ESSAYS ON ENVIRONMENTAL ECONOMICS

Abstract

Environmental risks and regulatory policies shape economic behavior in complex and often unintended ways. Households and firms respond not only to realized environmental conditions but also to the prospect of future regulation and constraints. These responses can occur through multiple channels, including anticipation of policy, private adaptation to environmental risk, and changes in the spatial distribution of pollution. Understanding these behavioral responses is essential for evaluating both the effectiveness and the distributional consequences of environmental policy.The first chapter examines how markets respond to environmental regulation under uncertainty. Focusing on diesel emission policies in Germany, I distinguish between regulatory signals arising from environmental NGO lawsuits and actual policy implementation in the form of local diesel bans. Exploiting variation in the timing of lawsuits and bans across regions, I show that used diesel market activity declines prior to the implementation of bans and accounts for a substantial share of total adjustment. After bans are implemented, I document additional supply side responses using high frequency data from a major online car marketplace. Owners of affected diesel vehicles reduce resale prices and listing volumes. These behavioral responses are accompanied by measurable improvements in local air quality, indicating that both regulatory signals and implemented bans shape market outcomes. The second chapter studies how households adapt to environmental risk through consumption. Using detailed data on wildfire smoke exposure and retail purchases in the United States, I analyze how air pollution shocks affect demand for protective and healthcare related goods. I find that wildfire smoke exposure leads to significant increases in purchases of products such as air purifiers and cold remedies, with dynamic and nonlinear responses. These effects vary across communities, with evidence that more vulnerable populations face constraints in accessing adaptive resources. The third chapter investigates how environmental regulation affects the spatial distribution of pollution. Focusing on sugarcane burning restrictions in Florida, I show that tighter regulations reduce burning on restricted days but induce substitution toward other periods. This reallocation increases pollution exposure in nearby communities and disproportionately affects more vulnerable populations, exacerbating existing environmental inequalities.