Highlights

• Rural America can reap significant benefits from investments made in the new climate economy, including measures to advance clean energy systems, remediate abandoned fossil fuel production sites, restore trees to the landscape, and reduce the risk of catastrophic wildfire. Collectively, these actions can create new economic opportunities in rural places while addressing climate change.
• This working paper presents a detailed analysis of the rural economic impact of federal policies that invest in the new climate economy, including information about the geographic and sectoral distribution of those investments.
• The opportunities analyzed here would require US$55 billion in annual federal investment nationwide for five years, of which nearly $15 billion per year would flow to rural counties. This rural investment could support nearly 260,000 rural jobs that would last for five years (a total of 1.3 million job-years) across the country, if complementary measures were adopted to ensure that a minimum share of funding reaches rural counties. It would also generate $21.7 billion per year in overall value added to rural economies, including $12.9 billion in rural employee compensation and $1.6 billion in local, state, and federal tax revenues.
• Every $1 million invested through the new climate economy pathways included in this analysis would generate 17.5 jobs and $1.5 million in value added in rural economies.
• Nearly 45 percent of all rural jobs created by these federal investments would accrue to economically disadvantaged rural counties. Federal investments must specifically prioritize equity in distribution to ensure that these benefits reach rural communities in need.

Context

Rural America faces the dual challenges of lagging economic growth and increasingly severe impacts from climate change. These challenges have been highlighted by economic losses from the COVID-19 pandemic, which has exacerbated existing inequalities and infrastructure needs, alongside catastrophic wildfires and severe weather linked to climate change.

Addressing both challenges at once will require federal investment in building a new climate economy for rural America—one that reduces greenhouse gas emissions to net zero while creating jobs, uplifting economically disadvantaged communities, and enhancing ecosystem services. Prospective investments in the new climate economy have already garnered broad support from federal policymakers and rural voters alike, but strong federal policy has yet to be enacted. The current push by Congress and the Biden administration to invest in the country’s ailing infrastructure and tackle the climate crisis represents the most promising political moment in years to amplify the new climate economy in rural America.

Federal investment in the new climate economy can create jobs, bolster rural economies, and contribute significantly to addressing the climate crisis. Specific investment opportunities evaluated in this paper include the following:

• Developing renewable energy resources
• Making homes and industries more energy efficient
• Building infrastructure for clean energy transmission, distribution, and storage
• Cleaning up abandoned fossil fuel infrastructure
• Restoring trees on federal lands through reforestation and restocking degraded forests
• Restoring trees on private, state, and local lands through reforestation, restocking, and agroforestry systems
• Reducing the risk of catastrophic wildfire through prescribed burning and biomass removal

While not comprehensive, these opportunities are intended to be representative of key needs for investment in the new climate economy. They are the subject of analysis in this working paper.

About This Working Paper

This working paper estimates the potential economic benefits in rural America from federal investments that support a new climate economy. Our assessment uses input-output modeling to estimate direct, indirect, and induced job creation in rural counties from specific federal investments across seven pathways, including opportunities in the energy and land sectors (Table ES-1). We also estimate the associated value added to rural economies, including total employee compensation and additional tax revenues to federal, state, and local governments. Based on these results, we analyze the distribution of rural economic benefits across the United States and the proportion of these benefits likely to accrue to economically disadvantaged rural communities, defined as counties identified as distressed and at risk by the Economic Innovation Group’s Distressed Communities Index.

We discuss federal policies that could catalyze investments in the new climate economy. The policies presented here could help rebuild U.S. infrastructure in a way that creates jobs, supports economically disadvantaged communities, and addresses climate impacts. While this discussion is targeted at federal lawmakers, state and local policymakers may also find value in these proposals.

Our analysis goes beyond most other published economic analyses of decarbonization policies by segmenting federal investment between rural and urban counties for specific opportunities in both the energy and land sectors, informed by interviews with practitioners and industry experts as well as qualitative case studies. The result is a detailed picture of how federal investments would be distributed across rural counties, including consideration of economically disadvantaged communities. This granularity reflects our understanding that good federal policy requires an intimate knowledge of how investments will translate into economic benefits across sectors and geographies.

Table ES-1 | Rural Economic Impacts by Investment Area (Each Year for First Five Years)

Source: WRI authors and BW Research.

Note: Delaware, the District of Columbia, New Jersey, and Rhode Island do not have any rural counties as defined by the U.S. Department of Agriculture.

This working paper is part of New Climate Economy, a project of the Global Commission on the Economy and Climate, which seeks to enhance our global and national understanding of how climate policy can help unlock economic and social benefits. This paper estimates overall economic benefits only.

The Rural Economic Opportunity

We evaluate the impact of $55 billion per year in federal investment in seven areas of the new climate economy over five years. An estimated $14.9 billion of that investment would be directed to rural America. That investment would support nearly 260,000 direct, indirect, and induced jobs in rural counties for at least five years (a total of 1.3 million job-years) and 740,000 jobs in the country as a whole for at least five years (a total of 3.7 million job-years). This equates to 17.5 jobs created per $1 million invested in rural counties, compared with 13.5 jobs created per $1 million nationally.

This level of investment would also add $21.7 billion per year to rural economies for the first five years—$1.46 for every dollar invested. This includes $12.9 billion in employee compensation and $1.6 billion in federal, state, and local tax revenues. Table ES-1 shows the distribution of economic benefits across the seven investment areas in the new climate economy. In absolute terms, rural counties in California, Texas, New Mexico, Missouri, and Wyoming stand to gain the most in terms of job creation each year for the first five years (Figure ES-1).

Of the 260,000 rural jobs created by this investment, over 118,000—nearly 45 percent of all rural jobs—would accrue to economically disadvantaged rural counties. These counties would benefit from $9.8 billion added to their economies annually, including $5.9 billion in total employee compensation and $685 million in total taxes.

The Policy Opportunity

The federal government has an opportunity to enact and expand policies that will drive investments in the new climate economy, creating jobs and bolstering rural economies in the process. Fully activating the opportunities analyzed in this paper would require a suite of federal policies, which could support a larger federal plan for rebuilding infrastructure and mitigating climate change. Policy opportunities for the new climate economy are shown in Table ES-2. They include policies that can positively impact the nation as a whole as well as policies specifically tailored to rural areas.

Rural America faces dual challenges from flagging economic vitality, exacerbated by the pandemic, and climate change, which is already affecting rural livelihoods (Hales et al. 2014; see Box 1 for a definition of rural America). Efforts to rebuild resilient rural communities would benefit from strategic federal investment that supports both deep decarbonization and the creation of good-paying jobs (Mulligan et al. 2020; Saha and Jaeger 2020). These investments could help usher in a new climate economy for the United States that would achieve economic growth by dealing with the risks associated with climate change (NCE 2018).

There is increasing interest in rebooting struggling rural communities by making strategic investments in the new climate economy. The Biden administration’s American Jobs Plan would target 40 percent of clean infrastructure investments in disadvantaged communities, which have experienced disproportionate levels of pollution, chronic disinvestment, and lack of access to economic opportunities. Many rural communities are likely to fall into this category. Legislative proposals to invest in rural areas to combat climate change and generate economic opportunities for underserved communities also abound. For example, the Climate Stewardship Act, introduced in the Senate in April 2021, would invest billions of dollars in U.S. Department of Agriculture (USDA) programs to restore trees and native vegetation on working lands while prioritizing investments and job opportunities for disadvantaged communities. The proposed American Jobs in Energy Manufacturing Act of 2021 would incentivize domestic manufacturing of clean energy technologies, with targeted investments in rural communities that have witnessed a decline in manufacturing and traditional energy jobs.

