Recent research from the University of Massachusetts Amherst establishes the first connection between U.S. household income and emissions, highlighting investment as a major driver behind emissions inequality.
New research conducted by the University of Massachusetts Amherst indicates that the richest 10% of Americans account for 40% of the country’s total greenhouse gas emissions. The study, published in the journal PLOS Climate, establishes a connection between income, particularly income stemming from financial investments, and the emissions produced to generate that income.
The researchers recommend that in order to equitably achieve the objective of limiting global temperature rise to 1.5 C, policymakers adopt taxes focused on shareholders and the carbon intensity of investment incomes.
Scientists and environmentalists have long known that consumption—the amount and kind of food we eat, the vehicles we drive, and all the stuff we buy—is closely linked to greenhouse gas emissions. Traditional environmental policy has then sought to either limit consumption or guide it into more environmentally friendly avenues: replacing red meat with plant-based diets or swapping a gas-guzzler for an electric vehicle.
“But,” says Jared Starr, a sustainability scientist at UMass Amherst and the lead author of the new study, “consumption-based approaches to limiting greenhouse gas emissions are regressive. They disproportionately punish the poor while having little impact on the extremely wealthy, who tend to save and invest a large share of their income. Consumption-based approaches miss something important: carbon pollution generates income, but when that income is reinvested into stocks, rather than spent on necessities, it isn’t subject to a consumption-based carbon tax.”
“What happens,” Starr asks, “when we focus on how emissions create income, rather than how they enable consumption?”
An answer to that seemingly simple question, however, is fraught with difficulty, because though it’s relatively easy to capture a snapshot of wages and salaries—the main sources of income for 90% of Americans—it has been very difficult to get a sense of the investment income that makes up a large source of the richest Americans’ wealth.