Essays on Environmental Economics

Abstract

Chapter 1.This chapter investigates the direct behavioral impact of information-based regulations by examining the effect of ozone alerts on cycling trips in Sydney. Moreover, the dynamics of individuals' response is studied by examining the behavioral impact of two successive day ozone alerts on cycling demand. A common problem in estimating direct avoidance behavior is that an increase in the pollution level could be an endogenous response to alerts. While controlling for the endogenous effect of alerts and air quality, results show that cycling trips decrease by 35 percent in response to a smog alert. When alerts are issued for two successive days, however, individuals appear to neglect the second day alerts. Our findings also indicate that ozone alerts induce one and half times larger impacts on weekends compared to weekdays. These patterns suggest that the cost of cycling substitution for commuter goals is higher than leisure goals. Furthermore, the cost of intertemporally avoiding cycling is increasing over time. Chapter 2. If decisions with lasting consequences are influenced by extraneous or transient factors then welfare can be damaged. This chapter investigates the impact of outdoor temperature on high-stakes decisions (immigration adjudications) made by professional decision-makers (US immigration judges). In our preferred specification, which includes spatial, temporal and judge fixed effects, and controls for various potential confounders, a 10 F degree increase in case-day temperature reduces positive decisions by 6.55%. This is despite judgements being made indoors, `protected' by climate-control. Results are consistent with established links from temperature to mood and risk appetite and have important implications for evaluating the welfare-burden of climate change. Chapter 3. The carbon tax in the Canadian province of British Columbia is widely-regarded as a `poster child' application of market-based methods to address greenhouse gas emissions. However the implications for local air quality have been ignored. Using synthetic control and difference-in-difference methods, in this chapter we evidence a causal link from carbon tax implementation and level to increased nitrogen oxides NOx and ultra-fine particulates PM_2.5 pollution problems in Vancouver, the province's largest city. We provide evidence consistent with the mechanism working through induced switching from gasoline to diesel vehicles. The results prove highly robust to inclusion of a wide set of controls in various combinations, alternative specifications, and satisfy a set of falsification checks. The analysis points to the possibility of negative secondary effects of climate policies, contrary to the usual presumption that secondary benefits are inevitably positive.