The Economic Case for Climate Action in the United States

There are risks and costs to action.

But they are far less than the long range risks of comfortable inaction.

John F. Kennedy, 35th President of the United States of America

Within one month, the United States has experienced two sides of the same coin.

Hurricane Harvey hit Texas and Louisiana. It was an unprecedented event due to the heavy rainfall. Some areas experienced more than 40 inches of rain in less than 48 hours, while other areas had more than 50 inches of rainfall– a record for a storm in the contiguous United States1. Harvey was also unprecedented in its exposure since it flooded almost all of Houston –the fourth largest city in the United States.

Record dry conditions and record breaking heat triggered 76 active wildfires in nine Western states: Montana, Oregon, California, Washington, Idaho, Colorado, Nevada, Utah and Wyoming2. Combined, these wildfires burnt 8 million acres this year –or about the combined land area of Connecticut, the District of Columbia and New Jersey3.

After devastating the United States Virgin Islands as a catastrophic category 5 hurricane, Irma hit Florida as a category 4 hurricane. It sustained winds of 185 mph for more than 36 hours, placing it as the strongest hurricane on record globally4. After severely damaging and destroying Florida, Irma became a tropical storm, bringing strong winds, heavy rain, flash flooding and storm surge flooding to Georgia, North Carolina and South Carolina as well as affecting Mississippi, Alabama and Tennessee5.

Puerto Rico suffered significant damage from Maria, a category 4 hurricane. Parts of the island received 40 inches of rain, causing widespread flooding6.

These extreme weather events, which happened in August and September 2017, are indicators of climate change.

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Weather events are the result of natural factors. For example, there are hot days in the summer and there is rainfall everywhere in the world.

Weather events, however, are also influenced by human-induced climate change. The changing climate has altered their intensity and/or frequency in a substantial and measurable manner. These include heat waves, droughts, wildfires, and severe storms (or heavy precipitation) and hurricanes (or tropical cyclones) –both of which lead to flooding7 8.

These weather events influenced by human-induced climate change are happening all over the United States. They are becoming more frequent and intense. They are also becoming more costly.

The facts are crystal clear. The number of extreme weather events causing at least $1 billion in economic losses have increased from 21 in the 1980s and 38 in the 1990s to 92 in the last decade (2007-2016) –a more than a two-fold increase compared to the 1990s and more than a four-fold increase compared to the 1980s9 (Figure 1).

The number of severe storms experienced the most significant increase in the last decade, with more than a four-fold increase compared to the 1990s. Drought events have almost doubled in number in the last decade, compared to the 1980s and 1990s. As a result of severe storms and hurricanes, flooding events in the last decade increased by almost a two-fold compared to the 1990s (Figure 2).

The cost from these weather events influenced by human-induced climate change, with at least $1 billion each in economic losses and damages, have significantly escalated from $145.7 billion in the 1980s and $211.3 billion in the 1990s to $418.4 billion in the last decade –a two-fold increase compared to the 1990s and an almost three-fold increase, compared to the 1980s10 (Figure 3).

Hurricanes caused the most economic losses in the last decade, with $144.6 billion, compared to $97 billion and $36.1 billion in the 1990s and 1980s respectively. The most significant increase in economic losses and damages, however, are from severe storms, which experienced a more than a four-fold increase in the last decade compared to the 1990s (Figure 4).

The rising trend continued in the 2000-2006 period, with $377 billion in economic losses and damages from 31 extreme weather events. The most costly event in that period was hurricane Katrina which caused $160 billion 11 in economic losses, affecting Louisiana, Mississippi, Alabama and Florida in August 200512.

Economic losses from extreme weather events are rapidly escalating. The economic losses of hurricanes Harvey, Irma and Maria and the wildfires in the nine Western states combined could be as high as the aggregate economic losses from the 92 events in the last decade13.

The economic impact of extreme weather events influenced by human-induced climate change can be severe for a region or a state. For example:

Agricultural production in the United States is highly dependent on rain. In 2012, only six percent of all farmland was irrigated14. Drought, thus, affects crop output impacting food availability and driving up food price for consumers. It also affects farmers’ livelihoods.

Since 2012, American farmers in California, Texas, Oregon, Washington, Idaho, Montana and New Mexico have lost crops on hundreds of thousands of acres, due to the persistent drought. Within the last five years, livelihoods of farmers in these states were impacted with $56 billion in economic losses15. If action to address climate change is not taken, the production of corn and soybean –the largest crops in the United States— could experience a 20 to 30 percent decrease within the next three decade16. This could potentially cost corn and soybean producers losses of $17 to $25 billion a year17.  

Louisiana is one of the states where the highest number of flooding events happened in the last decade as a result of severe storms or hurricanes. In August 2016, 30 inches of rain fell in a few days, flooding southern Louisiana –a 1 in 500 year event. More than 50,000 homes, 100,000 vehicles and 20,000 businesses were damaged or destroyed. The economic losses due to the floods in Louisiana were $10 billion18. Some 75 percent of those affected by this record rainfall were uninsured19.

