2025 Theses Doctoral

Essays in Environmental and Climate Economics

Obolensky, Marguerite

This dissertation focuses on two aspects of environmental economics: (1) understanding the impacts of climate change on economic systems and individual decisions and (2) informing the design of environmental policies to foster adaptation to future climate risks.

It aims to provide evidence of both academic and policy interests, combining diverse sources of data---censuses and surveys, satellite imagery, climate projections---with modeling tools from the empirical industrial organization literature.

The first chapter, 𝘗𝘳𝘰𝘵𝘦𝘤𝘵 𝘰𝘳 𝘗𝘳𝘦𝘱𝘢𝘳𝘦? 𝘊𝘳𝘰𝘱 𝘐𝘯𝘴𝘶𝘳𝘢𝘯𝘤𝘦 𝘢𝘯𝘥 𝘈𝘥𝘢𝘱𝘵𝘢𝘵𝘪𝘰𝘯 𝘪𝘯 𝘢 𝘊𝘩𝘢𝘯𝘨𝘪𝘯𝘨 𝘊𝘭𝘪𝘮𝘢𝘵𝘦, explores one trade-off governments face when designing weather insurance policies. On the one hand, offering assistance to individuals and businesses to insure their assets and revenues against climate risk lowers the financial strains extreme weather events put on the economy. On the other hand, interventions in the insurance market may slow down the adoption of costly adaptation technologies and increase the climate vulnerability of the system in the future. I study this question in the U.S. Federal Crop Insurance Program context. This program regulates weather protection insurance and offers large premium subsidies to farmers. On average, farmers pay only 40% of the price of their insurance and subsidies add to between 5 and 10 billion dollars annually. I build and estimate a dynamic land use and crop insurance choice model under climate change to quantify the aggregate welfare impact of alternative subsidy schedules. I find that without climate change, the current insurance subsidy decreases welfare by 1.5 percent of the total output value. Moreover, by disincentivizing farmers' adaptation to climate change and increasing the agricultural system's exposure to weather shocks in the future, the status quo further decreases welfare by 1.3 percentage points. However, designing the subsidies to reflect the climate change dynamic and shifting risk patterns provides efficiency gains at no additional cost to the government, fosters adaptation to climate change, and decreases the volatility of agricultural output.

The second chapter, 𝘏𝘰𝘮𝘦𝘸𝘢𝘳𝘥 𝘉𝘰𝘶𝘯𝘥: 𝘏𝘰𝘸 𝘔𝘪𝘨𝘳𝘢𝘯𝘵𝘴 𝘚𝘦𝘦𝘬 𝘖𝘶𝘵 𝘍𝘢𝘮𝘪𝘭𝘪𝘢𝘳 𝘊𝘭𝘪𝘮𝘢𝘵𝘦𝘴, with Marco Tabellini and Charles Taylor, asks whether migrants select destination with climate similar to that of their origin and the consequences of climate mismatch. Using historical censuses, administrative data and death records, we document several novel findings. First, we show that climate strongly predicts the spatial distribution migrants: a one degree Celsius discrepancy between origin and destination reduces migration flows by 0.5-1.5%, an effect similar to that of a 1.5% wage increase at destination. These results hold across time, geography, and migrant groups and are not driven by the persistence of ethnic networks or other confounders. Additionally, using variation in the long-run change in average US climate from 1900 to 2019, we find evidence that migration increases between locations whose climate converged. We provide evidence for two complementary mechanisms: climate-specific human capital and climate as amenity.

Finally, we show that climate mismatch significantly affects migrants' welfare. We derive an instrument for climate mismatch building on work by Terry et al. (2024) and show that five additional degrees of climate mismatch result in a loss of 40 days of life for adults aged 65 and more and an increase in infant mortality rate by 25%. We calculate an individual-level mortality cost of a 1°C change in climate to be $5,250. These findings can inform the design of climate change adaptation policies, such as resettlement and “managed retreat” from climate change hotspots.