A model to evaluate the subsidization of governmental animal disease control programs

Subsidization of disease control programs can be justified as economically efficient if the social costs of early detection and control of diseases are considered as well as the private costs to the individual. A method of analyzing the two sources of costs and the optimal investment in disease detection and control is developed. The application of the method is illustrated with data from brucellosis in the California cattle industry. Subsidization of a diagnostic laboratory system can be shown to be efficient under this set of parameters. The distribution of the benefits from the increased surveillance level in the long and short run is shown to benefit both the producer and consumer.