As California borrows billions to cover state priorities, climate should come first | Opinion

As the legislative year winds down, there is a looming debate over which billion-dollar bond measures will make it onto the 2024 statewide ballot for voter approval. Housing, education, mental health and addiction are all worthy causes and issues that need attention and financial support. However, the proposed $15 billion climate bond is the foundation of California’s long-term sustainability and deserves to be front and center on ballots.

The economic costs of climate change impacts — including large wildfires in both rural and suburban communities, massive floods and landslides, ongoing air pollution affecting vulnerable communities and rising sea levels that will destroy buildings and coastal roads — are estimated to reach $100 billion annually by 2050. Previously introduced climate impact bonds and other legislation that begin to address climate impact mitigation have stalled in the Legislature, driving up the cost of managing these serious issues with each climate disaster and delay in funding. These are also lost opportunities to provide good-paying construction and clean energy jobs along with growth in California’s economy.

Opinion

Also stalled is the state’s preparedness to face significant climate challenges in the future by identifying and harnessing the talent and expertise at all levels of government. Importantly, this includes investing in our data systems to enable data analytics and real-time metrics reporting as well as institutionalizing community partnerships not just among all levels of government but with our front-line communities who bear disproportionate climate-related burdens.

Placing a $15 billion climate bond on the ballot with strict accountability so voters can ensure funds are used to further California’s climate goals is a necessary action to protect critical infrastructure and assist local communities. It is also an opportunity to move away from doing business as we traditionally have with bonds. This means improved transparency and accountability to ensure the proceeds are well spent.

California was an early adopter of Green Bonds to finance energy-efficient buildings and projects intended to reduce carbon emissions. To further incentivize progress on its sustainability goals, California should seriously consider a new type of bond tied to a carbon price index proposed by noted economic analyst Robert Litterman. If the issuer meets its stated policy goals reflected in the carbon price index, the interest rate will be lower than a traditional bond. This bond structure will also help to provide a signal to investors about the price of carbon, which many have long argued is needed to spur greater carbon emission reductions.

Before any bond campaign is launched, the state should issue a public assessment of progress to date from past and existing climate funding. Establishing metrics to measure success at the outset of projects and publishing regular progress reports would serve to provide a public record of which climate investments have been successful so that the state can build off the knowledge and scale up progress for the future.

Betty T. Yee is the former California state controller. She also previously served as chair of the State Lands Commission and as the state’s budget director.