The Effect of Cap-and-Trade on Cincinnati

The Congressional Budget Office (CBO) recently estimated that proposed Cap-and-Trade legislation would slow GDP growth 0.2-0.7% by 2020. Via The New Republic, here is an interesting map of showing the expense by Metro area. The cost of Cap-and-Trade legislation would be $244 per household in Cincinnati - the 6th highest of the 100 largest U.S. metro areas. The key driver of this is the wide fluctuation in temperatures in the Midwest, which increases heating and cooling expenses (Los Angeles has the lowest expense of $96 per household).



So, from a strictly self-interested perspective, Cap-and-Trade is bad news for Greater Cincinnati’s economy. But this is kinda the point of the legislation - Carbon taxes attempt to raise the relative cost of carbon intensive behavior, so as to discourage it. It is an incentive to drive less and live in places with lower utility expenses. Unfortunately, Cincinnati ends up on the losing end.

I still think a carbon tax is still the correct policy for the country to curb emissions. However, I would expect our politicians to demand a new bridge, a bunch of hybrid buses, or an extremely expensive rail system in exchange for their votes on this bill.