Series Introduction

Economic analysis has much to contribute in many spheres of public policy, but the fields of environmental and energy policy stand out for the centrality of economic issues. With regard to the environment, the relative attractiveness of many leading policy alternatives that emerge in the context of climate change and global warming depends on the social discount rate, an economic construct. Economic analysis is essential for judging the potential costs, and for some areas benefits, that may be associated with rising global temperatures, and for assessing the relativemerits of abatement and amelioration strategies. A crucial economic insight is that when designing policies to reduce any type of environmental degradation, whether air, water, or noise pollution, it is essential to consider the relative costs of emission reduction at different point sources and to search for least-cost strategies to achieve a given emission target. With regard to energy, current tax and regulatory policies play important roles in affecting the utilization of various fossil fuel and renewable energy sources. The rate of economic growth is one of the primary drivers of aggregate energy demand, both within countries and globally. Public spending on energy research and development and intellectual property rules surrounding newdiscoveries are likely to be key determinants of the future viability of alternatives to current energy sources. In recognition of the importance of economics to the study of both environmental and energy policy, and with the generous support of the Alfred P. Sloan Foundation, the National Bureau of Economic Research (NBER) is pleased to launch a new annual initiative—the Environmental and Energy Policy and the Economy series—that will encourage leading economic researchers to prepare research papers on current issues in these two fields. The researchers must abide by the NBER’s prohibition on policy recommendations, but they are encouraged to draw