Three essays in environmental economics

Motivated by the desire to inform climate policy, this dissertation consists of a compilation of three essays devoted to unravelling the signi?cance of weather and climate as drivers of social welfare in two di?erent contexts: the impact of weather ?uctuations on labour markets and the importance of heterogeneity in determining individuals’ preferences for climate. Chapter 2 investigates the existence of weather-related changes in earnings and working times in the Mexican labour market. Leveraging quasi-random day-to-day variation in an individual’s exposure to weather, I provide evidence of extreme-rainfall days causing economy-wide meaningful reductions in working times. However, I observe no average heat e?ects on either earnings or working times, but only a small cold-related drop in minutes worked. Further analysis reveals considerable heterogeneity in temperature and precipitation e?ects across industries as well as job- and individual-speci?c characteristics, with non-trivial earnings losses observed for individuals working in unprotected working environments. Applying a residential choice model, Chapter 3 tests for the importance of origin climates in driving climate preferences of Mexican migrants to the United States (U.S.). I ?nd temperature preferences to di?er signi?cantly between migrants originating from colder and warmer Mexican municipalities. Building upon the ?ndings from Chapter 3, Chapter 4 further investigates heterogeneity in the amenity value of temperatures and individuals’ willingness to pay (WTP) for mitigation of global warming. The study employs a two-stage random utility sorting model to analyse location choice decisions of Mexican migrants to the U.S. The econometric model captures both observed heterogeneity and unobserved preference heterogeneity in temperatures. Evaluation of the ?rst stage is done following a Bayesian estimation procedure. Examining heterogeneity in individual climate valuations reveals signi?cant di?erences in the marginal willingness to pay (MWTP) for preferable temperatures across both demographic and clinal characteristics.