30 Years of Data Disproportionately Links Climate Issues with Wealthy Households

In a recent study, published in PLOS Climate, researchers found that there is a disproportionate link between wealthy United States households and their impact on climate change.  More specifically, the study found that the top 10% of income earners in the U.S. are behind a staggering 40% of the country’s total greenhouse gas (GHG) emissions.  Even worse, are the top 0.1% – which the study has labeled ‘super emitters' – that are linked to a lifetime worth of GHG emission for those in the bottom 10% in a mere 15 days.

How Has This Happened?

When arriving at its conclusion, the paper indicates that while 40% of greenhouse gases can be linked to the top 10% earning households, “investment holdings account for 38-43% of their emissions”.

This is key to understanding the situation at hand, as efforts to mitigate GHG emissions to date have focused primarily on changing consumption habits that span to include transportation, food, etc.  With this study now showing that investment holdings play a much more significant role in GHG emissions, it is clear that existing consumer-based approaches are inherently flawed.

Recognizing this, it is crucial for households that take climate issues seriously to re-evaluate where their capital is allocated.  This means doing due diligence on an investment/company beyond solely the potential for financial return, but also including a closer look at environmental and sustainability efforts being made by the companies being invested in.

While overall emissions were linked to household wealth, the study also shed light on several other factors, such as race, and age.  It indicates that predominantly white households were responsible for more emissions, while black households were responsible for the least.  Furthermore, it found that age played a notable role as well, with linked emissions rising over time, peaking between 45 and 54.  This is a logical finding, as households typically have the most excess capital for investments in the final career years before retirement, and as previously established, GHG emissions are highly correlated with investments.

Arriving at a Conclusion

In order to arrive at the conclusion that GHG emissions are disproportionately linked to wealthy homes, researchers behind the study poured through over 30 years of data from 5 million U.S. residents.  Parameters utilized to link GHG emissions with wealth included a look at the following and more, from 1990-2019.

• Wages
• Investments
• Retirement

The team noted that in doing so, it was able to shed light and “offer a new perspective on emissions responsibility, to fill in a key knowledge gap for a major GHG emitting nation,”.

This existing knowledge gap was attributed to the often elusive nature of investment income data, which contributes significantly to the wealth of the elite. In order to work around this obstacle, the team of researchers behind the study poured through “2.8 billion inter-sectoral transfers from the Eora MRIO database to calculate both supplier- and producer-based GHG emissions intensities and connect these with detailed income and demographic data,”.

Why So Important?

While disbelievers still remain, the majority of the populace and scientific community believe that climate change is not only real but a significant threat to the modern world.  More to this point, there is a general agreeance that if the world expects to avoid the worst potential effects of climate change, temperatures must not rise more than 1.5°C.  Unfortunately, we are already well on our way to not only approach but surpass this threshold in the coming years.

With this being the case, a closer look must be given to understanding exactly what is responsible for GHG emissions, so that nations can form more effective responses and mitigation strategies surrounding the issue.  This is what the recently released paper sought to achieve.

Moving Forward

As it stands, equal treatment has trumped accountability with regard to GHG emissions in North America through both existing and proposed action plans.  This means that, despite the most wealthy households being disproportionately linked to such emissions, they are typically placed on the same pedestal as poor and impoverished ones.  This approach essentially punishes households that do not have excess capital to invest, as they may be forced to pay for the actions of those that do.

Taking the above into account, the team of researchers responsible for the paper put forth a proposal that would see a migration away from “consumer facing carbon taxes that rely on individuals decarbonizing the economy,” towards a more effective approach involving “income or shareholder-based carbon tax”.  Essentially, this means targeting shareholders based on the carbon intensity of any investment gains.

When discussing this study, Head Researcher and Lecturer in Environmental Conservation, Jared Starr, stated,

“we could really incentivize the Americans who are driving and profiting the most from climate change to decarbonize their industries and investments. It’s divestment through self-interest, rather than altruism. Imagine how quickly corporate executives, board members and large shareholders would decarbonize their industries if we made it in their financial interest to do so. The tax revenue gained could help the nation invest substantially in decarbonization efforts.”

Concluding its findings, the paper drives home the following point – “It is clear that the economy needs to decarbonize faster than its current trajectory and that more money is needed to both fund this transition and equitably adapt societies to a warming world”.  Whether its tax proposal is the answer is yet to be seen, but the fact remains that more needs to be done, and effective accountability is key to a solution.