Economics of Environmental Epidemiology Subhrendu K. Pattanayak, Christine Poulos, Jui-Chen Yang, Kelly Jones, and George Van Houtven 1 May 2006 Infectious disease such as malaria, dengue, and diarrhea that are spread by vectors such as mosquitoes and flies are rife in the much of the developing world, potentially impacting more than two-third of the world’s population. Environmental conditions that favor the transmission of such diseases are, in turn, affected by human activity such as deforestation, livestock rearing, irrigated farming, migration, road construction, dam-building, and water and sanitation infrastructure provision through their impact on the survival and abundance of disease vectors. Therefore, the prevention and control of these diseases relies on the interplay of public policies (e.g., reducing microbial pathogen load in public water supplies) and private choices (e.g., safe storage, treatment, and handling of drinking water and food inside the house). As described, externalities play important roles in disease dynamics, demonstrating the need for public policies such as subsidies/taxes, information and technical assistance to achieve socially desirable outcomes. This paper presents an application in public economics that tests analytical models of economic epidemiology. The first part of the paper reviews and synthesizes the early literature that has focused on the behavioral basis of disease control and prevention. The second part presents empirical applications where we use the analytical models to shape the econometric analyses, permitting perhaps the first tests of untested hypotheses about the effectiveness of disease control interventions and how they related to private disease control. We draw on several data sets, including a large multi-year, multi-scale on going study from rural India to build econometric models of disease outcomes and public interventions. We conclude with a discussion of policy implications and conceptual and empirical research extensions. Keywords: micro-econometrics, economic epidemiology, malaria, diarrhea, Africa, India. JEL Classification: H4, I18, O13, Q56 Preliminary & Incomplete : please do not cite or quote without permission. 1 Address correspondence to Subhrendu K. Pattanayak, Fellow, Environment Health and Development, RTI International and Research Associate Professor at North Carolina State University, subhrendu@rti.org or Tel (919) 541-7355. We thank Erin Sills, Gene Brantly, Steve Polasky, Paul Glewwe, Andy Spielman, and seminar participants at the RTI Fellows Symposium 2006 and University of Minnesota for comments on earlier drafts.