The welfare consequences of price versus quantity-based regulation are known to differ when information about marginal benefits or costs of abatement is imperfect. Does uncertainty about demand for the polluting good also matter for welfare of these two approaches to regulation? In chapter 1, I use plant-level survey data and high frequency variation in power consumption to assess the dynamic implications of uncertainty about future demand for the relative welfare consequences of carbon taxes and cap-and-trade regulation. I address this question in the context of the electricity sector where demand risk is particularly salient. I show that the choice between policy instruments depends on how firms and consumers balance unpredictable output volatility (higher with carbon taxes) vs. price volatility (higher with cap-and-trade regulation). Over a wide range of policy-relevant abatement targets, I find carbon taxes outperform cap-and-trade in terms of welfare. Financial incentives like the Production Tax Credit are central initiatives behind wind power as the leading renewable energy source in the U.S. But do institutional design features of energy markets matter for cost-effectiveness of subsidies to wind investments? In chapter 2, I answer this question by investigating how the design of procurement contracts that are typically used by wind developers affects their investment incentives. Using unit-level data from wind farm production and installed capacity, I find that structuring subsidies based on key features of the type of procurement contracts associated to wind projects leads to major reductions in public expenditures in terms of subsidy payments to wind developers without undermining their investment incentives. The U.S. federal government is known to have a history of heavily subsidizing the wind power industry. Subsidies either to output (Production Tax Credit) or investment goods (Investment Tax Credit) have been critical to replace emissions-intensive technologies with wind power. Which type of subsidy is best to incentivize wind investments at the least cost? In chapter 3, I use plant-level data of wind facilities from the Texas electricity market to develop and estimate a model of investment decisions that accounts for productivity shocks at the wind farm level and prudent behavior of developers. I find that subsidizing production can increase average yearly investment rates in wind capacity up to 2.5 percentage points over mean investment rates under alternative subsidies to capital. This is driven by precautionary savings that developers accumulate to smooth out potential future shocks to investment income when adverse weather conditions lead to low subsidy payments.

In this dissertation, I study two different sides of inequality. In the first part of this dissertation, I show what the role of unwanted childbirth is on women’s wages and education. I document that on average, mothers whose first childbirth was unwanted have lower levels of education, lower wages, and have their first childbirth at younger ages compared to the rest of the mothers. In the second part of this dissertation, I show how the introduction of a carbon tax affects individuals with different educational attainment. In particular, I show how the carbon tax affects their consumption, but also how the tax reduces air pollution and consequently affects individual mortality. I find that introducing this mortality channel reduces the aggregate welfare cost of a carbon tax by about half. In terms of the distributional effect of the policy, the mortality channel deepens the regressivity of the tax, since the benefits in terms of mortality reductions are similar for all individuals, the valuation of this benefit is higher for more educated individuals.

Climate change is a global phenomenon that is disproportionately impacting people in developing countries. One coping mechanism that has been observed in response to climate change is migration. This paper attempts to understand the role of climate change as a driver of migration in Papua New Guinea, a complex and under-researched country in Oceania. Past research suggests a complicated story, and that migration in response to climate change is not a simple concept. In order add to the existing literature, a variety of individual, household, and community-level variables are analyzed from a survey of households in rural Papua New Guinea. These variables are analyzed in conjunction with self-reported environmental shocks to determine the impact on migration across time. The results suggest that environmental shocks increase the probability of an individual migrating, with various socioeconomic factors acting as push and pull factors.

This paper, titled “Factors of Economic Development and Implications for the Future” focuses on identifying historical factors that have impacted economic development and analyzing what changes may be important for the future. It uses studies done across the world in energy economics, economic development, economic policy, and more to identify important considerations for evaluating historical growth, as well as concerns for the future, particularly given the threat of climate change. Historically important papers, as well as newer insights both feature heavily. This literary review resulted in the finding that education, energy, trade, policy, institutions, endowments, and culture are all important factors for economic development. Endowments and institutions that arise from them are found to be the most important factor in explaining historical development. The paper also analyzes policy that the existing literature suggests could be beneficial for growth. Next, an analysis of factors that the literature identified as important for growth is carried out to assess which countries may have the highest potentials for future growth. The countries are ranked based upon a composite scoring system created from those factors. Countries in Central Asia feature heavily in the top ten entries, while many African countries narrowly miss out on the top ten but still rank relatively high. Together, the findings of both sections are used to discuss how economies have historically developed as well as possible policies to encourage future sustainable development. Both the literature and statistical findings suggest that for future growth promotion of strong institutions that promote property rights and economic growth will be important. They also suggest that coordinated energy policy to increase green technologies and decouple growth from emissions will be essential.