There is also increasing evidence that rural Americans support the new climate economy. In a national survey, 54 percent of rural voters said that taking action on climate change was “very” or “pretty” important, with policies that reduce pollution from power plants, incentivize the contribution that agriculture can make to mitigation, and strengthen rural communities against extreme weather events receiving high levels of support (Bonnie et al. 2020). Despite their support for climate action, however, rural voters report feeling “isolated” from the climate policy conversation and feel that many climate policies do not allow rural areas to benefit.

Federal policymakers need to ensure that rural voices are included in U.S. climate policy discussions. Not only do rural voters and rural states wield significant influence on the outcomes of national elections, but rural America matters a lot to the fate of U.S. climate policy. Farmers, ranchers, and forest owners manage large segments of American lands that hold enormous opportunities for mitigation. Natural and working lands currently remove about 800 megatons of carbon dioxide (MtCO₂) per year, or 12 percent of U.S. greenhouse gas (GHG) emissions (EPA 2021), and could remove an additional 540 MtCO₂ annually—equal to current emissions from U.S. agriculture—if trees were restored to ecologically suitable lands, primarily in rural areas (Mulligan et al. 2020). Rural areas are also crucial for clean energy development: 99 percent of all onshore wind capacity in the country is located in rural areas, as is the majority of utility-scale solar capacity (Seigner et al. 2021). Rural communities are, therefore, essential to building robust, equitable, and durable climate policies that harness the power of rural America to address climate change.

This paper aims to support rural-centric climate policy discussions by evaluating the potential economic benefits of federal investment in rural America, including benefits that accrue specifically to economically disadvantaged rural communities.

1.1 Declining Economic Opportunities in Rural America

While urban areas are not uniformly prosperous and rural areas are not uniformly poor, rural America as a whole has been slipping behind its urban counterpart for several decades on metrics including income, educational attainment, access to infrastructure, and job growth (Figure 1). As the United States has urbanized, young people and money have flowed to urban areas, where jobs and educational opportunities tend to exist, while the rural workforce has grown older and less able to access lucrative jobs (Andrews and Reiblich 2020). Simultaneously, traditionally rural industries like farming, mining, and manufacturing have seen workforces shrink due to mechanization and globalization. Boom-and-bust cycles and the transition toward low-carbon energy production have also left rural fossil fuel workers and communities with shrinking economic opportunities (Kopparam 2020). The closure of coal-fired power plants, for instance, has adversely impacted local communities, many of which are in rural areas, that rely on coal plants for tax revenues and jobs (Morris et al. 2019). Adding to economic pain, rural wages have stagnated for the past 50 years across all skill levels and demographics (Ziliak 2019).

Rural households, and particularly low-income households, have higher energy costs, but many cannot afford to invest in energy efficiency upgrades such as weatherization or efficient appliances that can bring savings. Rural households have a median energy burden—percentage of income spent on energy—of 4.4 percent, compared with 3.3 percent for urban households, and low-income households face energy burdens almost three times greater than high-income households (Ross et al. 2018). Electric cooperatives, which serve much of rural America, are often strapped for cash, hindering investment in clean energy programs that can benefit their communities.

In addition, climate change has already begun to affect rural livelihoods. Changing precipitation and temperature patterns are impacting crop growth and distribution of timber species, and these effects are projected to only increase. For rural areas dependent on recreation and tourism, climate change impacts like unpredictable snowfall and sea-level rise harm the resources and activities that draw visitors to the area (Hales et al. 2014). The devastating 2020 wildfire season in the western United States emphasized the increased threat of wildfire that accompanies a hotter, drier climate and endangers rural forest-adjacent communities.

Due in part to existing vulnerabilities, the COVID-19 pandemic has been particularly injurious for the economic health of rural areas. When the pandemic hit in 2020, rural employment had not yet fully recovered from the 2008–09 Great Recession, while urban areas had experienced a 9 percent growth relative to pre-recession levels (Kopparam 2020). The slowdown in economic activity hit some rural areas severely given their higher reliance on industries such as farming, mining, food processing, and tourism, which are highly susceptible to pandemic-induced closures (Mueller et al. 2021). The pandemic has also hit rural communities disproportionately hard in key clean energy employment sectors including efficiency and renewable energy generation, with rural counties shedding more jobs as a share of total employment relative to their urban counterparts (Saha and Cyrs 2021).

Federal support for economic recovery in these communities is now a top priority, especially where these investments can simultaneously address the threat of climate change. Since rural areas tend to have higher poverty rates, have fewer employment opportunities, and be more susceptible to labor market shocks compared with urban areas, federal recovery policies should be designed to address rural communities’ specific challenges and opportunities (Mueller et al. 2021). With state and local governments in many cases experiencing economic shocks in the wake of the pandemic and being forced to cut spending, a failure by the federal government to deliver substantial support to rural communities either directly or through subnational governments risks delaying economic recovery for years to come.

1.1 New Climate Economy Opportunities in Rural America

Investments in the new climate economy are both environmentally and economically sound prospects, with the potential to stimulate job growth and pave the way for long-term economic recovery from the COVID-19 pandemic (Saha and Jaeger 2020; E2 2020). Already, clean energy jobs make up a significant share of total employment in many rural communities (Figure 2), and this trend can be dramatically reinforced and expanded upon during the current decade. By one estimate, 600 gigawatts (GW) of new wind and solar projects projected to be built between 2020 and 2030 could generate US$220 billion in economic benefits, primarily in rural areas, which host 99 percent of onshore wind and a growing share of utility-scale solar projects (Seigner 2021). Energy efficiency improvements can reduce rural households’ energy burdens by 25 percent, representing more than $400 in annual household savings (Ross et al. 2018). Restoration of trees and other natural ecosystems, which are concentrated in rural areas, generated $9.5 billion annually in direct output and an additional $15 billion in indirect spending prior to the pandemic (BenDor et al. 2015).

Clean energy occupations pay higher wages and pose lower formal educational barriers to entry than most jobs nationwide, offering an inclusive economic opportunity for rural workers (Muro et al. 2019). However, not all clean energy jobs offer higher pay or are more unionized than fossil fuel jobs, so policies must ensure a fair transition for fossil fuel workers and communities adversely impacted by the shift to a low-carbon economy.

Taken together, federal investment opportunities analyzed in this paper can make a meaningful contribution to addressing rural economic distress and the climate crisis. The investments considered here, however, will likely not be sufficient on their own to recruit and train the workforce necessary to implement new climate economy pathways. The policies recommended here will also need to include mechanisms to ensure that jobs created provide minimal barriers to entry, are well-paid, offer opportunities for stable employment and benefits, and support unionization. These components will help ensure that the new climate economy will not just create jobs, but sustain worker and community well-being and create equitable opportunities for all.

This assessment quantifies the potential economic benefits of federal investments in seven areas of the new climate economy in rural counties. We evaluated and identified opportunities with significant climate benefits and job creation potential, and then determined investment levels required to scale up or expand each opportunity in rural counties. For opportunities in the energy sector, we modeled the economic impacts from an illustrative portfolio of renewable energy, energy efficiency, and transmission, distribution, and storage (TDS) policies and programs. We determined investment needs based on a review of historical funding for existing policies and additional funding needs derived from expert consultation and proposed legislation. We also estimated the leverage effect of federal investment in renewable energy, energy efficiency, and TDS scenarios, and the model includes assumed additional state, local government, and private sector spending. It is important to note though that our leverage assumptions are very conservative and the economic impacts for the three energy sectors result primarily from federal investment. For full detail on the investment level and leverage assumed for each program and policy contained in renewable energy, energy efficiency, and TDS analyses, refer to Appendix J.

