Essays in Environmental Economics

Abstract

This dissertation is generally interested in policy and pollution-relevant questions within the field of environmental economics, focusing either on regulated firms' behavior or individuals' reactions. The first chapter focuses on one regulatory policy aimed at decreasing greenhouse gas emissions and its impact on the firm it is regulating. In order to increase the use of renewable energy for electricity generation, a majority of the states in the US have introduced Renewable Portfolio Standards (RPS) over the last two decades. RPS specify the portion of electricity that must stem from renewable energy sources for an electricity operator in a given state. Even in those states that have adopted RPS, policies have varied greatly and thus can create varying incentives for electric utilities to invest in renewable energy. While RPS should positively impact the environment by promoting clean energy use, RPS can also negatively impact the profitability of electric utilities by limiting their energy portfolio choice set. However, this type of "flexible" regulation may prompt innovation offsets that eventually lead to improved profitability, as articulated by the Porter Hypothesis. This chapter empirically assesses the effect of RPS on the profitability of investor-owned utilities over the time period of 2000 to 2010. The results suggest that (more stringent) RPS policies might have negatively affected the profitability of utilities over the sample period; as important, the empirical results show no evidence to support the Porter Hypothesis. The second chapter analyzes the effect of one environmental management practice - internal monitoring -- on facilities' wastewater discharges, as measured by total suspended solids (TSS). Environmental management systems have become increasingly important - not only from the viewpoint of the facilities themselves but also from an environmental policy level as they clearly have the potential to facilitate greater compliance levels of firms subject to effluent limits. The facilities in the chemical manufacturing sector are regulated under the Clean Water Act (CWA) and thus have to comply with effluent limits. Given these limits, facilities can choose what methods they want to implement in order to meet their environmental targets. Monitoring within the treatment process is not required by the regulatory agencies and can thus be considered as a voluntary management choice by facilities to control their discharges. Using a variety of regressor sets, the results clearly suggest, that more technologically sophisticated monitoring significantly lowers TSS discharges relative to the limit levels. In the third chapter, I am using The China Survey from 2008 to analyze the potential influence of experienced environmental pollution on the subjective well-being (SWB) of three different social groups in China; urban, rural and "floating" (rural-to-urban migrants) populations. Environmental degradation has been an increasing concern in the last few decades in China, overshadowing the continuously high economic growth rates. This situation raises the question of how strongly environmental pollution affects the Chinese population. Previous research mainly focuses on the urban sub-population in China and often disregards the large number of people still living in rural areas as well as the increasing numbers of the more vulnerable population - rural-to-urban migrants. In addition to the survey data, I am using information on environmental and economic conditions on the provinces in which the survey respondents live. The results confirm the importance of previously analyzed determinants of SWB in China (gender, age, marital status) and suggest that SWB is only impacted by environmental pollution if it leads to a loss in income for the affected person.