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Policy makers are increasingly choosing market-based policies over command and control options. In this dissertation, I explore two instances of policy choices in environmental economics: a relatively novel market-based approach to handle congestion in transportation policy; and, government provision and control in the arena of water policy.The first chapter estimates the traffic volume and travel time effects of the recently implemented road congestion pricing on the San Francisco-Oakland Bay Bridge. I employ both a difference-in-differences and regression discontinuity approach to analyze previously unexploited data for the two years spanning the price change and obtain causal estimates of the hourly average treatment effects of the policy. I find evidence of peak spreading in traffic volume and significant decreases in travel time during peak hours. I also find suggestive evidence of substitution to a nearby bridge that is not subject to congestion pricing. In addition, I show significant decreases in travel time variability. Using my results, I calculate own- and cross-price elasticities for trips due to the toll change and include back-of-the-envelope calculations for the welfare effects of the policy.The second chapter I explore the impact of government water delivers in California's Central Valley. California's agricultural sector receives large quantities of irrigation water from the federal and state water projects. In recent years, there have been significant restrictions on these deliveries due to droughts and regulation to protect endangered species. This chapter empirically tests the hypothesis that higher deliveries to water districts in a given county lead to higher agricultural employment and cropped area and provides point estimates of this effect and uncertainty around the estimates. The results show robust evidence of a statistically and economically significant impact of irrigation water deliveries on employment and area. This effect is robust to different definitions of employment, alternate control groups, and different windows of data.

This dissertation contains three essays exploring how economic agents and markets respond to weather events and natural disasters.Chapter 1 examines whether short-run weather fluctuations affect the decision to go solar by residential customers in California. The results show that residential customers whose sign-ups are followed by less sunny weather are more likely to cancel their contracts. This behavior is inconsistent with rationality, as a solar PV system is a long-term investment whose return is not affected by short-run weather fluctuations. I analyze this behavior further using a theoretical model of projection bias combined with engineering models of solar power production and energy demand. Chapter 2 studies housing market responses to hurricanes using detailed data on Florida housing markets during 2000-2016. We identify the causal effects of hurricanes in a difference-in-differences framework exploiting the exogeneity of hurricane path and timing. The results show that the housing market is dominated by a negative supply shock lasting up to three years. While these effects are transitory, we show that they are associated with the arrival of home buyers whose income is higher, holding fixed the quality of homes transacted. This implies a lasting shift in the local economic profile towards higher income, along with potential gentrification.Chapter 3 investigates whether and how voters' preferences on environmental policy are reflected in legislative elections. People's belief in climate change is known to be affected by experiencing extreme weather events. We study the electoral responses to these randomly occurring events in House of Representative elections. To focus on the channel of environmental preference, we estimate differential responses based on the environmental ideology of the incumbent congressperson conditional on party membership. We find evidence that climate-related extreme weather events motivate political giving to challengers of anti-environment incumbents, increase the overall competitiveness in these races, and lead to a lower probability of re-election for these incumbents.

This thesis consists of three chapters that investigate environmental policy questions from an empirical point of view. Chapter 1 examines the trustworthiness of official air pollution data sources for Beijing when compared to similar data from the US Embassy in Beijing. Using a statistical regularity, I find that the official data likely suffered from misreporting until the end of 2012. From 2013 onwards, however, misreporting appears to have stopped. Chapter 2 evaluates China's main air pollution control policy to study the effects of environmental regulation when institutions are weak. I find that the policy was ultimately successful in reducing air pollution, but that those effects only set in once the Chinese government started appropriate air pollution monitoring. Moreover, I quantify the efficiency of different policy instruments to control air pollution in China and find that - in contrast to the United States - a market-based solution and a technology mandate for scrubbers are nearly identical. Finally, Chapter 3 studies whether nudges can help consumers align intention and action when choosing their electricity contract. Using a survey experiment, we find that only a default nudge had a statistically and economically significant effect on consumers' decision to contract renewable energy. ; Aquesta tesi consisteix en tres estudis que investiguen problemes relacionats amb la política de medi ambient des d'un punt de vista empíric. El capítol 1 examina fins a quin punt són fiables les dades sobre la contaminació de l'aire a Beijing quan es comparen amb dades semblants de l'ambaixada dels EUA. Mitjançant l'ús d'una regularitat estadística, proporciono evidència que les dades oficials segurament van ser manipulades fins a finals del 2012. A partir del 2013, però, les dades semblen indicar que es va posar fi a aquesta manipulació. El capítol 2 avalua la política xinesa més important duta a terme per frenar la contaminació de l'aire i pretén estudiar els efectes de la regulació del medi ambient en un context ...

