Hidden Costs of Climate Change Running Hundreds of Billions a Year

A new report warns of a high price tag on the impacts of global warming, from storm damage to health costs. But solutions can provide better value, the authors say.

Debris from a damaged home in Spring, Texas, serves as a reminder of Hurricane Harvey's fury. Such storms may be spurred by a changing climate, with expensive consequences.

Extreme weather, made worse by climate change, along with the health impacts of burning fossil fuels, has cost the U.S. economy at least $240 billion a year over the past ten years, a new report has found.

And yet this does not include this past month's three major hurricanes or 76 wildfires in nine Western states. Those economic losses alone are estimated to top $300 billion, the report notes. Putting it in perspective, $300 billion is enough money to provide free tuition for the 13.5 million U.S. students enrolled in public colleges and universities for four years.

In the coming decade, economic losses from extreme weather combined with the health costs of air pollution spiral upward to at least $360 billion annually, potentially crippling U.S. economic growth, according to this new report, The Economic Case for Climate Action in the United States, published online Thursday by the Universal Ecological Fund.

“Burning fossil fuels comes at a giant price tag which the U.S. economy cannot afford and not sustain," said Sir Robert Watson, coauthor and director at the U.K's Tyndall Center for Climate Change Research.

Climate Change 101 with Bill Nye

“We want to paint a picture for Americans to illustrate the fact that the costs of not acting on climate change are very significant,” Watson, the former chair of the Intergovernmental Panel on Climate Change, told National Geographic.

Watson is quick to point out that extreme weather events, including heat waves, hurricanes, wildfires, and droughts, are not caused by climate change. However, there is no question their intensity and frequency in many cases has been made worse by the fact the entire planet is now 1.8 degrees F (1 degree C) hotter, he said in an interview.

While a 1.8 degree F (1 degree C) increase may seem small, it’s having a major economic impact on the U.S. According to data provided by the National Oceanic and Atmospheric Administration (NOAA), the number of extreme weather events causing at least $1 billion in economic losses has increased more than 400 percent since the 1980s. Some of that increase is due to increased amounts of housing and commercial infrastructure along coastlines. “However that doesn’t account for big increases in the last decade,” Watson said.

And much more global warming is coming—3.6 degrees F (2 degrees C) temperature by 2050 and even greater warming beyond that—unless bigger cuts in fossil-fuel emissions are made than those promised in the 2015 Paris Climate Agreement, said Watson. “The impacts of climate change are certainly going to get more than twice as bad,” he said. (Learn more about why this hurricane season has been so catastrophic.)

Seeking Solutions

The report also looks at low-carbon solutions that can cut emissions and air pollution and benefit the U.S. economy. For instance, doubling the current share of renewable energy could create 500,000 new jobs while substantially cutting the amount of electricity currently generated using coal—improving air quality and reducing health costs.

Renewable energy, even when subsidized, will save America billions of dollars, according to the first national study of the future costs and benefits of renewable portfolio standards (RPS). Twenty-nine states have RPS—regulations requiring increased production of energy from renewable energy sources.

If existing RPS programs continue unchanged from now until 2050 they’d generate about 40 percent of U.S. electricity and save $97 billion in air pollution health costs and $161 billion in climate damage reductions, the Assessing the Costs and Benefits of U.S. Renewable Portfolio Standards study found. But if all states meet their Clean Power Plan obligations solely with renewables they’d generate 35 percent of U.S. electricity by 2030 and 49 percent by 2050.

The health benefit savings and climate impact cost reductions in this scenario would be over $1.1 trillion. However, the Trump Administration signed an Executive Order calling for a review of the Clean Power Plan last March and the new head of the EPA has told states they no longer have to comply.

RPS policies do increase electric system costs and may increase rates in some states but the overall costs are far less than the health benefits and cost reductions, said lead author Ryan Wiser, a senior scientist at Lawrence Berkeley National Laboratory.

“RPS programs provide a big social benefit to all Americans,” Wiser said in an interview. However, RPS policies are not the most efficient way to reduce fossil fuel use, he added.

“Pretty well every economist will tell you that a carbon tax or cap and tradeare better.”

