Specific proposals that several Western states would implement to comply with a proposed cap-and-trade carbon emissions control pact would destroy jobs and erode income, according to a report co-released by the Beacon Hill Institute (BHI) and the Washington Policy Center (WPC).

Reviewing the three cap-and-trade recommendations -- that consider "narrow" and "broad" market coverage and the use of offsets -- made by the Western Climate Initiative (WCI), the authors identified several flaws made by the seven-state consortium, consisting of Arizona, California, Montana, New Mexico, Oregon, Utah and Washington. Thus, calling into question the so-called cost savings of $11.4 billion to $23.5 billion heralded by WCI.

Under a scenario in which 25 percent of greenhouse gas emission permits would be auctioned off to emitters in a cap-and-trade scheme, BHI determined that the seven states:

Would lose between 35,177 to 165,397 private sector jobs, while the permit revenue would allow the states to hire up to 19,710 state employees.

Would put investment by firms at serious risk by slowing investment in the region by $1.6 billion to $4.5 billion.

Would diminish total personal income, which would fall by $10.2 billion to $47.71 billion per year.
Moreover, BHI found that none of the 7 WCI states would escape economic harm should cap-and-trade be imposed. Take Washington State for example. The state could lose:

18,292 net jobs.
$5.71 billion in personal income.
$302.54 in per capita disposable income.

The proposals' negative economic effects stem from the price and tax increases the states would impose on the energy and transportation sectors. Because a cap on carbon emissions is effectively a tax on energy production that is passed to industry, businesses and consumers, the effect is likely to drive commerce and jobs to other states or countries, says BHI.