Essays in Empirical Environmental Economics
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 ...