The investment needs associated with environmental remediation for abandoned fossil fuel infrastructure are based on total cost of remediation and restoration activities as opposed to specific policies. For full detail on the investment level assumed for orphaned oil and gas wells and abandoned coal mines, refer to Appendix J.

For opportunities in the land sector, we estimated investment needs based on the total cost of achieving desired results across ecologically suitable areas without displacing food or fiber production, rather than basing inputs on specific policies. This analysis derived modeling inputs from county-level data on acreage of opportunity for each land sector pathway; and average cost of implementation per acre. Restocking opportunities were considered only in eastern states with low risk of wildfire and without the concerns of excessive fuel loads that are present in western forests. For more information on methodologies for deriving opportunity acreage and cost, see Appendix K.

Table 1 summarizes the federal investment amounts in the seven areas of the new climate economy, including the assumed rural shares.

Subsequently, BW Research, commissioned by World Resources Institute, used the Economic Impact Analysis for Planning (IMPLAN) input-output economic model to estimate the direct, indirect, and induced effects on jobs; economic value added; employee compensation (e.g., wages, salaries); and local, state, and federal taxes generated nationally and in rural counties. See the glossary for definitions.

We estimate economic impacts in the energy sector for the first five years of robust federal clean energy spending while those in the land sector are distributed over 20 years. This longer time horizon for investment in tree restoration and wildfire mitigation reflects the need for long-term forest management to ensure forest health and tree survival for reforestation and restocking projects, and adequate mitigation of wildfire risk.

We assumed that for each of the seven investment areas, a certain share of the modeled federal investment went to rural counties. We determined this based on a number of factors including existing clean energy county-level labor trends, historical geographic funding patterns, and the geography of a given sector (e.g., location of abandoned coal mines, documented orphan oil and gas wells, or federal forests). For programs targeting rural areas specifically, we allocated the entire federal investment to rural counties in the state. Finally, for the renewable energy, energy efficiency, and TDS sectors only, we made an additional assumption that at least 15 percent of modeled investment would flow to rural counties. We used 15 percent as a modeling construct for the minimum share going to rural areas. This assumption is intended to illustrate the potential if federal investments were allocated to rural areas at a more equitable level; however, it is likely that targeted complementary policies would be required to ensure that funding actually reaches certain regions. At the same time, a rural allocation of funds could be even higher than this minimum share, driven by policy goals to advance racial and economic equity within rural areas and between rural and urban areas. A more detailed description of these methodologies can be found in Appendix J.

To assess the impact of new climate economy investments on economically disadvantaged rural communities, we used the Economic Innovation Group’s Distressed Communities Index (DCI), which uses aggregated employment and wealth metrics to identify economically disadvantaged rural counties (Figure 3). DCI sorts U.S. counties into five quintiles using seven metrics: poverty rate, percent of adults that have not graduated high school, percent of unoccupied housing units controlled for vacation homes, median household income, change in number of employees working in the county from 2014 to 2018, change in number of establishments located in the county from 2014 to 2018, and percent of adults ages 25–54 that are not in the workforce. In this paper, we focus on rural counties in the fourth (at-risk counties) and fifth (distressed counties) quintiles of the DCI to highlight the economic impacts of federal investment on those rural counties. The DCI, and by extension this paper, does not include components for race and public health associated with pollution. Further research should investigate the potential impact of investment on communities and workers of color as well as environmental justice communities.¹

Our analysis primarily examines benefits from federal investments in rural areas and our leverage assumptions for private sector investment are conservative. In reality, though, any of the investment areas we analyzed, including renewable energy and TDS, also experience high levels of private investment. For those, our results may represent only a portion of the job creation and economic benefits that can be realized in the coming years. Despite this, federal investments have a major role to play in catalyzing economic growth and creating rural jobs for all sectors in the new climate economy.

An annual federal investment of $55 billion in the seven areas of the new climate economy in the first five years, with $14.9 billion directed to rural counties, would create nearly 260,000 direct, indirect, and induced jobs in rural communities that would last for at least five years (a total of 1.3 million job-years) and 740,000 jobs across the United States (a total of 3.7 million job-years).² This investment translates to 17.5 jobs created per $1 million invested in rural counties, compared with 13.5 jobs created per $1 million nationally.

This level of investment would also lead to $21.7 billion in value added or increased gross domestic product (GDP) per year for rural economies, representing $1.46 for every dollar invested. This includes $12.9 billion in employee compensation and $1.6 billion in tax revenues (see Table 2). Nationally, the added value from these investments would total $72.2 billion annually—$1.31 per dollar spent. Table 3 shows the distribution of economic benefits across the seven investment areas in the new climate economy.

In terms of annual job creation, we estimate that California, Texas, New Mexico, Missouri, and Wyoming would see the greatest benefit in absolute terms in their rural counties (Figure 4). California and Texas would see significant job gains in part due to the current size of their clean energy workforces, which we used as one of the modeling assumptions to allocate economic impacts across states. While California sees more than half of this job gain from investment in wildfire risk management, federal investments in renewable energy and transmission, distribution, and storage sectors contribute to more than 60 percent of Texas’s job creation. Investment in wildfire risk management also comprises a significant share of New Mexico’s and Wyoming’s total job creation potentials. When looking at the results on a normalized basis (rural jobs created as a share of total employment), California, New Mexico, and Wyoming are still in the top five states, but Massachusetts and Nevada also emerge as leaders (Figure 5). Investments in transmission, distribution, and storage drive job creation in both these states.

Table 3 | Rural Economic Impacts by Investment Area (Each Year for First Five Years)

Source: WRI authors and BW Research.

The following sections outline the economic benefits from seven areas for federal investment and offer recommendations for policy vehicles to convey investment to rural communities.

4.1 Renewable Energy

The Issue

Over the last decade, investment in renewable electricity technologies has risen thanks to reduced technology costs coupled with state and federal policy incentives. Since 2010, cumulative installed renewable capacity has more than doubled, and renewables now make up approximately 20 percent of total electricity generation (EIA 2020a; BNEF 2021). Investment in renewable energy exceeded $60 billion in 2019, with most accruing to wind and solar (BNEF 2021).

Despite the encouraging growth, renewable energy has not been immune to recent pandemic-induced shocks, with total investments falling by $7 billion in 2020 (BNEF 2021). This decline poses a challenge to meeting ambitious climate goals. Annual renewable capacity additions must double in the coming years—from 33 GW in 2020 to upwards of 60 GW over the next decade—and maintain this growth rate to be on pace for 90 percent clean electricity by 2035 (UCB 2020a).

Renewable energy can drive job growth and economic benefits in rural communities, as exemplified in Box 2. From 2017 to 2019, renewable energy jobs in rural counties grew by 20 percent, adding roughly 10,000 new jobs and accounting for the majority of employment growth in the sector nationwide (Saha and Cyrs 2021). At the same time, the renewable energy sector still represents a smaller share of total employment in rural counties than it does in urban ones, and this trend has been exacerbated by recent economic shocks.

The Rural Economic Opportunity

We examine the impact of $18.8 billion in federal investment per year over the next five years in renewable energy, based on opportunities to extend existing federal policies and accelerate technology deployment. Of this, $3.8 billion would flow directly to rural communities.

This level of federal investment would support nearly 32,000 direct, indirect, and induced jobs that would last for at least five years (160,000 job-years) in rural communities. The majority of these jobs would be in construction, manufacturing, and professional, scientific, and technical services industries. This level of federal investment would also add $3.4 billion in annual value to rural economies for five years including $1.7 billion in annual employee compensation and $536 million in local, state, and federal taxes (Table 4). States seeing the most significant economic benefits in rural areas would include Texas, California, Illinois, Iowa, and Colorado, which together would account for over a third of total job creation. On a normalized basis (jobs created as a share of total employment), Massachusetts, California, Nevada, Maryland, and Illinois rank among the top five states (Figure 6). Note: For detailed outputs by state, see Appendix B.

