Essays on environmental economics

In the first essay choice between development and environmental policy, which are affecting quality of life in the residential area differently, has been explored theoretically and empirically. Income, job opportunity, and the household production technology of the environmental good using leisure and environmental attributes as inputs are identified as the determinants of the preferences of the residents.; The next two essays investigate risks associated with global climate change using data reflecting climate variability and its impact on vegetative growth. The second essay provides evidence that vegetative growth in California has been subject to discrete change in growth state and each growth state persists quite a long period, at some sites more than 100 years on average. No statewide contemporaneous movements were detected from 35 Californian tree ring series, suggesting the local environmental factors have been more important in determining local plant growth than the global climate factors. These results draw attention to the crucial role of spatially coordinated risk management policies such as trade, and dispersal of production mitigating the welfare loss from the persistent deviations of vegetative production, and raise questions regarding those currently popular approach of modeling climate-related output variation as spatially uniform and dominated by global climate changes.; In the third essay, the statistical problems in making reliable inferences about short or long term climate variations, crucial in addressing economic impacts, are investigated. The commonly practiced reconstructing procedure of the climate history from the paleoclimatic data series has major drawbacks, so the fluctuation in the reconstructed series is significantly underestimated and the climate generating process is wrongly specified. Extremes in climate variability equivalent in magnitude to the posited recent global warming trend may not be detected from the reconstructed climate history. In addition this essay illustrates the relation between the paleoclimatic data and temperature series, both showing upward trends from the late 19th century, could be spurious, not causal. Therefore there is a significant amount of uncertainty about estimates of the relation between paleoclimatic data and temperature, and the inferences drawn from the reconstructed climate series.