In the 1980s acid rain air pollution was curbed through a cap and trade program championed by George H.W. Bush. It was the first such program in the world and worked quite well, said Wiser.

Renewable Energy 101

Additional Benefits to Tackling Emissions

Switching to renewables will also save enormous amounts of freshwater. Electricity generation is the nation’s biggest water user because coal and gas boil large amounts of water to make electricity. If 35 percent of this generation was renewable it would reduce water use enough to meet the needs of 1.9 million homes, according to Wiser’s study. However, the cost benefits of this water savings is not included in the report, nor are other environmental costs and health benefits.

The Economic Case for Climate Action report also doesn’t include a number of climate-related losses such as reduced crop yields from drought. Those amounted to $56 billion since 2012. Nor does it include economic losses from health impacts of heat waves or impacts on ecosystems and water resources.

“Our report is an under estimate of the real costs of continued use of fossil fuels,” Watson said.

“Anything we estimate now is an underestimate,” said Amir Jina of the University of Chicago and co-author of yet another new study looking at impacts of climate change on the U.S. “Climate change is not isolated to small increases in global temperature, but to local impacts to our health and well-being that could be enormous.”

Boat rescue traffic on the flooded Jimmy Johnson Road in Port Arthur, Texas, on August 30.
Evacuees wait at Woodrow Wilson Middle School for word about what shelter they will be sent to after they were evacuated from the flooding of Hurricane Harvey on August 30, 2017 in Port Arthur, Texas. Harvey, which made landfall north of Corpus Christi late Friday evening, is expected to dump upwards to 40 inches of rain in Texas over the next couple of days.
A highway stands immersed in floodwaters from Hurricane Harvey in this aerial photograph taken above West Columbia, Texas on August 30.
Evacuees sit on a boat after being rescued from flooding from Hurricane Harvey on August 30 in Port Arthur, Texas.
Recreational vehicles sit on their sides in flood water in the wake of Hurricane Harvey on August 29 in Houston, Texas.
Residential neighborhoods near the Interstate 10 sit in floodwater in the wake of Hurricane Harvey on August 29 in Houston, Texas.
Texas Army National Guard members Sergio Esquivel, left, and Ernest Barmore carry 81-year-old Ramona Bennett after she and other residents were rescued from their Pine Forest Village neighborhood due to high water from Hurricane Harvey on August 29.
People take shelter at the George R. Brown Convention Center after flood waters from Hurricane Harvey inundated the city of Houston on August 29.
Mark Ocosta and his baby Aubrey Ocosta take shelter at the George R. Brown Convention Center.
People walk to a Harris County Sheriff air boat while escaping a flooded neighborhood during the aftermath of Hurricane Harvey in Houston, Texas on August 29.
Rescuers in boats help trapped residents escape rising floodwaters due to Hurricane Harvey in Spring, Texas on August 28.
Shardea Harrison looks on at her 3 week old baby Sarai Harrison who is being held by Dean Mize. Mize and Jason Legnon used his airboat to rescue Shardea and her daughter from their home after the area was inundated with flooding from Hurricane Harvey on August 28.
People walk down a flooded street as they evacuate their homes after the area was inundated with flooding from Hurricane Harvey in Houston, Texas on August 28.
People use a inflatated mattress to evacuate their homes after the area was inundated with flooding from Hurricane Harvey on August 28.
Firefighters put out a fire during the aftermath of Hurricane Harvey on August 28.
Flood victims are seen at a shelter in the George R. Brown Convention Center during the aftermath of Hurricane Harvey in Houston on August 28.
Stranded vehicles sit where they got stuck in high water from Hurricane Harvey in Houston, Texas on August 28.
Abandoned cars sit on Interstate highway 45 near downtown Houston, Texas after it was flooded due to rain from Hurricane Harvey.
A stranded motorist escapes floodwaters on Interstate 225 after Hurricane Harvey inundated the Texas Gulf coast with rain causing mass flooding in Houston, Texas on August 27.
Andrew White, left, helps a neighbor down a street after rescuing her from her home in his boat in the River Oaks neighborhood after it was inundated with flooding from Hurricane Harvey on August 27 in Houston, Texas.
A resident walks down a flooded street in the River Oaks neighborhood after it was inundated with water from Hurricane Harvey on August 27 in Houston, Texas.
Volunteers and officers from the neighborhood security patrol help to rescue residents in the River Oaks neighborhood after it was inundated with flooding from Hurricane Harvey on August 27 in Houston, Texas.
People are rescued from flood waters from Hurricane Harvey in an armored police mine-resistant ambush protected (MRAP) vehicle in Dickinson, Texas.
Stewart Adams, of San Marcos, Texas, plays in the winds from Hurricane Harvey in Corpus Christi, Texas on August 25.
Hurricane Harvey is pictured off the coast of Texas from aboard the International Space Station on August 25.
Houses surrounded by flood waters caused by Hurricane Harvey are seen from a U.S. Coast Guard helicopter during a flight from Port Aransas to Port O'Connor, Texas, on August 26.
People gather supplies out of destroyed homes to take back to a shelter near City-By-The Sea, Texas, as Hurricane Harvey hits the Gulf Coast on August 26.
Steve Culver cries with his dog Otis as he describes the "most terrifying event in his life," when Hurricane Harvey blew in and destroyed most of his home while he and his wife took shelter there on August 26 in Rockport, Texas.
A man walks through flood waters and onto the main road after surveying his property, which was hit by Hurricane Harvey in Rockport, Texas.
A woman makes her way out of the wreckage of her home as neighbors try to help her out the window after Hurricane Harvey destroyed the apartment on August 26 in Rockport, Texas. Donna was hiding in the shower after the roof blew off and the walls of her home caved in from the wind.
This RV was destroyed during Hurricane Harvey on State Highway 188, outside of Rockport, Texas.
Dead cows killed in Hurricane Harvey lie on highway 35 near Fulton, Texas.
Jeff Page watches a helicopter fly overhead as he stands near a hotel damaged during Hurricane Harvey in Rockport, Texas.
A firefighter wipes his face as he searchs for survivors at an apartment complex in Rockport, Texas.
A destroyed laundromat is seen in Rockport, Texas.
Children play in a flooded road following the passage of Hurricane Harvey on August 26 in Galveston, Texas.
Business owner and resident Carlos Lopez clears debris from outside his shop, which was hit by Hurricane Harvey in Rockport, Texas, on August 26.
A multi-level storage facility housing boats was damaged by Hurricane Harvey in Rockport, Texas.
Women are illuminated by the light of a smart phone as they seek refuge in the Good Samaritan Rescue Mission during Hurricane Harvey in Corpus Christi, Texas, on August 25.
Tap images for captions