The Federal Policy Opportunity

Federal investments could be channeled through a combination of well-established policy vehicles, with renewed and/or enhanced incentive structures relative to recent years. These include tax incentives for manufacturing, deployment, and generation as well as targeted grant and loan financing for rural communities.

Figure 7 | Illustration of Federal Energy Efficiency Investment and Associated Benefits for Rural Areas

Note: USDA RESP = U.S. Department of Agriculture Rural Energy Savings Program; co-op = cooperative; HVAC = heating, ventilation, and air conditioning.

Specific policies that can play a role in accelerating renewable energy in rural America include the following:

• Extending the federal investment tax credit (ITC) of 30 percent for offshore wind, solar, and other renewables
• Extending the federal production tax credit for wind and other renewables
• Renewing the advanced manufacturing tax credit (tax code section 48C) for 30 percent of investments in facilities that produce clean energy products including renewable energy generation technologies and their components
• Expanding grant and loan programs targeted at rural communities, including the USDA Rural Energy for America Program (REAP) program³

To ensure that underserved communities are at the fore of federal investment strategies and that benefits accrue equitably, states, local governments, and other key implementing partners can adopt complementary provisions. Such measures can include requirements that a certain share of funding is allocated to economically disadvantaged communities, sales tax exemptions for projects that use community workforce agreements and/or prioritize hiring from economically disadvantaged communities, and other incentives.

4.2 Energy Efficiency

The Issue

Investing in energy efficiency remains one of the most reliable strategies for lowering emissions in the United States and will be vital for decarbonization moving forward. Energy efficiency measures alone can cut U.S. energy use and GHG emissions in half by 2050, with efficiency measures for buildings and industry in particular comprising roughly 60 percent of this potential (Nadel and Ungar 2019).

Despite the vital importance of energy efficiency investment, rural communities often face persistent underinvestment in energy efficiency relative to their urban counterparts. Rural households across the country have a disproportionately high energy burden, due to interrelated factors including low population density, lack of local capacity from energy services contractors, and the limited financial capacity of rural electric cooperatives (Shoemaker et al. 2018).

Investment in energy efficiency is also lagging. Prior to the COVID-19 pandemic, energy efficiency spending in the United States had stagnated, and investment in energy efficiency is estimated to have fallen globally by 9 percent in 2020 (EIA 2020b; IEA 2020). In recent years, annual U.S. spending on efficiency has been estimated at $60–115 billion (Nadel 2017). However, significant, far greater potential is both achievable and necessary to reach ambitious climate commitments and bolster economic growth.

The Rural Economic Opportunity

We examined the impact of $8.3 billion in federal investment per year over the next five years in energy efficiency upgrades for homes, commercial buildings, industrial facilities, and farms across the country. Of this total, an estimated $2.1 billion would flow directly to rural counties. Figure 7 illustrates an example of how such efficiency investments can flow to rural areas, generating jobs, value added, and other local or regional benefits, and a more detailed case study is provided in Box 3.

This level of federal investment would support approximately 30,000 direct, indirect, and induced jobs annually in rural counties, including in the energy services, construction, and engineering sectors, that would last for at least five years (150,000 job-years). Rural economies would also accrue $2.9 billion in annual value added for five years, including $1.6 billion in annual employee compensation and $162 million in local, state, and federal taxes (Table 5). States that would see the most significant job creation benefits include California, Texas, Ohio, North Carolina, and Michigan, accounting for over a quarter of rural jobs added. On a normalized basis (jobs created as a share of total employment), Massachusetts, Maryland, California, Connecticut, and Vermont would stand to gain the most (Figure 8). Note: For detailed outputs by state, see Appendix C.

The Federal Policy Opportunity

These economic benefits can be achieved through a combination of targeted tax incentives and block grant programs. In many cases, such programs are well established and received appropriations following the 2009 financial crisis comparable to those envisioned in this analysis.

Specific energy efficiency policies that could provide economic benefits to rural communities include the following:

• Extending and enhancing incentives for efficiency upgrades in homes and residential buildings, including the existing homes tax credit (tax code section 25C) and new homes tax credit (sec. 45L)
• Enhancing tax incentives for efficiency upgrades in new and existing commercial buildings (sec. 179D)
• Expanding efficiency block grant programs that channel money directly to state and local agencies for targeted upgrades, including the Weatherization Assistance Program (WAP), State Energy Program (SEP), and Energy Efficiency Conservation Block Grants program
• Establishing a comparable block grant program for industrial facilities
• Expanding grant and loan programs targeted at rural communities in particular, including USDA REAP, the Energy Efficiency Conservation Loan Program, and the Rural Energy Savings Program

To ensure that these investments achieve tangible results in rural communities, complementary policies at the federal, state, and local levels may also be required. Historically, rural communities have tended to benefit less from energy efficiency measures than their urban counterparts, in part due to a lack of on-the-ground contractors and the added cost of making upgrades in remote areas (Shoemaker et al. 2018). Greater investment in job training and capacity building is therefore required as a complement to the above programs and policies.

4.3 Transmission, Distribution, and Storage

The Issue

The aging and fragmented electric transmission and distribution grid in the United States has suffered from decades of underinvestment, creating an opportunity for new investments that not only address safety and reliability concerns but also pave the way for the integration of next-generation clean technologies. Grid modernization will enable the integration of increasing levels of renewable generation capacity, optimization of supply and demand across long distances, and management of heightened demand from electric vehicles and appliances, all of which will be vital to addressing climate change. These investments can create major economic opportunities, including in rural communities. Transmission facilities obtain 82 percent of construction services, materials, and equipment domestically, creating U.S. manufacturing and construction jobs (WIRES 2011).

Expanded transmission is critical to any plans to decarbonize the power sector, with one analysis finding that transmission infrastructure would have to be doubled to decarbonize the power sector in a cost-effective manner (Brown and Botterud 2021). Fortunately, studies find that investing in grid modernization would be both economically and technologically feasible, effectively paying for itself many times over given the numerous co-benefits (UCB 2020b). Box 4 describes the economic benefits to four Midwest states from a recently approved transmission line, highlighting just one promising case.

The Rural Economic Opportunity

We examined the impact of $19.6 billion in federal investment in the transmission, distribution, and storage sector per year over a five-year period, with approximately $3.4 billion flowing directly to rural communities.

The construction, engineering, and financing associated with this investment would create nearly 50,000 rural jobs each year that would last for at least five years (250,000 job-years). The investment would also yield $5.8 billion in value added for rural economies each year for five years, including $3.1 billion in employee compensation and $362 million in tax revenues (see Table 6). California, Texas, Tennessee, Nevada, and Florida would account for over one-third of rural jobs supported. On a normalized basis (jobs created as a share of total employment), Massachusetts, Nevada, California, Maryland, and Arizona would see the most job gains from federal investment in TDS (Figure 9). Note: For detailed outputs by state, see Appendix D.

The Federal Policy Opportunity

These economic benefits can be achieved through a combination of targeted tax credits and grant, loan, and loan guarantee programs. These mechanisms can be deployed in tandem to accelerate and unlock private investment for emerging technologies.

