It’s Time to Be Honest About the Impending Costs of Climate Change
The passage of the Biden Administration’s climate change package, the so-called “Inflation Reduction Act,” has predictably split along partisan lines, with Republicans characterizing the bill as an act of reckless government spending, certain to raise taxes and fuel further inflation. But does this act really represent reckless spending? The legislation authorizes $430 billion in spending, the bulk of which—more than $300 billion—is earmarked for tax credits; other spending and initiatives aimed at stimulating the clean energy economy; and reducing carbon emissions. (The bill also allows Medicare to negotiate prices with drug companies for certain expensive drugs.) The bill is funded in part by a 15% minimum tax on large corporations and an excise tax on companies that repurchase shares of their own stock. Given the scope of the problem, and the escalating future costs of climate inaction, this legislation is an exceedingly modest, but very necessary, first step.
Further delay in fact will compound future economic pain. That might be why, as the costs of addressing inland flooding in his own state continue to escalate, with some worrying about the future of many Appalachian towns, Senator Joe Manchin of West Virginia had a change of heart and allowed for passage of the legislation. Let’s hope it’s the beginning of a realization that our nation’s greatest financial threat isn’t a budget deficit, runaway inflation, declining productivity, or out of control government spending, but the impending and rapidly escalating cost of climate change. To paraphrase the preeminent schlock-rockers Bachman-Turner Overdrive, “you ain’t seen nothing yet!”
For exploding climate-related costs, it’s instructive to look at Steven’s home state of Louisiana, the proverbial canary in the coal mine. Following the devastating damage of Hurricanes Katrina, the financial impacts became so acute that policymakers were forced to consolidate all climate change planning and budgeting under a single Coastal Protection and Restoration Authority (CPRA), charged with identifying the most critical coastal restoration strategies and mitigation projects into a comprehensive Coastal Master Plan that is now updated every five years. To date more than 60 miles of barrier islands and berms have been constructed, 365 miles of levees improved, and 55,000 acres of wetlands revived. Going forward the CPRA is slated to spend $1 billion every year on mitigation projects, with the expectation that the program will continue at the same cost (or likely more) for at least another 50 years. For the imperiled state of Louisiana, this is not optional spending.
In addition to these costly government programs, additional financial burdens have fallen on the private sector. Four major insurance companies along with a handful of smaller ones have declared bankruptcy since Hurricane Ida, and others have decided to either pass the burden on to existing insurees or leave the state in the wake of accelerating rates of risk associated with storm damage. These private-sector failures have long been backed up by federal and state insurance programs, but these programs are now reaching the limits of their political efficacy, leaving many local citizens facing personal bankruptcy and a painful migration to higher ground (or out of state completely).
But Louisiana is hardly alone. The costly impacts of inland flooding, wildfires, and, perhaps most unforgiving of all environmental challenges, drought, are taking their toll on increasingly large swaths of the country. For example, more than half of Texas is currently experiencing extreme drought, and according to drought.gov, this year will be the sixth-driest year in the past 128 years. Meanwhile, it is August, the waters in the Gulf are heating up, and Houston, Galveston, and other vulnerable coastal cities are bracing once again for another active storm season. (Note that the price tag for rebuilding New Orleans and Houston, after Hurricanes Katrina and Harvey, was more than $250 billion, or more than half of the cost of the climate bill, for just two storms).
Mississippi’s and Kentucky’s recent flooding are also tragic cases in point. A new study from SafeHome.org ranks Mississippi and Kentucky as the fifth and ninth worst for severe climate change-related events. Of the five risk factors measured—extreme heat, drought, inland flooding, wildfires, and coastal flooding—Kentucky is vulnerable to four. Climate Central found that 3.37% of Kentucky’s population is vulnerable to extreme heat, another 3.6% is at risk for inland flooding, and more than a third is at risk for wildfire. By midcentury Kentucky will experience nearly two thousand dangerous heat days (one of every five days), a 95% increase in summer drought, and an additional two weeks at risk for wildfires. At what point do we begin planning and, yes, spending accordingly, to mitigate these almost certain certainties? It’s important to mention that two of our most populated states, California and Florida, face even graver climate threats, with potential costs exponentially higher than those in Kentucky.
Across the U.S., some 162 million people—nearly one in two—will most likely experience a decline in the quality of their environment, namely more heat and less water. For 93 million of them, the changes could be particularly severe, and by 2070, if carbon emissions rise at extreme levels, at least 4 million Americans could find themselves living at the fringe, in places decidedly outside the ideal niche for human habitation. And for those who think about escaping to the remaining few oases of climate change it may be useful to imagine the vast numbers of privileged refugees that will also be looking at the same solution.
As the impacts of climate change continue to accelerate, factors like human migration will bring even more social and economic challenges. Communities impacted first, and most harshly, are often those who have access to the fewest resources. In the 1930s Dust Bowl migration alone killed more than 7,000 farmers, left 2 million people homeless, and sharply reduced the nation’s agricultural output. If sea levels continue to rise as expected and the drought in the west persists, we’ll see similar if not more severe disruptions in our future.
This is only the beginning of a future that will leave our children and grandchildren to pay many trillions for environmental mitigation and restoration, due solely to the utter failure of our current generation to plan for these impending costs. And while our political leaders are haggling with what the fiscal watchdogs call “nice to have” or “like to have” legislation that gets them through the next election cycle, it is important to understand that the “must have” costs of climate change will be much less forgiving.
Sea walls, floating cities, carbon capture facilities, drinking water infrastructure, permanent and temporary housing to accommodate population shifts, renewable desalination plants, cooling centers, a green national energy grid—all these “must haves” and unforeseen others will require government spending that dwarfs the package Congress is about to pass. We spent about $6.5-trillion on wars in the Middle East. Climate change costs are likely to greatly exceed that. It’s time both political parties come to terms with that reality. Planning is always a good idea—but even better when we do it ahead of time.
This essay originally appeared in Fast Company. Featured image: Hinds County Emergency Management personnel wade through flood waters in northeast Jackson, Miss., via The Hill.