*Please note that my dissertation work is ongoing. Details and results for my three essays will be updated periodically.
Essay 1: Testing Recent European Carbon Futures Markets for Weak-Form Informational Efficiency
The European Union’s Emissions Trading System (EU-ETS) is one of the most important tools we have in the fight against the adverse effects of global climate change. As the most well-established cap-and-trade program in the world, it has set the global standard for carbon markets. However, prior studies have provided mixed results regarding the efficiency of these markets (where efficiency is defined in terms of the efficient market hypothesis). Non-efficient markets provide an arbitrage opportunity for participants.
This essay analyzes the price series of four annual carbon futures contracts to determine if recent (2017-2021) carbon markets were weak-form efficient. I use a variety of methods to gauge relative efficiency, including runs tests, unit root/stationarity tests, an autocorrelation analysis, variance ratio tests, and an analysis comparing the performance of simple technical trading rules relative to baseline strategies.
Essay 2: Stock Market Reactions to Natural Disasters: The Case of Green Technology Companies in the United States
Links between human actions and global climate change are well-documented, as are the links between climate change and the frequency and intensity of extreme weather events. The prior literature in economics and finance has examined the effects of natural disasters on insurance sectors in leading global stock markets. Many studies have analyzed insurance sectors for evidence of the “gain from loss hypothesis” --- the idea that investors will demand more insurance coverage in times of natural disasters, thereby yielding above-average stock returns in this sector.
Further development and implementation of “green” energy is critical in the fight against global climate change. Do green companies see increased stock returns in days following natural disasters? My second essay seeks to answer this question. I apply a hybrid methodology to investigate the impact of natural disasters in the United States on leading green technology companies. My approach uses traditional event studies methods and more advanced econometric models (i.e., generalized autoregressive conditional heteroskedasticity [GARCH] models).
Essay 3: The Clean Development Mechanism in India and Considerations for an Indian Emissions Trading Scheme
This essay traces the development of Clean Development Mechanism (CDM) projects in India and China and conducts a policy analysis to highlight potential challenges to the implementation of an emissions trading scheme in India. Historically, developed nations have been responsible for a majority of greenhouse gas (GHG) emissions (and their associated abatement). This dynamic is changing as developing countries enter the global stage, and characteristics of these economies misalign them with current pollution-management techniques. In particular, abatement methods in developing countries need to strike a balance between reducing GHG emissions and allowing continued economic growth. This essay will provide policy recommendations related to developed nations' support of emissions trading programs in developing nations.
“Managing a Portfolio of Spatial Wildlife Infection Risks: An Application to Elk in the Greater Yellowstone Area”
Authors: Richard D. Horan, Alexander S. Hopkins, David Finnoff, and Sarah Lindley
Selected poster to be presented at the Agricultural & Applied Economics Association (AAEA) 2022 Annual Meeting
“Multipollutant Markets Increase the Efficiency of Managing Jointly Produced, Stochastic Emissions”
Authors: Alexander S. Hopkins, Richard D. Horan, Carson J. Reeling, and Robert S. Shupp
Selected paper presented virtually at the AAEA 2021 Annual Meeting