South and Midwest to Be Hardest Hit

Estimating Economic Damage from Climate Change in the United States is a state-of-the-art analysis that projects future costs and benefits county by county based on current and past data. It found counties in states in the South and lower Midwest would be the hardest hit economically without strong action to curb climate change.

“The Gulf Coast will take a massive hit. Its exposure to sea-level rise—made worse by potentially stronger hurricanes—poses a major risk to its communities. Increasingly extreme heat will drive up violent crime, slow down workers, amp up air conditioning costs,” said co-author Robert Kopp, director of the Institute of Earth, Ocean, and Atmospheric Sciences at Rutgers University.

Programs like federal flood insurance insulate coastal communities from some of these risks but it means citizens a long way from the coast bear the financial costs. The same applies to disaster relief.

Billions of local, state and federal taxpayer dollars will rightly go towards the recovery efforts from the devastating impacts of Hurricanes Harvey, Irma, and Maria. However, those monies could have gone elsewhere to grow our economy and that affects every American, said Jina. "What would we have done with this rebuilding money if we didn't have to use it to rebuild?"

The study shows that these big storms lower the long-run growth of the U.S. economy and that their economic and human impacts ripple through the country for up to two decades. New Orleans hasn’t fully recovered from Hurricane Katrina in 2005. Many small businesses never bounced back. Ten years after the storm the unemployment rate was still higher than pre-Katrina levels. Research shows that after most hurricanes more people tend to rely heavily on unemployment insurance and Medicaid, increasing the strain on those publicly funded programs, Jina said.

"The 'hidden costs' of carbon dioxide emissions are no longer hidden, since now we can see them clearly in the data,” he said. 

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