Essays on the negative externalities of energy development:
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Nonrenewable energy development is known to have various negative externalities, with air and water pollution, and ecosystems deterioration being the major ones. While water pollution is mainly local and ecosystems deterioration is global, the effects of air pollution could be both local (particulate matter, sulfur dioxide) directly affecting human health and global (greenhouse gas emissions) causing climate change in the long run. To help inform energy and climate policies for a cleaner and sustainable future, this dissertation considers three separate markets to inspect public perception of climate change and other negative externalities of nonrenewable energy development. Chapter 2 investigates the reaction of energy capital markets to hurricanes. Climate change is expected to increase the intensity and frequency of extreme weather events. Provided that capital markets are rational and relatively efficient, the impact of any information that a hurricane conveys about the immediacy and severity of climate change should be reflected in short-run stock price changes. Because carbon dioxide emissions from the combustion of fossil fuels are a sizeable contributor to greenhouse gas concentrations, and their reduction is a key ingredient in any climate change mitigation strategy, I focus on energy companies. Four hurricanes are examined with an event-study approach: Hugo (1989), Andrew (1992), Katrina (2005), and Sandy (2012). Chapter 3 and Chapter 4 inspect two important external costs associated with unconventional oil and gas development. In Chapter 3, I use a difference-in-difference hedonic model to evaluate the seismic risk induced by wastewater disposal. Using data from Oklahoma County, I recover hedonic estimates of property value impacts from nearby shale gas development that vary with earthquake exposure. Chapter 4 estimates the costs of shale oil and gas development in Texas’ health care market, focusing on four short-term health conditions: circulatory, digestive, respiratory, and skin and sense organs. Using a rich individual hospital visit data from January to June 2010 and a genetic matching method, I estimate the average impact of fracking on hospitalization rate and per capita total (non-covered) costs on the four categories for the entire population and by age group.