions government officials face concerning public policies and projects designed to protect drinking water from contamination. Moreover, the theory that has been developed and the techniques that have been employed may be usefully applied to other areas, such as food safety, where the benefits of proposed regulatory programs are needed to inform public decisions, or where the costs of public health episodes, such as outbreaks of salmonellosis, are desired. This book also provides useful information for appraising the damages to surface-water and groundwater resources arising from the accidental release of hazardous substances. Economics and Episodic Disease demonstrates the utility of combining economics with an appropriate dose of public health and natural science to provide a means for analyzing public policy issues involving a mix of marketed and nonmarketed goods and services.