NYC's Climate Resiliency Plan Should be Funded with a Carbon Tax

Last week, New York City Mayor Michael Bloomberg released a report on how the City could prepare for the rising sea levels that will result from climate change. A Stronger, More Resilient New York is a 438-page blueprint for climate adaptation that covers everything from coastal protection to built infrastructure, like buildings and telecommunications, and community rebuilding and resiliency. It is an ambitious plan, to say the least, and the vast majority of it, if implemented, will be under the next Mayor.

The total cost of the plan is projected at $20 billion. About half the plan is already funded and an addition $5 billion is expected to be funded, which leaves a shortfall of roughly $5 billion. The plan looks to a combination of federal and state aid, along with a potential tax benefit and a “Resiliency Assurance Charge” on property and casualty insurance policies. There is also mention of Bloomberg’s previous failed congestion charge proposal, which would have charged tolls to enter into Manhattan’s central business district. Congestion pricing has been successfully adopted in London with a decrease in traffic, increased ridership on public transport, and a solid revenue source for the city but the proposal for NYC died in Albany.

This seems to be a good time to mention a revenue source that would not displace other federal funds, actually help stave off the worst impacts of climate change, and start placing the burden of climate adaptation on the polluter: a carbon tax. We’ve written before about how a carbon tax is a win-win-win: the revenue could help reduce the deficit, change behaviors so greenhouse gas emissions are lowered, and help reduce taxes on productive behavior. The CBO has projected that a $20/ton tax on carbon could raise $88 in 2012 and up to $144 billion by 2020. The federal carbon tax could be a source of steady financial support for the City’s mitigation efforts.

On the City-level, New York could follow Boulder, CO’s lead and adopt a city-level carbon tax. First enacted in 2006, residents voted to extend the tax for an additional five years last fall. Over 80 percent of residents voted to extend the tax, which puts a price of approximately $7 per ton of carbon and pays for energy-efficiency and renewable energy programs. The tax generates nearly $2 million per year for the city and costs residents less than $2 per month. For New York City’s needs, a slightly higher tax would bring in more revenue, but there would need to be some kind of rebate or exemption program based on income so that low-income households don’t bear a disproportionate cost burden.

As the NYC report highlights, adapting to climate change will not be easy nor will it be cheap. With a carbon tax, at least we can take the cost burden off of the taxpayer and onto the behavior that is resulting in the necessity of things like climate resiliency plans.