Specific policies that together can catalyze needed investments include the following:

• Offering tax credits to incentivize transmission projects that are regionally significant and enable renewable energy integration; stand-alone energy storage technologies; and domestic clean energy manufacturing facilities (tax code sec. 48C)
• Reauthorizing the Department of Energy’s Smart Grid Investment Grant program to promote investments in smart grid technologies
• Authorizing the Department of Transportation to make transmission infrastructure projects, especially those that emphasize the integration of renewable energy, eligible under the Transportation Infrastructure Finance and Innovation Act loan guarantee program
• Providing loans and loan guarantees through the USDA Electric Infrastructure Loan & Loan Guarantee program to help finance transmission and distribution systems in rural areas
• Providing grants and technical assistance to rural electric cooperatives to deploy energy storage and microgrid technologies

While many policies mentioned above would apply to the whole country, some specifically target rural areas. USDA’s Electric Program, for instance, provides loans and loan guarantees to maintain, upgrade, and expand rural energy infrastructure, including investments in smart grid technologies that can catalyze broadband services in underserved rural communities. Electric cooperatives, which provide electricity to most rural customers, are one of the main beneficiaries of these federal programs. Federal funding can further help electric cooperatives improve energy grid capacity and resiliency by investing in energy storage and microgrid projects. Moreover, federal investment including tax credits to incentivize the construction of transmission projects should be accompanied with policies that address current challenges around siting, permitting, and allocating costs for new projects.

4.4 Environmental Remediation of Abandoned Fossil Fuel Infrastructure

The Issue

The production and use of fossil fuels have economically powered communities across the United States for generations. At the same time, the mining, drilling, and burning of fossil fuels have exacted an enormous toll on the environment and public health. Abandoned coal mines, where mining-related structures, equipment, and waste have been left behind in disuse and disrepair, exist in many rural parts of the country and adversely impact local ecosystems in addition to emitting methane. Orphaned oil and gas wells—i.e., wells that no longer have a solvent or known owner to pay plugging costs—also emit methane, harming the health of surrounding communities and contributing to climate change. Studies find that orphaned, unplugged wells emit anywhere between 0.03 to 0.19 metric tons (mt) of methane per well (Raimi et al. 2020), with a corresponding range in total emissions of 64,000 to 404,000 mt for the estimated 2.1 million orphan wells in the United States.

Federal investment in environmental remediation programs can provide near-term job opportunities to clean up polluted sites as well as create additional jobs if those sites are converted to other productive uses such as developing solar energy on former mine lands. In many cases, these sites are in rural communities with ties to oil, gas, and coal production, thus providing opportunities to support communities adversely impacted by declining production. Cleaning up coal mines, for instance, can employ former miners who already have the required skills or can be quickly trained for these positions. Similarly, there is significant overlap in skills required for plugging wells and those used in oil and gas extraction.

The Rural Economic Opportunity

This analysis examines the impact of a total federal investment of $2.4 billion for plugging and environmental remediation of over 60,000 documented orphaned oil and gas wells and cleaning up over 2,000 abandoned coal mines per year over five years. Of this, $1.3 billion would go to rural areas, representing a significant down payment toward creating economic opportunities for fossil fuel–dependent regions impacted by the transition to a low-carbon economy. Figure 10 illustrates an example of how such investments can flow to rural areas, generating jobs, value added, and other local or regional benefits.

Figure 10 | Illustration of Investments in Orphaned Oil and Gas Well Remediation and Associated Benefits for Rural Areas

We estimate that this rural investment would support 14,620 direct, indirect, and induced jobs each year that would last for at least five years (73,100 job-years). The investment would also lead to $1,997 million in value added to rural economies each year for five years, including $952 million in employee compensation and $164 million in tax revenues (Table 7). Rural counties in Pennsylvania, Kentucky, Kansas, West Virginia, and Texas would account for nearly three-quarters of jobs supported. On a normalized basis (jobs created as a share of total employment), rural counties in Pennsylvania, Kansas, West Virginia, Kentucky, and Wyoming would benefit the most from federal investment in environmental remediation of orphaned oil and gas wells and abandoned coal mines (Figure 11). Note: For detailed outputs by state, see Appendix E.

The Federal Policy Opportunity

The federal government has historically played a large role in the cleanup and remediation of polluted sites, especially those located in low-income and minority communities. The following federal investments in environmental remediation of abandoned mines and wells can significantly reduce pollution in rural communities:

• Increasing federal funding to clean up abandoned coal mine sites, potentially through the federal Abandoned Mine Land program
• Creating a new federal program to plug and remediate documented orphaned oil and gas well sites

Large-scale remediation programs for orphaned and abandoned sites as envisioned in this report require public funding, in large part because such sites no longer have solvent owners. However, federal investment should be paired with policy reforms that ensure that fossil fuel companies, rather than taxpayers, are responsible for cleaning up polluted sites moving forward. Though states require oil and gas companies to set aside money to plug wells and restore sites once production ends, the amount required from them is nowhere close to the actual plugging and remediation costs (Bordoff et al. 2020). State and federal agencies can collaborate to ensure that bonding requirements and other mechanisms are strengthened. Federal grants to states can also be tied to requirements that states update their regulations to reflect true costs, thereby reducing the risks of creating a new generation of orphaned wells.

Furthermore, the scale and pace of federal investment should account for the current administrative capacity of state programs to channel federal dollars into remediation projects. To that end, a portion of federal funding could be targeted toward state regulatory agencies, improving their capacity to administer large-scale programs.

Finally, Congress and implementing state agencies can incorporate provisions to ensure that investments are accompanied with strong labor standards, including a prevailing wage guarantee, “local hire” directives, and preference given to laid-off fossil fuel workers in the region. These provisions can heighten the benefits of federal investments in rural communities, which host a disproportionate share of abandoned fossil fuel sites.

4.5 Tree Restoration on Federal Lands

The Issue

Federal lands are critical to the economies of many U.S. rural communities: Rural counties in the western United States with large shares of federal land have experienced significantly higher rates of growth in employment, income, and population in recent decades compared with rural counties with smaller shares (Lawson 2017). Federal lands are also critical for emissions mitigation: Federal forests store 63 gigatons of carbon dioxide equivalent (GtCO2e)—an amount that exceeds cumulative U.S. net emissions over the last decade—and more carbon per acre than privately owned forests (Smith et al. 2019).

But federal lands can do even more to contribute to rural economies and carbon removal. Increasing rates of disturbance due to wildfire, pests, and disease have left large areas of federal forest land degraded or barren, sequestering carbon at lower rates than it otherwise could (Domke et al. 2020). Current funding for restoration programs within the U.S. Forest Service (USFS) and other land management agencies is woefully insufficient to meet the need for reforestation and restocking on federal lands, resulting in a growing backlog of projects (Wagner 2014). Disturbed and unhealthy forests also provide inferior opportunities for recreation, causing a drag on neighboring rural economies (Rosenberger et al. 2012; Arnberger et al. 2018).

Due to overstocking and a subsequently high risk of catastrophic wildfires in many western federal forests, this analysis considers restocking opportunities only in eastern states; however, this analysis does include reforestation opportunities in western states where forests and corresponding carbon stocks have been lost due to fire and pathogens. Eighteen million acres of federal land are suitable for reforestation or restocking (Cook-Patton et al. 2020; USFS 2021; Sohngen 2018).⁴ Collectively, these lands could sequester an additional 17 metric tons of carbon dioxide equivalent (MtCO2e) per year by 2030, and up to 35 MtCO2e per year in 2040 and beyond (Cook-Patton et al. 2020; Mulligan et al. 2020).⁵

The Rural Economic Opportunity

Such a wide-scale effort to restore trees on federal lands would require a concerted and sustained national investment. This analysis considers a national investment of $445 million annually over 20 years, of which $350 million would flow to rural areas (see Appendix K). This investment in rural America would support 9,300 direct, indirect, and induced jobs annually that would last for 20 years (186,000 job-years). These jobs would provide $474 million in annual value added to rural economies, including $330 million in employee compensation and $12 million in tax revenues (Table 8). Figure 12 illustrates an example of how such investments would flow to rural areas, generating jobs, value added, and other local or regional benefits.