Many individuals, families and businesses lost everything due to extreme weather events, such as the one in Louisiana. So did those Americans affected by the severe flooding in Colorado in 2013, or by Superstorm Sandy in New York and New Jersey in 2012 or by the wildfire in California nearly each year.

Not all states are impacted in the same way by extreme weather events. Many events impact more than one state. However, each state impacted by multi-state events did not suffer at least $1 billion in economic losses. The states impacted by these billion dollar events in the last decade are:

• Drought: California (8, with no billion dollar drought events in the 1990s or 1980s), Idaho (7, with no billion dollar drought events in the 1990s), Oregon and New Mexico (6, a six-fold increase compared to the 1990s), Oklahoma (6, a two-fold increase compared to the 1990s), Kansas (6, a three-fold compared to the 1990s) and Texas (6, a three-fold increase compared to the 1990s).

• Wildfire: California (6, a two-fold increase compared to the 1990s), Arizona and Oregon (6, a six-fold increase compared to the 1990s), Idaho (6, with no billion dollar wildfire events in the 1990s or 1980s), Texas, Nevada, Washington and Colorado (5 each, a five-fold increase compared to the 1990s) and Montana (5, with no billion dollar wildfire events in the 1990s).

• Severe storm: Texas (32, a more than a four-fold increase compared to the 1990s), Kansas (24, a six-fold increase compared to the 1990s), Oklahoma and Illinois (23 each, a more than a four-fold and almost a six-fold increase compared to the 1990s, respectively) and Missouri (21, a more than a five-fold increase compared to the 1990s) and Tennessee (18, a more than a four-fold increase compared to the 1990s).

• Hurricane: Alabama, Louisiana and Virginia (4 each, a two-fold increase compared to the 1980s); Pennsylvania, New York, Maryland and Connecticut (3 each, a 50 percent increase compared to the 1990s); North Carolina (3); and Mississippi and New Jersey (3 each, a three-fold increase compared to the 1990s).

• Flooding, as a result of severe storms and hurricanes: Louisiana and Missouri (4 each, a four-fold increase compared to the 1990s); Texas (3); and Arkansas, Illinois, Indiana, Kansas and Iowa (3 each, a three-fold increase compared to the 1990s).

Extreme weather events causing more than $1 billion in economic losses by state

See the interactive maps showing the increasing frequency of billion dollar events has impacted each state in the 1980s, 1990s and the last decade (2007-2016).

Other weather events that can be influenced by human-induced climate change have impacts on health. Heat waves –more than two consecutive days of extreme heat —have become more intense20. Extreme heat impacts human health, including heat strokes, heat exhaustion, heat cramps and heat rashes21. Heat waves are linked to an increase in emergency room visits, hospitalizations, and premature mortality. In July 2006, California had a 14-day heat wave. About 36 million people were affected, leading to more than 16,000 emergency room visits, 152,000 outpatient visits and 1,620 hospitalizations. These aggregate health costs were estimated at $207 million 22. In addition, this 2-week heat wave caused 655 premature deaths, estimated at $6 billion23 in health costs24. The number of deaths as a result of this heat wave exceeded the current annual average of 618 deaths by extreme heat in the United States25.

The 2006 heat wave also impacted other states, when half of the United States experienced maximum temperatures much above normal. This percentage was exceeded in 2012 and in 2016 with 88 percent and 70 percent, respectively. These are the three years with the highest percentage of the United States experiencing maximum temperatures above normal since 191026. Heat waves are increasing27, which will aggravate health impacts and further escalate health costs.

The increase in the number of weather events influenced by human-induced climate change is the result of the already observed 1.1ºC increase in global temperature above pre-industrial times28.

Despite the escalating economic losses and costs on lives, health, homes, businesses and livelihoods, the United States continues to primarily rely on fossil fuels to produce energy, the root cause of climate change.

Coal, oil and natural gas –all fossil fuels— account for about 80 percent of the primary energy produced and used in the United States29. This percentage has decreased slightly during the last two decades, but still remains above 80 percent. As a result, 82 percent of the United States greenhouse gas emissions are currently from carbon dioxide (CO2) from fossil fuel burning30. CO2 emissions are primarily driving the observed changes in the climate.

Burning fossil fuels to generate energy (electricity, fuel and natural gas) comes at the price of the impacts of climate change. It also brings about air pollution which, in turn, has consequences on health.

More than 43 million people in the United States live in areas with unhealthy air pollution31. The costs of health damages due to air pollution exposure caused by energy production in the United States were estimated at $188 billion32 in 2011. However, effective emission regulations on the energy sector have successfully reduced air pollution and thus decreased health costs from $255 billion33 in 2002 –a 35 percent reduction. Indiana, Ohio and Pennsylvania are the states with the highest annual damages from electric power generation, oil and gas extraction, coal mining and oil refineries34. The Appalachian region also has a significant public health burden. Alabama, Kentucky, Maryland, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia produce 25 percent of the coal in the United States35. The health costs associated with coal mining of communities in Appalachia was estimated at $86 billion a year36 37.

