Temperatures in Utah have risen 2.7° F since 1900, risking longer and more severe droughts. Presently, Utah is in a state of emergency due to drought, with nearly 90% of the state in extreme or exceptional drought.
The economic toll of rapid changes to the climate risks Utah’s way of life. For example, Utah’s farming, ranching and outdoor recreation industries may face uncertainty with water scarcity and restrictions, unexpected extreme variations in seasonal temperatures/precipitation and wildfires. However, through smart economic policy, there is opportunity. We can significantly reduce our reliance on fossil fuels to help manage economic risk from climate change, while bolstering a strong economy.
In 2019, the “largest public statement of economists in history,” signed by all living chairs of the Federal Reserve, 28 Nobel Laureates and more than 3,500 other economists, was published in The Wall Street Journal. The statement advocates for a policy wherein a fee is put on carbon pollution and all funds raised are returned directly to households in the form of “carbon dividends.”
This carbon fee and dividend solution is favored as it offers a cost-effective lever to reduce carbon emissions efficiently and at a scale necessary to have meaningful impact. By providing a financial incentive to all consumers and producers, it “will send a powerful price signal that harnesses the invisible hand of the marketplace to steer economic actors towards a low-carbon future.” It will increase both GDP and job opportunities, and provide a financial benefit to the most vulnerable in our society.
A critical component of an effective carbon fee and dividend proposal is a border carbon adjustment on imports and exports. This will “enhance the competitiveness of American firms that are more energy-efficient than their global competitors” and “create an incentive for other nations to adopt similar carbon pricing.”
Because this policy intends to give consumers and producers the flexibility to reduce emissions in the way that is best for them, reductions are achieved at least-cost, and this is better for the economy. A climate report from the International Monetary Fund shows that a strong carbon fee and dividend policy will increase GDP somewhat in the near-term, and may improve it dramatically in future decades as climate-related damages to the economy are avoided. Further, the report indicates this type of market-based policy will have a “net positive effect” on employment.
As carbon and other pollutants are reduced and climate risk stabilized, the policy is likely to improve our health and could save tens of thousands of lives each year.
Finally, this approach provides a financial benefit to the poor. Simply by charging a fee for pollution and returning all funds to the American people, “The majority of American families, including the most vulnerable, will benefit financially by receiving more in ‘carbon dividends’ than they pay in increased energy prices.”
We agree: A national carbon fee and dividend policy is a clear win-win for Utah and America. Implementing this policy can stabilize climate risk, improve the economy, increase job opportunities, preserve our agriculture and outdoor recreation industries, improve our health and help the most vulnerable.
Brigham Frandsen, Ph.D., associate professor, Brigham Young University; Benjamin Iverson, Ph.D., associate professor, Brigham Young University; Joseph Price, Ph.D., professor of economics, Brigham Young University; Mark Showalter, Ph.D., professor of economics, Brigham Young University; David Berri, Ph.D., economics, professor of economics, Southern Utah University; David Tufte, Ph.D., professor of economics, Southern Utah University; Günseli Berik, Ph.D., professor, Economics Department, University of Utah; Haimanti Bhattacharya, Ph.D., associate professor, University of Utah; Gail Blattenberger, Ph.D., associate professor emerita, Department of Economics, University of Utah; Subhasish Dugar, Ph.D., associate professor, University of Utah; Korkut Erturk, Ph.D., professor of economics, University of Utah; Peter Philips, Ph.D., professor of economics, University of Utah; Codrina Rada, Ph.D., associate professor, University of Utah; Elizabeth Tashjan, Ph.D., professor of finance, University of Utah; Arthur Caplan, Ph.D., economics, professor, Utah State University; James Feigenbaum, Ph.D., professor of economics, Utah State University; Paul Jakus, Ph.D., professor emeritus, Department of Applied Economics, Utah State University; Matt Gnagey, Ph.D., associate professor, Weber State University; Alvaro La Parra Perez, Ph.D., economics, associate professor, Weber State University; Doris Geide-Stevenson, Ph.D., economics, professor, Weber State University; Jeff Steagall, Ph.D., economics, professor, Weber State University; James “Cid” Seidelman, Ph.D., distinguished service professor of economics, Westminster College