Essays in Environmental Economics

Abstract

This dissertation examines how environmental externalities shape financial markets, regulatory policies, and public well-being, using a combination of empirical analysis and theoretical modeling. The first chapter investigates whether environmental concerns help explain Bitcoin's returns and volatility. Using innovative textual data from Tweets and Google Trends, I construct three proxies for climate risk, each capturing a distinct dimension: aversion, uncertainty, and attention. The findings reveal that climate risk uncertainty (aversion) improves the in-sample predictability of returns (volatility), while climate risk attention enhances the out-of-sample predictive ability of volatility. The second chapter develops a partial equilibrium model to determine optimal emission taxes in the presence of two-sided environmental externalities, two-sided abatement, and one-sided market power. In this case, the taxes imposed on polluting producers and consumers fall below their Pigouvian levels without achieving the first-best. However, if only one side abates, the first-best is achieved by taxing the (un)abating polluters at (below) their respective Pigouvian level. The third chapter employs a difference-in-differences approach to assess the causal effects of prenatal fluoride exposure on birth outcomes in the United States. Results show a significant reduction in birth weight and an increased risk of central nervous system anomalies, especially during the first trimester and among White, married, and more educated mothers, which highlights socioeconomic disparities in vulnerability. Additionally, the effects vary by exposure type, with distinct impacts observed for low-dose cumulative versus high-dose acute exposure.