JACKSON HOLE, Wyo. – When officials of the Federal Reserve Bank of Kansas City sought a location for an annual economic symposium in 1982, they chose Jackson Hole, Wyoming, for a simple reason: It had fly-fishing.
Paul Volcker, the Fed chairman at the time, was known to enjoy the pastime, and it was hoped that the opportunity to do some fishing would draw Volcker away from Washington, D.C.'s late August heat. The ploy worked, and the Fed has held a conference there in late August ever since.
Now, though, warmer waters in Jackson Lake and the Snake River it empties into have led the Park Service to urge anglers to restrict their fishing to the morning hours. Catch-and-release fishing, the most common practice here, is harder on the fish when water is warmer, and the fish are also harder to catch later in the day.
It is just one example of how the consequences of climate change are now in plain view to Fed officials during their annual summer symposium in Jackson Hole. Wyoming’s Teton County has been afflicted by the same long-term drought that has lowered rivers and reservoir levels throughout the West.
Some water activities typically enjoyed by visitors to the Jackson Lake Lodge, where Fed officials are convening, have been canceled this summer. The Colter Bay Marina has been closed because of low water levels, an economic blow to the small businesses that rent motorboats and other equipment.
Many academic economists and central bankers from around the world attend the Fed's conclave in Jackson Hole, a valley nestled amid the majestic Teton mountain peaks. The signs of climate damage are among the ways in which the region's challenges are evident alongside the idyllic setting. The nearby town of Jackson is also struggling with soaring home prices, labor shortages and widening economic inequality.
Jackson Lake, visible from the lodge that hosts the Fed's symposium, is just 36% full. That is nearly as severe as last summer, when drought conditions were even worse and water levels reached one of the lowest levels in 30 years.
Rain has been better this year, though it was so heavy in June that it caused major flooding in nearby Yellowstone Park, closing sections for the park for weeks. The shutdown has thrown many wildlife guides and other park employees out of work, said Cody Pitz, a local coordinator for the Sunrise Movement, an environmental group.
Chair Jerome Powell and the rest of the Fed are embroiled in a public debate over just how far the central bank should go to take account of climate issues in its policymaking. The Fed is under pressure from environmental activists to consider climate change in how it regulates banks. Many activists argue that the financial system is at risk because, among other things, rising waters could increasingly flood real estate and force developers to default on property loans.
Some such groups, including the Sunrise Movement and 350.org, are holding protests near the lodge and have called on the Fed to stop supporting the fossil fuel industry. During the pandemic, the Fed unveiled a lending program to bolster medium-sized businesses that critics charged was made available to oil and gas drillers, though few loans were made overall and the program was temporary.
Yet the Fed has also absorbed criticism from congressional Republicans for the modest steps it's taken to incorporate climate change into its regulatory oversight. GOP senators, including those on a committee that oversees the central bank, argue that the issue is not part of the Fed’s purview.
Last year, though, the Fed declared that climate change “poses significant challenges for the global economy and financial system, with implications for the structure of economic activity, the safety and soundness of financial institutions and the stability of the financial sector more broadly.”
And at a congressional confirmation hearing in January, Powell declared, "Our role on climate change is a limited one but it is an important one, and it is to assure that the banking institutions that we regulate understand their risks and can manage them.”
In early 2021, the Fed became the last major central bank to join the Network for the Greening of the Financial System, an international group that focuses on global warming and financial regulation.
In the meantime, Jared Baeker, executive director of the Jackson-based Snake River Fund, pointed out that it’s unusual for the lake to become so low by August. In the past, the water level typically bottomed out closer to October.
But snow packs in the Teton Mountains, he said, are smaller and are melting earlier, leaving less water later in the summer. The damage will likely increase and require more action by state, local and federal authorities, he said.
“We’re a climate-dependent economy,” Baeker said, “whether it’s skiing in the winter or boating and fly fishing in the summer. Without a doubt, policy is important there.”