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Abstract

Climate change has the potential to drive transformations in natural resource access, availability, and use that will have significant, far‐reaching impacts worldwide, not only for those of us living today but also for future generations. As economists we are being called upon to assess the economic impacts of alternative climate change scenarios and the costs of efforts to mitigate and adapt to the adverse consequences of climate change. I classify these professional activities as “economic analysis,” and I cite John Quiggin’s 2011 AAEA Fellows Address (Quiggin 2012) as one of many noteworthy contributions we have made. Equally important, we are being asked to design economic artifacts – institutions, markets, contractual relationships, measuring and monitoring procedures, and decision support systems – that will allow people to better respond to and adapt to changing circumstances. I classify these professional activities as “economic design.” In my AAEA Presidential Address (King 2012) I asserted that these two sets of activities, economic analysis and economic design, while closely related and highly complementary, are also distinct and different. I also asserted that, while we are familiar with and accustomed to the processes and methods of economic analysis, our shared understanding of economic design scholarship is less fully developed. This paper focuses on the general questions of how we do economic design and what constitutes good scholarship in economic design, with illustrations and examples related to the design of climate change policy.

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