The thesis consists of three independent chapters on environmental and urban economics. A central theme explored in this thesis is individuals' responses to environmental challenges.The first chapter, "The Healthcare Cost of Air Pollution: Evidence from the World's Largest Payment Network", provides the first nationwide analysis of the healthcare cost of PM2.5 using the universe of credit- and debit-card transactions in China during 2013-2015. The second chapter, "Improved Transportation Networks Facilitate Adaptation to Pollution and Temperature Extremes", compiles daily travel flows based on transaction records from the world’s largest payment network and documents that China's rapid expansion of high-speed railways (HSR) facilitates the use of intercity travel as an effective adaptation strategy. In the third chapter, "The Role of Environmental Amenities in the Urban Economy: Evidence From a Spatial General Equilibrium Approach", I develop and estimate a spatial general equilibrium model to examine how environmental amenities affect the spatial distribution of urban economic activities and their welfare consequences.