This dissertation consists of three essays in the field of environmental economics and sustainable finance. The first chapter investigates the impact of localized exposure to heat waves and floods on the pricing of U.S. municipal bonds. I identify a significant relationship between the vulnerability of cities to heat waves and flood-related damages and municipal bond yield spreads. In particular, the effects are more pronounced in the case of municipal bonds with extended maturity periods. Cities demonstrating heightened capacities for adaptation exhibit a discernible mitigating impact on the yield spreads of these bonds. Moreover, my paper underscores the variations in political affiliations, climate attitudes, and risk perceptions across different cities, shaping this dynamic relationship. The second chapter presents empirical insights into the economic and financial effects of natural disasters, focusing on wildfires in California. Integrating financial data with historical wildfire records from 2016 to 2020, the study quantifies how wildfire risks influence municipal tax policies, revealing that local governments adjust tax rates in response to these risks. Furthermore, the study examines how municipalities enhance expenditures on public safety, particularly in fire and disaster preparedness, reflecting proactive measures to mitigate wildfire impacts and ensure community resilience. The third chapter, co-authored with Christina Laskaridis, analyzes sovereign green, social, sustainability, and sustainability-linked (GSS+) bonds in emerging and developing countries. This study maps out trends and characteristics of sovereign GSS+ bond issuances, assessing their potential to finance the energy transition and achieve Sustainable Development Goals (SDGs). The research evaluates the risks and limitations of GSS+ bonds, emphasizing the need for longer maturities, longer costs of capital, and increased funding scales to effectively contribute to sustainable development financing. Overall, these essays contribute multifaceted perspectives on the intersection of climate risks, fiscal policies, and sustainable finance, offering valuable implications for policymakers, investors, and stakeholders aiming to navigate the complexities of climate economics.

Schools are among the most important contributors to human capital development. Over the past few decades, the education sector has witnessed two significant trends that highlight the complex challenges and opportunities that schools currently face. First, there is a growing concern over the quality of the public school system. In response, school choice initiatives have become increasingly common, proposed as a means to introduce competitive forces into the education market, thereby incentivizing incumbent schools to enhance their quality. Second, the impact of climate change on human capital development has become increasingly apparent. The education system is particularly vulnerable to disruptions caused by climate-induced adverse events, such as natural disasters and infectious disease outbreaks, which are growing more frequent and severe. This dissertation examines the consequences of these two important trends, aiming to provide insights into their implications for education policy. In the first chapter, I study the impact of competitive pressures on school resource allocation and the consequent impact on student achievement. Using administrative data in North Carolina, I examine the impact of nearby charter openings on the class structure and the allocation of teachers to students within traditional public schools (TPSs). I find that TPSs experience a significant attrition of teachers and a disproportionate exodus of economically advantaged and high-achieving students to charter schools. Subsequently, TPSs reduce the number of classes, resulting in a significant increase in both class size and the student-teacher ratio. Faced with the dual pressures of enlarged class sizes and the necessity of maintaining school proficiency rates dictated by accountability systems, TPSs undertake measures to enhance the allocation equity and efficiency of teaching resources. This involves a strategic reassignment of more high-quality teachers to disadvantaged students, and the enhancement in teacher-student racial matching. These effects remain consistent after accounting for changes in the composition of both teachers and students at the school level before and after the introduction of charter schools. Exposure to charter schools does not significantly affect the average standardized test scores in Math for TPSs, but it does lead to a noticeable increase in school proficiency rates. The second chapter studies the implications of alternative school choice designs for the equity and efficiency in the allocation of teachers within TPSs. This chapter develops and estimates an empirical model of school choice and school competition to characterize how TPSs reallocate teachers to students in response to competitive forces from charter schools, and the subsequent impacts on the distribution of student academic performance. I use administrative data from North Carolina to estimate the model with standard structural model estimation techniques. I utilize the model to assess the policy implications of expanding charter schools, decomposing the policy's effects into those stemming from student sorting and those from the reallocation of teachers (via the competition channel). I find that expanding the charter school sector effectively enhances equity in the distribution of high-quality teachers within TPSs and reduces achievement gaps, primarily through the competition channel. Additionally, optimizing the matching process between teachers and students can further facilitate allocative efficiency as a result of this policy. The third chapter focuses on the distributional effects of climate change on human capital development, with an acute emphasis on the suffering of the most disadvantaged students. We examine the causal effect of unexpected school closures due to wildfires on student academic achievement and the underlying mechanisms. We exploit exogenous variation in the intensity of wildfire school closures in California between 2009 and 2017 as a natural experiment. We find that wildfire school closures have negative effects on both English language arts and Math test scores. Students with lower socioeconomic status experience larger negative effects from such unexpected closures. Furthermore, we show that school time loss and air pollution are two important mechanisms contributing to the decline we measure in student achievement.