This dissertation comprises four essays on the topic of environmental economics and industrial organization. In the first essay, we develop a two-country world differential game model with a polluting firm in each country to investigate the equilibrium of the game between firms when they decide to trade or not and to see under which conditions social welfare coincides with the market equilibrium. In the second essay, we built a model where firms strategically choose whether to participate in an auction/lottery to attain pollution permits, or instead invest in green R&D, to show that, somewhat counterintuitively, a desirable side effect of the auction is in fact that of fostering environmental R&D in an admissible range of the model parameters. The third essay investigates a second-best trade agreement between two countries when pollution spillovers are asymmetric to examine the strategic behavior of governments in using pollution taxes and tariffs under trade liberalization. The fouth essay studies the profitability of exogenous output constraint in a differential game model with price dynamics under the feedback strategies.

My dissertation is comprised of three separate essays in the field of environmental economics. The first chapter experimentally models the climate change social dilemma and evaluates how heterogeneous environmental impacts and unequal endowments affect the propensity to avoid catastrophic climate change. Introducing a punishment mechanism to alleviate the collective bargaining problem, I identify the external factors and intrinsic preferences that impede cooperation. Inequality and delayed contributions negatively affect successful provision, while higher levels of collective-risk increase the probability of threshold attainment. A consensual punishment mechanism incentivizes cooperation in low-risk and heterogeneous groups, overcoming the collective action problem.The second chapter investigates the efficacy of military and legal efforts to thwart environmental domestic terrorism. While passive legislative interventions increase the cost of illegal action and proactive policies thwart terrorism with preemptive strikes, the efficacy of counterterrorism efforts has been questioned. Using quarterly data from 1980 to 2014, I analyze the effect of counterterrorism policy on radical environmental direct action (REDA) modes of attack and the severity of illegal actions. Combining vector autoregression and intervention analysis under a rational choice framework, I find that while legislative policies have decreased the economic severity of attacks, incidents have more than doubled. Proactive interventions reduce domestic terrorism, but by a smaller magnitude than the increase from passive legislation. Substituting between modes of attack and ideological targets, policies have tripled the use of explosives while REDA attacks against people have increased more than sixfold in the long run.In the final chapter, I explore the role of payments for ecosystem services (PES) and their impact on conservation efforts to avoid deforestation in developing nations. Targeting counterfactual-based studies to identify additionality gains and minimize leakage impacts, I perform a meta-analysis to evaluate how PES program design and market factors impact avoided deforestation. Program design variables include contract length, payment differentiation, and participation targeting. Environmental variables proxy for opportunity costs by controlling for alternative land use prices and socioeconomic conditions. As each dimension has a varying impact on avoided deforestation, these results aim to influence future market-based interventions.

In this dissertation, I contribute to three strands of the environmental economics literature: (1) regulation of air pollution from stationary sources, (2) interaction between behavioral biases and consumer demand for energy, and (3) long-term distributional outcomes of policies that seek to mitigate climate damages from the housing sector. The first paper looks at how environmental regulations work in practice -- assessing ex-post the causal consequences of a specific policy, the Large Combustion Plant Directive. The Large Combustion Plant Directive was a key policy instrument to limit air pollution from power stations in the European Union. The Directive set limits on emissions of harmful sulfur dioxide, nitrogen oxide and particle dust from combustion plants with total capacity of at least 50 MWth. A fundamental empirical problem is to create a valid counterfactual, to understand what would have happened in the absence of such a regulation. As is the case with most command and control policies, all plants fell under regulation, but the stringency was vintage-differentiated. More crucially, a group of plants chose to opt-out of emissions performance standards but were instead required to gradually cease operations. I exploit the structure of the directive to construct valid control groups to assess the effectiveness of emission performance standards. Evidence from this empirical study suggests that EU-wide emission performance standards, when sufficiently stringent, are an effective instrument for pollution abatement at the plant stack-level. However, the regulation was not ambitious enough and in fact allowed business-as-usual operations for some of the most carbon-intensive power plants operating in the European Union. In the second paper, I exploit a large-scale natural experiment in utility billing cycles at the building level to identify the salience effect of costs on energy consumption. By exploiting variation in billing cycles, I find new evidence for consumer inattention to energy costs: consumers ...