Inequality is Toxic: How Economic and Social Disparities Drive Climate Change

At least on the left, many also recognize that, despite the massive job creation and other economic benefits that will come from moving to a clean fuel economy, there will be significant short-term costs. For example, fossil fuel workers will need a just, economically viable transition into new industries. There are also strong ideas being put forward to help low-income people with the rising energy prices that would result from a much-needed carbon tax.

Yet, as I write in my new report, “Boiling Points,” one key topic that is still overlooked is how environmental degradation and climate change are themselves the toxic byproducts of our inequality problem.

This may sound counterintuitive: But there is a spate of research showing a clear and positive relationship between environmental damage and economic and social inequality.

For example, economist James Boyce conducted a study in the early 1990s with colleagues from the Political Economy Research Institute, which compared industrial air pollution across U.S. metro areas. The authors looked at the distribution of air pollution impacts across income levels and racial groups and found that, in cities where the gaps in pollution exposure between people of color and whites are larger, there tends to be much more pollution in general.

A second study Boyce conducted, with another group of colleagues, looked at environmental quality across the 50 states and asked why it’s better in some states than others. It again turns out that these variations have much to do with differences in wealth and power. “Where income inequalities were greater, where educational inequalities were greater, where the fairness of fiscal policy in terms of both the tax system and access to services like Medicaid was better, you tended to find differences in environmental degradation.” More equal distributions of wealth and power were associated with better environmental outcomes.

Economist Jungho Baek and his coauthors also find that more equal income distribution in the U.S. results in better environmental quality in both the short and long run. Similarly UK geographer, Danny Dorling conducted a study of the world’s 25 richest countries, looking at behaviors like consumption of meat, water use, production of waste, flights, and overall effects on ecology. He found that “in all these affluent countries there are inequalities, and in those where inequalities are the greatest it is now becoming evident that people, on average, pollute much more.”

How do we make sense of these and other studies with similar results? Is inequality actually causing environmental damage? Or is this merely a correlation, whereby societies that have high inequality levels are also likely to pollute their environments more?

I argue that it’s both. First, we can imagine how the causes of inequality are also separately doing environmental harm. For example, take the rise of corporate short-termism since the 1970s. Many economists, including myself, argue that public companies that only prioritize next-quarter share prices—and pump up those share prices through stock buybacks—are an enormous driver of inequality. Corporate short-termism, by its very definition, is bad for the environment because the same shareholder incentives that skew companies away from investing in workers, capital, and innovation discourage them from investing in, for example, green retrofitting of existing buildings, sustainable production practices, and even compliance with environmental regulations.

Second, there are mechanisms by which inequality itself is an environmental toxin. For example, Boyce argues that, because wealth ultimately converts into political power, a society with high levels of wealth and income inequality leaves those at the bottom less able to resist the powerful interests that benefit from pollution. This increases environmental “bads” because the magnitude of environmental harm is a function of the magnitude of inequality. (These explanations just scratch the surface. See the report to delve more into these ideas.)

What is the potential of these findings? Can we think of financial regulation, progressive tax policy, and entitlements as climate change policy? They will not directly pull carbon out of the atmosphere, which we need to do urgently, but these kinds of progressive economic policies may be a necessary foundation for a sustainable society. Recognizing that solving inequality is actionable climate policy builds on the foundation of climate justice exhibited at actions like the People’s Climate March, providing an incredibly strong framework for designing good policy and mobilizing an even stronger, multi-interest climate movement.