Biographical note: KainJohn F.: John F. Kain is Professor of Economics and Professor of City Planning, Harvard University.MeyerJohn R.: John R. Meyer was the James W. Harpel Professor of Capital Formation Emeritus at the John F. Kennedy School of Government.

This chapter focuses on regional energy and environmental analysis. A basic feature of economic activity is the extraction of materials from the environment, their transformation during production and consumption, and their final restoration to the environment. The economics of environmental...