Essays in Environmental Economics and Policy

This dissertation is concerned with the impacts of environmental stressors on people’s health and welfare. In particular, it focuses on air pollution and temperatures anomalies. Air pollution is considered the fifth leading mortality risk factor worldwide (Cohen et al., 2017). Despite impressive improvements in air quality over the last half-century, air pollution remains a global challenge, especially in rapidly urbanizing countries. On an even larger scale, anthropocentric emissions of greenhouse gases have been pushing a shift in the world’s climate that is projected to widen in the coming decades. The ability of economies to cope with changing temperatures is paramount to limiting the damages from climate change. The three chapters of this thesis should be read in the framework set by these challenges. In each chapter, a specific question is brought to the surface, and the road to address it is outlined. Chapter 1 investigates the negative effect of air pollution on physical ability. A large share of the world’s population is employed in manual labor. Yet, our understanding of the productivity cots of air pollution for physically intense work remains limited. The chapter identifies in track and field competitions a natural experiment where cognition plays a minor role. Combining half a million competition results with weather and air quality data, it estimates the change in physical performance induced by variations in air pollution. Chapter 2 considers the methodological tools available to estimate the causal change in air pollution concentrations following a reduction in emissions. It recognizes the challenges to identification posed by fluctuations and trends in atmospheric conditions and proposes a machine learning approach to address them. The chapter then applies this strategy to quantify the reduction in pollution and related health benefits induced by the COVID-19 lockdown of Lombardy, Italy, in spring 2020. This work is a joint effort with Lara Aleluia Reis (RFF-CMCC European Institute on Economics and the Environment), Valentina Bosetti (Bocconi University), and Massimo Tavoni (Politecnico di Milano). Chapter 3 is concerned with the persistence of the effects of temperature anomalies on economic growth. If an adverse temperature shock damages the determinants of economic growth, we can expect losses from climate change - a permanent shift in the mean temperature - to be cumulative over time and, therefore, very costly. Despite the primary importance of this question for modeling the climate-economy interactions, data constraints and data-hungry approaches have led to inconclusive answers. This chapter presents a new and more efficient method to test for the persistence of effects; using three different GDP datasets, evidence emerges that temperature effects are indeed persistent. This chapter has been the output of joint work with Bernardo A. Bastien-Olvera and Frances C. Moore of the University of California at Davis.