These three trends –more frequent and intense weather events influenced by human-induced climate change, increased economic losses and health costs, coupled with continued use of fossil fuels– will continue to negatively impact Americans and the American economy.

 

Sources:

1. National Weather Service: http://www.weather.gov/crp/hurricane_harvey
2. The National Interagency Fire Center (Sept. 7, 2017): https://www.nifc.gov/fireInfo/nfn.htm
3. U.S. Census Bureau: https://www.census.gov/geo/reference/state-area.html
4. Since the National Aeronautics and Space Administration began using satellites to analyze hurricanes in the 1960s
5. National Hurricane Center: http://www.nhc.noaa.gov/archive/2017/IRMA.shtml
6. National Hurricane Center: http://www.nhc.noaa.gov/archive/2017/MARIA.shtml
7. Explaining Extreme Events of 2015 from a Climate Perspective, Bulletin of the American Meteorological Society (2015)
8. Attribution of Extreme Weather Events in the Context of Climate Change, The National Academies of Sciences, Engineering, and Medicine (2016)
9. National Oceanic and Atmospheric Administration (NOAA) NCEI. U.S. Billion-Dollar Weather and Climate Disasters (2017). https://www.ncdc.noaa.gov/billions
10. NOAA NCEI. U.S. Billion-Dollar Weather and Climate Disasters (2017). https://www.ncdc.noaa.gov/billions
11. CPI-adjusted, from $125 billion in 2005 dollars
12. NOAA NCEI. U.S. Billion-Dollar Weather and Climate Disasters (2017). https://www.ncdc.noaa.gov/billions
13. The final accounting of the economic losses has not been completed; preliminary estimates by NOAA NCEI are nearly $300 billion for these four events combined
14. U.S. Department of Agriculture, Census of Agriculture (2012)
15. NOAA NCEI. U.S. Billion-Dollar Weather and Climate Disasters (2017). https://www.ncdc.noaa.gov/billions
16. Proceedings of the National Academy of Sciences of the United States of America, Nonlinear temperature effects indicate severe damages to U.S. crop yields under climate change: http://www.pnas.org/content/106/37/15594.full.pdf
17. U.S. Department of Agriculture, Economic Research Service – Agriculture and Food Statistics
18. NOAA NCEI. U.S. Billion-Dollar Weather and Climate Disasters (2017). https://www.ncdc.noaa.gov/billions
19. https://www.munichre.com/site/mram-mobile/get/documents_E1333998487/mram/assetpool.mr_america/Images/5_Press_News/Press%20Releases/2016/20160103_RZ_Big-five-overview%20final.pdf
20. Explaining Extreme Events of 2015 from a Climate Perspective, in the Bulletin of the American Meteorological Society (2015)
21. Centers for Disease Control and Prevention (CDC), Warning Signs and Symptoms of Heat-Related Illness: https://www.cdc.gov/disasters/extremeheat/warning.html
22. CPI-adjusted from $179 million in 2008 dollars
23. CPI-adjusted from $5.1 billion in 2008 dollars
24. Six Climate Change-Related Events In The United States Accounted For About $14 Billion In Lost Lives And Health Costs: Knowlton, et al. (2011)
25. Centers for Disease Control and Prevention (CDC), Natural Disasters and Severe Weather – Extreme Heat: https://www.cdc.gov/disasters/extremeheat/index.html
26. NOAA, National Centers for Environmental Information: https://www.ncdc.noaa.gov/extremes/cei/graph/us/1c/01-12
27. Bulletin of the American Meteorological Society: Monitoring and Understanding Changes in Heat Waves, Cold Waves, Floods and Droughts in the United States: State of Knowledge (2013)
28. World Meteorological Organization, State of the Global Climate (2016)
29. U.S. Energy Information Administration, Primary Energy Overview (2016)
30. Second Biennial Report of the United States of America under the United Nations Framework Convention on Climate Change, 2016
31. State of the Air 2017, American Lung Association: http://www.lung.org/our-initiatives/healthy-air/sota/key-findings/people-at-risk.html
32. CPI-adjusted from $131 billion in 2000 dollars
33. CPI-adjusted from $175 billion in 2000 dollars
34. Energy Policy: The International Journal of the Political, Economic, Planning, Environmental and Social Aspects of Energy, Vol. 90 (2016) Air pollution emissions and damages from energy production in the U.S.: 2002–2011, Paulina Jaramillo (Department of Engineering and Public Policy, Carnegie Mellon University) and Nicholas Z. Muller (Department of Economics, Middlebury College)
35. U.S. Energy Information Agency
36. CPI-adjusted from $74 billion in 2008 dollars
37. Annals of the New York Academy of Sciences: Full cost accounting for the life cycle of coal, Paul R. Epstein et al (2011)

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