Zivin and Zilberman (2002)Graff Zivin, J and D Zilberman, “Optimal Environmental Health Regulations with Heterogeneous Populations: Treatment versus ‘Tagging’,” Journal of Environmental Economics and Management 43(2002): 455-476. develops and implements an economic model of environmental health risk regulation that is based on scientific constructs utilized in public health. This structural specification allows one to identify a menu of policy options, including the selection of optimal policies where vulnerable subgroups of the population are targeted with special exposure-reducing treatments, so called ‘tagging’. Analytic results show that the potential economic gains from tagging will depend critically on the quality of existing capital, the degree of returns to scale in treatment technologies, and the size and sensitivity of the vulnerable population. An empirical application of the model to the case of cryptosporidium in drinking water supplies suggest that tagging can substantially reduce the costs of meeting health standards in small and medium-sized water districts.
