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Abstract
This paper examines the implications of a carbon-constrained future on coal-reliant county governments in the United States. We review modeling projections of coal production and argue that some local governments face important revenue risks. Complex systems of revenue and intergovernmental transfersand insufficiently detailed budget data make it difficult to parse out how ex-posed jurisdictions are to the coal industry. A look at three illustrative counties shows that coal-related revenue may fund a third or more of their budgets. When extrapolated outside the sample, our regression analysis of 27 coal-reliant counties suggests that the demise of coal could lower these counties’revenue by about 20%. This does not account for the potential downward spiral of other revenues and economic activity as the collapse of the dominant industry erodes thetax base. Coal-dependent communities have issued outstanding bonds that will mature in a period in which climate policy is likely. Our review of illustrative bonds indicates that municipalities have not appropriately characterized their coal-related risks. Climate policies can be combined with investments in coal-dependent communities to support their financial health. We discuss how asmall fraction of revenue from a federal carbon price could fund assistance to coal-dependent communities and workers.
Citation
Doshi, Siddhi. 2021. “Revenue at Risk in Coal-Reliant Counties.” Environmental and Energy Policy and the Economy 2: 83-116. https://doi.org/10.1086/7113071.