US taxpayers spend over $300 billion on just two climate impacts

Switchboard

Yesterday, the White House published a disturbing statistic in its FY2016 budget proposal: the Federal government has incurred over $300 billion in climate-related costs over the last decade (see this section in the supplementary Analytical Perspectivesreport). While we can’t identify how much is due precisely to climate change, the report shows troubling trends.

Before some details, first note that this $300 billion price tag reflects just two costs directly observable in government expenditures–spending on extreme weather events and fire (scroll down to the table in this blog for an exhaustive list of current and potential climate impacts, all of which affect government spending in one way or another). The chapter also discusses a number of indirect costs.

Most of the estimated $300 billion went toward domestic disaster relief ($176 billion), flood insurance ($24 billion), crop insurance ($61 billion) and wildland fire management ($34 billion). It’s worth reading the short (4.5 pages) for details on these direct costs, but also for the (many more) indirect costs they discuss.

Here are just a few highlights to get the flavor:

• Health care: Climate change threatens the health and well-being of Americans in a number of ways, including increased asthma, heart attacks, and pre-mature deaths from increased air pollution; illnesses transported by food, water, and disease carriers such as mosquitoes and ticks; and death, injury and illness from extreme weather events. The Federal Government is the nation’s largest purchaser of health care services–spending $815 billion in 2014 on Medicare, Medicaid, and the Children’s Health Insurance Program. All of these programs are being increasingly impacted by climate change.

• Flood insurance: The National Flood Insurance Program (NFIP), established in 1968 and run by Federal Emergency Management Agency (FEMA), is in the red. The program was designed to collect enough in premiums to cover payouts, but in recent years has fallen short. Unfortunately, it’s only expected to get worse: under a scenario of modest climate change, average loss payments will increase an estimated 10-15% as soon as 2020, and 50-90% by 2100. The costs will be much higher if any of the catastrophic risks climate scientists worry about materialize. Exacerbating higher average payouts, the number of policy holders is also expected to increase by 80-100%. I would hazard a guess that these figures don’t take into account a continued exodus of private insurers from the market, and government’s growing obligation to pick up more and more of the tab. The potential for catastrophic risks has made some areas uninsurable, because the premiums required to cover them would be intolerably high (read, private insurance policies cannot charge enough to generate positive expected profits). The bars in the graph below show payouts over the last 30 years, with a clear increasing trend in the last decade (the 2005 spike reflects Hurricane Katrina, and the 2012 spike Hurricane Sandy).

• National security: the Department of Defense refers to climate change as a “threat multiplier” because it can exacerbate already significant global challenges, including the spread of infectious disease, resource scarcity, socioeconomic conflict, and terrorism. Though not discussed in the chapter, one compelling example is Syria, where extreme drought fueled civil unrest in the incipient days of the now full scale civil war. For a gripping account of this, see the free first episode of Showtime’s Years of Living Dangerously, from Hollywood’s blockbuster producers James Cameron, Jerry Weintraub, Arnold Schwarzenegger.

• Wildland fire: In combination with other contributing factors (e.g. increased settlement in risk prone areas and forest management practices), climate change is contributing to increasing wildland fire frequency and intensity. The vast majority of the largest fires in modern history has occurred in the last decade, and on average firefighting appropriations has grown 25% per year over last two decades. Note that the chapter only looks at government expenditures, and is cumulative over a decade. But a recent study suggests that fires cost us 10 to 50 times more their suppression costs (e.g. in lost flood control services, timber, and other ecosystem amenities), and projects an annual increase of $10 to $60 billion per year in total costs by 2050 due to climate change alone.

• Crop insurance: Drought and extreme weather heavily affect the number and value of crop insurance claims, and the trend is not looking good for the government:

• Military installations: The U.S. military has many facilities across America, and indeed the world, that currently incur significant costs and are increasingly exposed to more risk. One example: an Army installation in the Southwest incurred $64 million in damages due to unusual torrential rainfall. Within an 80 minute period, the installation was hammered with as much rain as typically falls over the course of a year, damaging 160 facilities, 8 roads, 1 bridge, and 11,000 feet of fencing.