UC Berkeley

Climate change is set to have a significant economic impact, affecting our behavior and changing the ways we produce and consume. This dissertation illustrates different channels through which environmental change has already been impacting our economy and highlights potential measures and market designs to mitigate future costs. The first two chapters of this dissertation leverage historical weather data to assess the market and behavioral responses to extreme temperature shocks. Chapter 1 utilizes European electricity markets data to assess the non-linear relationship between weather and energy cost. The analysis of spot market electricity prices reveals that estimates of the energy cost due to climate change which rely solely on consumption are significantly biased downward. In addition, the creation of a ``unified'' European market through regional market integration has contributed to drastically lower the impact of extreme temperatures on electricity price. Chapter 2 demonstrates that warm temperatures are associated with a rise in violent crime in the US. I further investigated the effect of extreme weather on police officer behavior using original and novel crowd-sourced data on civilian deaths involving police. The results indicate that fatal shootings increase proportionately to the growing number of violent crimes during warmer days. Taser use and physical restraints --- two controversial uses of force --- increase significantly on such days regardless of the threat level, indicating a need to reevaluate their usage. Finally, chapter 3 explores the distribution of human attention to moments in time using Google search data. Attention is a key parameter in the field of environmental economics as public policies enacted today are a direct function of how much people value the past, current, and future states of the economy. The results suggest strong common patterns of thought with respect to time, however recent trends and regional variations indicate that some non-biological factors can alter these patterns slightly.