| dc.description.abstract | This dissertation includes three essays related to energy and environmental economics, with an
emphasis on policy. Topics discussed pertain to policies aimed at internalizing externalities, or encouraging
adaptation to climate change. I discuss these topics in the context of the transportation
sector, natural disaster insurance, and infrastructure policy.
I analyze consumer behavior in a vehicle arms race—where preferences for safety lead to strategic
purchases of large vehicles—as a potential contributing factor to the rise in vehicle sizes in the
U.S. First, I test for arms race purchasing behavior by exploiting quasi-random next-door neighbor
fatalities in fatal car accidents in order to examine how shifts in preferences for safety impact demand
for heavy vehicles. I find that households neighboring an individual who dies in an accident
respond by purchasing significantly larger and safer vehicles than households neighboring someone
who survives an accident. Second, I explore how gasoline taxes counteract arms race behavior
by estimating a discrete choice model of vehicle purchases, allowing for consumer preferences on
relative weight. My specification allows preferences for vehicle size to vary based on the size of
cars in the households’ area. Counterfactual simulations illustrate that an arms race can be reversed
with a sufficiently high Pigouvian tax, which will depend on the distribution of vehicle weights,
specific to the area.
The next study examines the unintended role government policies can play in discouraging climate
change adaptation. Despite the large costs of covering flood losses, little is known about whether
flood insurance availability affects the decision to live and stay in more flood-prone areas. In this
paper, we present evidence that suggests households in flood-prone areas would have otherwise
moved to less risky areas absent flood insurance availability. We identify the effect of flood insurance
availability on population flows by exploiting the within- and across-county variation in the
various programs that the federal government implemented to encourage flood-prone areas to join
the National Flood Insurance Program (NFIP). Results suggest that flood insurance availability
caused population to increase by 4 to 5 percent in high flood-risk counties. Furthermore, we find
that NFIP causes a 4.4% increase in population per one standard deviation increase in risk.
Finally, I analyze how infrastructure policy may encourage coal plants to convert to clean natural
gas energy. The U.S. Environmental Protection Agency’s (EPA’s) Mercury and Air Toxics
Standards (MATS) have imposed significant costs on coal-fired power plants in recent years. To
many old, inefficient coal plants, high costs of compliance have prompted a trend toward conversions
to natural gas—a much cleaner source of energy. Transportation frictions may inhibit
some of these conversions from taking place. In this paper, I analyze the role that the natural
gas pipeline infrastructure plays in incentivizing these conversions. Exploiting MATS’ increased
pressure on coal electric generating units (EGUs) with capacity 25 megawatts or greater within
a triple-differences framework, I estimate that a 10% reduction in pipeline distance produces an
additional 6.4% increase in likelihood of conversion for an EGU regulated under MATS. Isolating
the impact of pipeline costs within a dynamic model of the plant’s decision to convert (still fully
exploiting MATS), I find that pipeline subsidies alone can produce one-third of the conversions as
emissions reduction mandates under MATS, and present value of external benefits of $10.1 billion
from reduced emissions. In addition, I estimate a marginal benefit of $2.6 million per-mile of
pipeline. | en |