Figure 12 | Illustration of Investments in Tree Restoration via the Restoration Trust Fund and Associated Benefits to Rural Areas

Over 70 percent of rural jobs would be created in the Intermountain West region, which includes the top five states for job creation. Utah stands to benefit the most, with a total potential of 1,500 jobs each year for 20 years. On a normalized basis (jobs created as a share of total employment), Utah, Colorado, Wyoming, Idaho, and New Mexico have the highest levels of job creation (Figure 13). Note: For a full table of all state-level impacts, see Appendix G.

The Federal Policy Opportunity

Congress can provide sufficient funding to federal agencies to accelerate tree restoration on federal lands. Actions that could contribute toward this objective include increasing appropriations for USFS programs that can help restock federal forests affected by pests, diseases, or other disturbances, including the Forest Health Monitoring Program, Vegetation and Watershed Management Program, and Collaborative Forest Landscape Restoration Program.

Actions could also include increasing appropriations for programs that support tree restoration on lands managed by other federal agencies, including the Bureau of Land Management (BLM), U.S. Fish and Wildlife Service (USFWS), and Department of Defense. Federal funding can also attract matching funds from state and local governments, civil society, and the private sector, augmenting its benefits for rural economies and climate change. However, funding for federal lands can be deployed only at the rate that federal agencies can design, review, and permit projects. Increasing agency capacity to conduct these project planning activities is therefore critical to scaling up tree restoration on federal lands.

In addition to increased program funding and agency capacity, forest restoration on federal lands will require an expanded workforce to plan, implement, and monitor projects. Developing and training this workforce and ensuring that high-quality, well-paid jobs are created will require additional investment beyond what we consider here. Providing funding for jobs through the proposed Civilian Climate Corps could alleviate this potential labor bottleneck and set standards for job quality.

4.6 Tree Restoration on Non-federal Lands

The Issue

Opportunities for tree restoration on non-federal lands cover 296.2 million acres and offer the potential to remove 156 MtCO2e per year by 2030, and up to 312 MtCO2e per year in 2040 and beyond—greater than any other near-term strategy for carbon removal (Cook-Patton et al. 2020; Sohngen 2018; USFS 2021; Fargione et al. 2018; Mulligan et al. 2020).⁶ More than two-thirds of the nation’s forest area are located on non-federal lands, including land owned by state and local governments and an estimated 11 million private forest landowners (Oswalt et al. 2014). Non-federal forests produce over 90 percent of U.S. timber supply and other forest products while storing 130 GtCO2e (Oswalt et al. 2014; Smith et al. 2019). Those forests are an important economic driver for many rural communities: Private forests contribute over 5 percent of national manufacturing GDP (Forest2Market 2019), while recreation and other ecosystem services provide additional economic value.

Even beyond forests, trees can be an important contributor to rural economies. Silvopasture systems can diversify income streams for producers, increase livestock productivity by reducing heat stress, and build land value (Grado and Husak 2004; Mayerfeld et al. 2016). Cropland agroforestry systems generate on-farm income from a secondary crop like timber, fruit, or nuts while benefiting the primary crop by reducing soil erosion and enhancing soil fertility (Schoeneberger et al. 2012).

Restoring trees on private, state, and other non-federal public lands can create new jobs in rural forest and agricultural communities while enhancing the capacity of forests to reduce emissions. Because of the high labor inputs and relatively low capital requirements for tree restoration projects, investments in tree restoration tend to generate more jobs than comparable investments in other economic sectors (Pollin and Chakraborty 2020).

The Rural Economic Opportunity

This analysis examines a federal investment of $4.3 billion per year over 20 years, of which $2.8 billion would flow to rural areas. That investment would create 76,200 direct, indirect, and induced jobs that would last for 20 years (a total of 1.5 million job-years), of which 44,000 jobs would be attributable to reforestation and restocking projects and 32,200 would be attributable to silvopasture and cropland agroforestry. This investment would add $3.9 billion annually to rural economies, including $2.7 billion in employee compensation and $212 million in tax revenues (Table 9). Figure 14 illustrates an example of how such investments would flow to rural areas, generating jobs, value added, and other local or regional benefits.

Figure 14 | Illustration of Investments in Tree Restoration via USDA Conservation Programs and Associated Benefits to Rural Areas

Note: USDA = U.S. Department of Agriculture; EQIP = Environmental Quality Incentives Program; CRP = Conservation Reserve Program.

Rural jobs created by restoring trees on non-federal lands are concentrated in the Midwest, which would account for more than one in three jobs created. The top five states for rural job creation would be Missouri, Ohio, South Dakota, Michigan, and Wisconsin. On a normalized basis (jobs created as a share of total employment), states with the greatest job creation would include Missouri, South Dakota, North Dakota, Montana, and Maine (Figure 15). Note: For a full table of state-level economic impacts, see Appendix H.

The Federal Policy Opportunity

Federal incentives for planting and maintaining trees on non-federal lands in ways that are ecologically appropriate, increase forest resiliency, and sequester carbon will be critical to creating rural jobs and realizing economic benefits. A federal incentive program could take the form of a tax credit or landowner payments for tree restoration. While these policy mechanisms target the same objectives, there are important trade-offs in how they would function (see Table 10).

A tax credit approach could be modeled off the existing 45Q tax credit for carbon capture, utilization, and storage, but with a focus on natural carbon capture. Making the tax credit refundable or transferable would facilitate participation by all eligible landowners, regardless of their tax liability.

Direct payments could come through expansion of existing USDA conservation programs such as the Environmental Quality Incentives Program and the Conservation Reserve Program, with additional guidance to prioritize forest restoration projects in application review processes as well as guidance regarding carbon credit allocations.

Under either a tax credit or direct payment program, expanding eligibility to third-party intermediaries that contract with landowners to implement tree restoration projects could facilitate scale-up by reducing transaction costs and leveraging private finance (Mulligan et al. 2020).

Additional federal funding would also be needed to accelerate reforestation, restocking, and agroforestry restoration on state- and locally owned lands as well as private lands that cannot take advantage of tax credits or USDA programs. The USFS could funnel additional funding to tree restoration projects through the Forest Stewardship Program, the Forest Health Management Program on Cooperative Lands, and the Urban and Community Forestry Program.

Importantly, the investments and policy levers contemplated here do not include necessary investments upstream in the supply chain for rural tree restoration efforts, such as expanding the national nursery capacity or building and supporting a sufficient workforce to implement tree restoration projects at an accelerated pace and scale. Current legislative proposals to increase funding for federal nurseries and fund the Civilian Climate Corps proposed by President Biden can begin to address these needs. These investments also do not address the need for long-term, ecologically informed forest management to support carbon storage and climate resilience into the future. State- and local-level programs to incentivize and support forest stewardship and maintenance of forest cover will be necessary to complement federal investment.

4.7 Wildfire Risk Mitigation

The Issue

Many forests in the United States, particularly in western states, are facing the risk of large and intense wildfires that threaten ecosystems and communities. Historical wildfire suppression has created unnaturally high tree densities and abundant brushy vegetation that can fuel high-severity fires (Steel et al. 2015). Additionally, the effects of climate change are already increasing fire incidence and intensity as hotter, drier summers become the norm and chronically drought-stressed trees succumb to insect infestations, creating additional fuel for fires (McKenzie et al. 2011; van Mantgem et al. 2013).

