This dissertation addresses several issues regarding the consequences of environmental policy and its optimal level, as well as household's decisions on energy consumption and labor supply. In chapter two, a theoretical analysis investigates whether fossil fuel taxation or a consumption cap is sufficient for the adoption of both biofuels and solar energy. It is shown that under these policies solar adoption can crowd out biofuels consumption. Chapter three addresses the link between longevity and optimal environmental policy. It is shown that the significant rise of life expectancy in the recent decades, which is common across different countries, calls for tighter environmental policies. Chapter 4 investigates households's decisions on the utilization of energy-using appliances. Households tend to increase energy service consumptions, like driving or indoor lighting, once they adopt a more efficient appliance, like fuel-efficient cars and LED light bulbs. This increase in the utilization of appliances is called the rebound effect. According to empirical evidence, the rebound effect declines with households' income. The chapter investigates why households with lower income tend to have larger rebound effects. Chapter 5 investigates differences in households decisions from a different perspective. Here, the labor supply decisions of households in urban and rural areas is analyzed in a historical background. Different patterns of the labor supply of rural and urban households is explained based on the changes in market productivities and non-market opportunities.