Study of climate policies in San Joaquin Valley finds $13 billion in economic benefits

Amid concerns about the economic and employment impacts of California's ambitious climate policies, the first comprehensive, academic study of their effects in the San Joaquin Valley has found a total economic benefit of $13.4 billion.

The study, The Economic Impacts of California's Major Climate Programs on the San Joaquin Valley, addresses compliance and investment costs as well as the benefits across the region, and finds a net boost to the Valley's economy from the state's major climate programs, including the creation of tens of thousands of jobs, according to a press release.

"The San Joaquin Valley is a bellwether for the state's climate policies, faced with unique challenges in terms of its environment and its economy," said F. Noel Perry, businessman and founder of the nonpartisan, nonprofit group Next 10, which commissioned University of California researchers to collect data, run economic models and produce the report. "But if climate and energy policies can work in the San Joaquin Valley, they can work anywhere in California – and serve as models for states across the country and around the world."

The valley is especially vulnerable to air quality problems that climate policies tend to alleviate, the release said. But it also faces more socioeconomic challenges than other parts of the state and is less equipped to take chances with its economy.

"This report shows that even in one of the poorest and most disadvantaged regions of the state and nation, California's existing climate policies can provide net economic benefits," said Ethan Elkind, who coordinated the report for the Center for Law, Energy and the Environment (CLEE) at the UC Berkeley School of Law.

Researchers looked at three key California climate and clean energy policies: 1) cap-and-trade, which established a market designed to reduce carbon emissions from major polluters, 2) the Renewables Portfolio Standard (RPS), which calls for California to get 33 percent of its energy from renewable sources by 2020, growing to 50 percent by 2030 and 3) energy efficiency programs run by investor-owned utilities and overseen by the Public Utilities Commission.

Cap-and-trade

After accounting for compliance and other costs, the UC researchers estimate the cap-and-trade program had a direct economic benefit of $119 million to the San Joaquin Valley, and boosted the economy by $200 million when you include indirect and induced economic benefits. Including spending that has been allocated but not yet disbursed, those numbers rise to $1 billion in direct economic benefits and $1.5 billion when including indirect economic benefits.

Proceeds from carbon auctions disbursed in the region so far have largely gone toward initial work on the state's high-speed rail project, affordable housing, irrigation modernization and electric vehicle incentives. The study found that industries benefiting from the investment of cap-and-trade revenue, such as construction, generate more economic activity in the region than those industries bearing the costs of cap-and-trade compliance.

Researchers calculated a potential negative impact on 400 jobs due to compliance, but found that on a net basis, more than 700 jobs were created directly, and more than 1,600 supporting service and industry jobs were created indirectly, from 2013 through 2015. In the same period, state and local tax revenues received a $4.7 million boost.

Renewables Portfolio Standard

A lot of attention is paid to the state's carbon cap-and-trade program, but in terms of the San Joaquin Valley's economy, the state's Renewables Portfolio Standard (RPS) has had a bigger impact so far. Construction on renewable energy projects has resulted in $11.6 billion in total economic activity in the Valley.

The San Joaquin Valley is home to 24 percent of the state's solar generation and 54 percent of the state's wind generation, providing significant employment opportunities in the region.

Energy efficiency programs

The report found energy efficiency programs overseen by the California Public Utilities Commission (CPUC) are cost-efficient vehicles for families, businesses and institutions to save energy and money year after year. By cutting demand, efficiency efforts also reduce the need for costly new power-generating infrastructure.

Energy efficiency programs in the San Joaquin Valley are the most cost-effective in the state, according to the report authors' analysis of data reported by the CPUC. The report's researchers found these programs in the Valley have provided net economic benefits of $248 million since 2010.

Policy recommendations 

Given the economic benefits of California's climate policies in the San Joaquin Valley, the researchers offered recommendations for maintaining and improving results as the state moves to further climate policies under SB 32 (Pavley, 2016) and SB 350 (De Leon, 2015).

Recommendations include removing uncertainty regarding key climate programs.

"The Valley's economy would benefit in particular from state leaders removing the legal uncertainty about the cap-and-trade program – especially the allowance auction mechanism – beyond 2020," Elkind said. 

Other recommendations include ensuring that cap-and-trade auction proceeds are spent on valley programs that cut greenhouse gas emissions and co-pollutants; expanding energy efficiency incentives in the Valley, where they yield greater energy savings than in more temperate parts of the state; and developing robust transition programs for workers and communities affected by the decline of the region's greenhouse gas-emitting industries.

 


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