In 2020, the USFS and Department of the Interior (DOI) spent $2.3 billion fighting wildfires, and this yearly cost is likely to increase as the effects of climate change intensify (NIFC 2020). There is evidence, however, that federal investment in prescribed burning and removal of small-diameter trees could help decrease the size and intensity of wildfires while improving forest health and decreasing fire suppression costs (North et al. 2015; Snider et al. 2006). This investment could also support rural forestry jobs, stimulate rural economies, and decrease fire risk for communities living adjacent to forests.

Prescribed burning and biomass removal could also offer climate benefits by reducing the risk of high-intensity fires that contribute to emissions and decrease forest carbon storage. Prescribed burning alone could reduce wildfire carbon emissions in the western United States by 18–25 percent and could increase long-term forest carbon storage by 18 MtCO₂ per year through avoided tree mortality (Fargione et al. 2018; Wiedinmyer and Hurteau 2010).

There are 57.4 million acres of forest considered to be at a high or very high risk of wildfire in the United States, of which 33.2 million acres are found in rural counties (Dillon and Gilbertson-Day 2020). Deploying landscape-scale strategies to reduce wildfire risk can be resource- and time-intensive and requires participation from many stakeholders. Federal investment and policy support are required to employ these treatments at scale.

The Rural Economic Opportunity

This analysis contemplates a federal investment of $1.5 billion per year over 20 years, which would support prescribed burning and small-diameter tree thinning in federal, state, and private forests at high risk for wildfire. Over 70 percent of this investment, or $1.1 billion, would flow to rural counties. This investment, plus the downstream economic impact of generating products from small-diameter trees, would create 49,000 direct, indirect, and induced rural jobs that would last for 20 years (a total of 980,000 job-years). This would result in $3.3 billion in value added to rural economies, including $2.5 billion per year in employee compensation and $183 million in tax revenues (Table 11). Figure 16 illustrates an example of how such investments would flow to rural areas, generating jobs, value added, and other local or regional benefits.

Figure 16 | Illustration of Investment in Wildfire Risk Management and Associated Benefits to Rural Areas

Note: USDA = U.S. Department of Agriculture; EQIP = Environmental Quality Incentives Program; CRP = Conservation Reserve Program.

The majority of rural jobs created by federal investment in fuel load reduction occur in the western United States. The top five states for rural job creation (California, New Mexico, Wyoming, Idaho, and Oregon) account for more than 75 percent of all yearly job creation potential for the conterminous United States. California alone offers 25 percent of the job creation opportunity. On a normalized basis (jobs created as a share of total employment), states with the highest levels of job creation include California, New Mexico, Wyoming, Idaho, and Oregon (Figure 17). Note: For a full table of state-level impacts, see Appendix I.

The Federal Policy Opportunity

Meeting the need for large-scale fuel load reduction in U.S. forests will require federal investment in policy vehicles that help build long-term forest resilience while stimulating rural economies. To address underfunding for fuel treatment in federal agencies, Congress could increase funding to the USFS “Hazardous Fuels” budget and the DOI Office of Wildland Fire, which allots fuel management funds to the BLM, USFWS, National Park Service, and Bureau of Indian Affairs. An increase in program funding for the USFS State and Private Forestry division could also help accelerate fuel load reduction projects in non-federal forests. The USFS Collaborative Forest Landscape Restoration Program (CFLRP), for example, uses public-private partnerships to address fire risk and forest health at scale, but its yearly appropriations are mostly devoted to existing projects. CFLRP’s appropriations could be increased to support the development of new projects in areas in vital need of fuel load treatment. For an example of fuel treatment projects using existing federal funding, see Box 5.

Beyond the scope of existing federal programs, new policies could improve the longevity and effectiveness of fire risk mitigation initiatives while supporting community resiliency, innovation, and economic activity. Most USFS fuel treatment projects currently rely on yearly appropriations and, as a result, project terms are too short to make necessary impact and contractors cannot rely on ongoing funding. Improving mechanisms for financing federal fuel treatment, such as amending the USFS’s budgetary authority to allow for longer-term contracts and greater leveraging of private investment, would help build capacity to address wildfire risk at scale. Longer-term project funding would also help create fire risk management jobs that would have longer durations, which in turn could support the development and training of professionals specializing in biomass removal and prescribed burning. Even with increased investment in the programs described above, federal fuel treatment projects will require support from private finance and additional staff capacity through partnerships and contracting with state, nonprofit, and private entities.

Federal investment in the seven areas of the new climate economy could help create employment and increase economic activity in economically disadvantaged rural counties, helping to revitalize these areas while providing climate benefits. About 52 percent of all rural counties are economically disadvantaged, defined as “at risk” and “distressed” counties by the Economic Innovation Group’s DCI. In 2019, these economically disadvantaged rural counties accounted for 43 percent of all rural county employment.

The new climate economy opportunities described here could create over 118,000 jobs per year in these counties, resulting in over $9.8 billion added to these rural economies annually, including $5.9 billion in employee compensation and $685 million in total tax revenues (Table 12). Economically disadvantaged rural counties in California, Texas, New Mexico, Missouri, and Kentucky stand to benefit the most in terms of total jobs supported by federal investment in the seven focus areas of this analysis. While this job creation is significant, representing approximately 45 percent of job creation potential from investment in the seven areas of the new climate economy, more needs to be done to ensure economic benefits reach the areas where they are most needed.

The investment in the policies and opportunities modeled in this analysis represent only the first steps toward creating economic opportunities in economically disadvantaged rural counties. As suggested by the White House Environmental Justice Advisory Council (WHEJAC 2021), federal policies and initiatives will need to include measures specifically designed to ensure that investments and benefits reach these disadvantaged communities. This could include workforce training programs in the energy and land sectors with employment guarantees, measures to make clean energy affordable for low-income households, grant programs to support local businesses and nonprofit organizations, and requirements that new program designs be collaborative, inclusive, and accessible to all workers.

The U.S. pathway to a low-carbon future has gained significant momentum as the Biden administration and Congress resume work toward ambitious climate goals. This analysis shows that rural America stands to benefit significantly from federal investment in seven key areas of the new climate economy. Of a total of $55 billion in annual federal investment in the new climate economy, an estimated $14.9 billion flowing specifically to rural communities would create the following:

• Nearly 260,000 rural jobs that would last for at least five years (a total of 1.3 million job-years), spread across every region of the country
• $21.7 billion per year in value added to rural economies, including $12.9 billion in employee compensation and $1.6 billion in local, state, and federal tax revenues
• 118,500 rural jobs annually and added value of $9.8 billion per year specifically in economically disadvantaged communities
• Approximately 17.5 jobs and $1.5 million in value added in rural counties for every $1 million in federal investment

For the new climate economy to support economic growth and vitality across the United States, federal policymakers will need to ensure that national climate policies address the needs and priorities of rural communities as well as urban ones. These decisions will ultimately determine how fast clean industries grow and the extent to which the resulting economic benefits are well distributed. Federal policy proposals highlighted in our analysis provide a roadmap that can facilitate the development of thriving rural economies.

Our analysis focuses only on direct economic impacts, but these benefits will be further amplified by reductions in emissions that damage people’s health and contribute to climate change. Further research on the economic benefits of investments in the new climate economy in areas not covered in this paper—including electric vehicle manufacturing and infrastructure development, carbon removal infrastructure like carbon dioxide pipelines and geologic storage wells, and technologies to reduce greenhouse gas emissions from agricultural operations—could paint a more comprehensive picture of potential benefits accruing to rural America. Finally, deeper analysis of how federal policies can specifically target underserved rural communities and communities and workers of color is needed.

