Climate Inaction Could Cost the U.S. $2 Trillion Per Year, Study Finds
The White House Office of Management and Budget (OMB) has released its first report describing the financial impact of climate inaction in the U.S. The analysis outlines the taxpayer cost should climate change remain unchecked, and it amounts to over $2 trillion per year by 2100.
“Climate change threatens communities and sectors across the country, including through floods, drought, extreme heat, wildfires, and hurricanes that affect the U.S. economy and the lives of everyday Americans,” wrote Candace Vahlsing, OMB’s associate director for climate, energy, environment, and science, and Danny Yagan, OMB’S chief economist. “Estimated damages from a subset of these events have grown to about $120 billion a year over the past five years. Future damages could dwarf current damages if greenhouse gas emissions continue unabated.”
The analysis outlines three main points: the economy could face decline, program costs, such as for disaster aid, would rise, and some impacts remain vague and unaccounted for.
OMB noted that the U.S. GDP may decrease as much as 10% by 2100 and could cost the Federal government a revenue loss of more than $2 trillion per year in today’s dollars.
“Furthermore, the analyses found that, the Federal Government could spend between an additional $25 billion to $128 billion annually on just six types of Federal expenditure: coastal disaster relief, flood insurance, crop insurance, healthcare insurance, wildland fire suppression, and flooding at Federal facilities,” Vahlsing and Yagan said.
Increased hurricane frequency would require the biggest increase for coastal disaster response at $22 billion to $94 billion per year by 2100. Replacements for federal buildings and structures impacted by 10 feet of sea level rise would require $43.7 billion. Federal fire suppression programs for wildfires could increase 78% to 480%, and crop insurance premium subsidies are estimated to rise up to 22% annually.
Further impacts such as climate risks to national security, effects on ecosystems and costs for infrastructure remain unknown, as reported by NPR. There could also be costly impacts to public health and businesses outside the federal government.
In an executive order, President Biden has directed OMB to release these analyses each year. President Biden has also included a proposal of $44.9 billion toward climate action for the 2023 budget.
Vahlsing and Yagan concluded, “Investments to confront the climate crisis will reduce greenhouse gas emissions, drive down clean energy prices, make our Nation more resilient, present new opportunities for American innovation and well-paying jobs, provide benefits to historically underserved communities, and work to protect against the long-term fiscal risks identified in the new Budget analyses released today.”