The new climate economy can help bridge the rural-urban divide by bringing economic opportunities to regions and communities eager for jobs and economic growth while helping the nation meet the ambitious decarbonization goals that can help unlock a prosperous future for all.

agroforestry: Agroforestry encompasses practices that combine agriculture and trees to produce benefits such as improved soil health, diversified farm revenue (USFS 2012), improved livestock health (NAC n.d.), improved water quality, and increased carbon sequestration (Montagnini and Nair 2004). Specific agroforestry practices include silvopasture, alley cropping, and windbreaks or riparian buffers.

direct effects: Direct effects represent the initial change in earnings or jobs created by new input activities in the initially changed industries. This is the first round of impacts. An example of a direct effect are the jobs created in the heating, ventilation, and air conditioning (HVAC) industry to make efficiency upgrades targeted by a federal program.

employee compensation: This is the total value of payroll and includes wages or salaries, additional benefits, and payroll taxes. Employee compensation is one of the four components of gross domestic product. The other elements are proprietor income, taxes on production and imports, and other property income.

indirect effects: Indirect effects are those throughout the supply chain resulting from the direct change. This is the second round of impacts. An example of an indirect effect are the jobs created at a high-efficiency boiler manufacturer when an HVAC installation firm purchases its products.

induced effects: Induced effects result from the new earnings created by the direct and indirect effects. These earnings are injected into the economy when workers spend their incomes on any kind of good or service in the region.

private financing: This refers to debt-leveraged funding from financial institutions. The money paid out by financial institutions creates the initial construction impacts.

reforestation: Reforestation describes the process of planting trees or naturally regenerating trees on previously forested land. Reforestation does not include replanting trees after they have been logged for commercial use.

renewable: A source of energy is renewable if it comes from natural sources or processes, like wind and solar, and is constantly replenished.

restocking: Restocking describes the practice of increasing the density of existing forests and/or replanting trees after they have been harvested. Restocking differs from reforestation in that restocking takes place in established forests to restore areas where trees have been lost due to disease, environmental factors, or harvesting.

rural counties: A county is defined as rural according to the U.S. Department of Agriculture 2013 Rural-Urban Continuum Codes. Rural counties fall on the spectrum of scores from 4 to 9.

taxes on production and imports (TOPI): These include the total value of sales, excise, property, and severance taxes; customs duties; motor vehicle licenses; and special assessments. Subsidies are subtracted. They do not include profit taxes. In some instances, TOPI are negative, implying that the value of subsidies is greater than the taxes generated by the industry.

total economic investment: The amount of money infused into the economy after private financing leverage and investments are considered.

tree restoration: Tree restoration describes a set of practices that restores healthy forests and tree cover to historically forested areas. These practices include reforestation and restocking degraded forests and establishing agroforestry systems (see above).

urban communities: A county is defined as urban according to the U.S. Department of Agriculture 2013 Rural-Urban Continuum Codes. Urban counties fall on the spectrum of scores from 1 to 3.

value added: This represents the difference between total output and the cost of intermediate inputs (consumption of goods and services purchased from other industries or imported). Value added is equivalent to an industry’s contribution to gross domestic product.

wildfire risk management: Wildfire risk management involves forest management strategies that mimic the effects of wildfire by thinning overstocked forests and/or using prescribed burns to reduce ground-level fuels. While fuel treatments such as thinning and prescribed burning do diminish carbon stored in forests, they are intended to prevent a far greater release of carbon from high-intensity conflagrations that kill all trees in a stand (Dore et al. 2010).

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We would like to thank those that provided valuable inputs, insights, and feedback for this paper, including Juan-Carlos Altamirano, James Barrett, Tyson Bertone-Riggs, Lori Bird, Christine Cadigan, Aimée Christensen, Susan Cook-Patton, Christina Deconcini, David Dreher, Margaret Farrell, Todd Gartner, Kareem Hammoud, Heidi Huber-Stearns, Joel Jaeger, Claire Jahns, Lesley Jantarasami, Keefe Keeley, James W. Kirby Jr., Zach Knight, Arjun Krishnaswami, Dan Lashof, Ruth McCormick, Kerry Metlen, Ugbaad Kosar, Jillian Neuberger, Luke Plant, Daniel Raimi, Martha Rogers, Andrew Sand, Rebecca Shively, Mary Shoemaker, Clea Schumer, Marek Smith, Rachel Smith, Lowell Ungar, John Watts, and Patrick Whitty.

We also wish to thank BW Research Partnership, especially Philip Jordan and Mitchell Schirch, for conducting the economic impact assessment demonstrating the potential for job creation and other economic benefits in rural America.

Thanks also to Kenan Fikri and Kennedy O’Dell from Economic Innovation Group for providing data and documentation behind their Distressed Communities Index in support of our assessment.

Finally, thanks to Bill Dugan, Emily Matthews, Emilia Suarez, Rosie Ettenheim, Romain Warnault, and Sarah DeLucia for providing production, design, and editing support; Matt Herbert, Molly Bergen. and Carrie Dellesky for providing communications and engagement support; and Matthew Cronin for providing overall project support.

This project was made possible through the generous support of Ruth McCormick Tankersley Charitable Trust.

Devashree Saha is a senior associate at WRI.Contact: devashree.saha@wri.org

Alex Rudee was a manager in WRI’s U.S. Climate Initiative.

Haley Leslie-Bole is a research analyst in the WRI Climate Program.Contact: haley.leslie-bole@wri.org

Tom Cyrs is a research associate in the WRI Climate Program.Contact: tom.cyrs@wri.org

1. 1Environmental justice communities are those most impacted by environmental risks and harms. They face a disproportionate exposure to environmental hazards.
2. 2While the full federal investment and corresponding economic benefits for the new climate economy were modeled over a five-year period, the land sector pathways (including tree restoration on federal lands, tree restoration on non-federal lands, and wildfire risk mitigation) offer the opportunity for more extended federal investment and economic benefits. The benefits for these pathways were modeled over a 20-year period. For all pathways, annual job creation and other economic benefits would be expected to extend for as long as federal investments continue.
3. 3The REAP program offers guaranteed loans and grants to rural businesses and farms for qualifying energy projects, including wind, solar, and biomass generation.
4. 4Land is deemed suitable for reforestation where significant forest cover occurred prior to European settlement but current canopy cover is less than 25 percent, as described by Cook-Patton et al. (2020). Forest land is deemed suitable for restocking where canopy cover exceeds 25 percent (to avoid double-counting with reforestation opportunities) but current basal area stocking levels are below 60 percent, the minimum level at which the U.S. Forest Service considers forest land to be fully stocked.
5. 5We estimated the potential for carbon removal from tree restoration using methods consistent with Mulligan et al. (2020). Potential from reforestation was derived from Cook-Patton et al. (2020), while potential from restocking uses area data from the U.S. Forest Service (2021), sequestration rates from Hoover and Heath (2011), and additional potential estimates from Sohngen (2018). Mulligan et al. (2020) estimate the full opportunity for carbon removal to be achievable within 20 years, so we estimated the potential in 2030 to be one-half of the full opportunity.
6. 6We assessed suitability for reforestation and restocking opportunities and their corresponding carbon removal potential in the same way as for tree restoration on federal lands. We assumed pasture land was suitable for silvopasture wherever it historically supported forest cover (Cook-Patton et al. 2020), with the carbon removal potential estimated using sequestration factors from COMET-Planner (Swan et al. 2015). We determined land suitability and carbon removal potential associated with other agroforestry systems, such as alley cropping and windbreaks, according to the methodology from Fargione et al. (2018).