impact of climate change on economy essay

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How Climate Change Impacts the Economy

The Fourth National Climate Assessment , published in 2018, warned that if we do not curb greenhouse gas emissions and start to adapt, climate change could seriously disrupt the U.S. economy. Warmer temperatures, sea level rise and extreme weather will damage property and critical infrastructure, impact human health and productivity, and negatively affect sectors such as agriculture, forestry, fisheries and tourism. The demand for energy will increase as power generation becomes less reliable, and water supplies will be stressed. Damage to other countries around the globe will also affect U.S. business through disruption in trade and supply chains.

A recent report  examined how climate change could affect 22 different sectors of the economy under two different scenarios: if global temperatures rose 2.8˚ C from pre-industrial levels by 2100, and if they increased by 4.5˚ C. The study projected that if the higher-temperature scenario prevails, climate change impacts on these 22 sectors could cost the U.S. $520 billion each year. If we can keep to 2.8˚ C, it would cost $224 billion less. In any case, the U.S. stands to suffer large economic losses due to climate change, second only to India, according to another study .

We are already seeing the economic impacts of the changing climate. According to Morgan Stanley, climate disasters have cost North America $415 billion in the last three years, much of that due to wildfires and hurricanes.

In 2017, Texas’s estimated losses from Hurricane Harvey were $125 billion; Hurricane Sandy caused about $71 billion of damages in 2012. And while it’s not yet possible to directly link climate change to hurricanes, warmer temperatures and higher sea levels are known to enhance their intensity and destructiveness.

“Science advances also give us more detailed spatial information to say which assets and operations are in harm’s way with climate change—for example say, just how many buildings will be inundated due to sea level rise,” said climatologist Radley Horton, associate research professor at Lamont-Doherty Earth Observatory. But the indirect economic impacts may be felt long before an actual disaster.

“For example, it’s not just whether a building is underwater or not,” he said. “What’s important are the harder-to-define things like when does societal risk perception shift? It may be that buildings lose their value before the water actually arrives, once people realize that eventually the water’s going to arrive. We need deeper thinking about the interconnection between physical and social systems.”

Here are some of the many ways that climate change will likely affect our economy, both directly and indirectly.

Agriculture

The sector most vulnerable to climate risk is agriculture.

Environmental economist Geoffrey Heal, a professor in the Columbia Business School, explained that although agriculture makes up a fairly small part of the total U.S. economy, “locally these effects could be big. There are about a dozen states in the Midwest that are very dependent on agriculture and they could take quite a big hit.”

They already have. Extreme rainfall events have increased 37 percent in the Midwest since the 1950s, and this year, the region has experienced above normal amounts of rain and snowmelt that have caused historic flooding.

Many fields have washed away and livestock have drowned; Nebraska alone lost $440 million worth of cattle, and as of March, Iowa had suffered $1.6 billion in losses.

The National Oceanic and Atmospheric Administration (NOAA) expects the coming months to bring even more flooding, which could impact our food supply. To date, farmers have only planted 67 percent of their corn crop compared to last June, when they had planted 96 percent. This lost yield could cause prices for animal feed and ethanol to rise, and potentially disrupt marketplaces at home and abroad. As a result of climate change impacts, the Midwest is projected to lose up to 25 percent of its current corn and  soybean yield by 2050.

In addition to flooding, increased heat and drought will likely reduce crop yields. According to a 2011  National Academy of Sciences report , for every degree Celsius the global thermostat rises, there will be a 5 to 15 percent decrease in overall crop production. Many commodity crops such as corn, soybean, wheat, rice, cotton, and oats do not grow well above certain temperature thresholds. In addition, crops will be affected by less availability of water and groundwater, increased pests and weeds, and fire risk. And as farmers struggle to stay afloat by finding ways to adapt to changing conditions, prices will likely increase and be passed along to consumers.

Infrastructure

Much of our society’s critical infrastructure is at risk from flooding. “Sea level rise could potentially cause a loss of value of assets in the trillions of dollars—probably anywhere from two to five trillion dollars—by the end of the century,” said Heal. “That’s loss from damage to housing, damage to airports on the coasts, damage to docks, the railway line that runs up and down the East Coast all of which is within a few feet of sea level, damage to I-95 which runs also along the coast. And that’s just the East Coast. If you take a global perspective, this is repeated around the world.” Much of this infrastructure will likely need to be repaired or replaced.

Military bases are also vulnerable. According to a  2016 report published by the Center for Climate and Security policy institute, sea level rise could flood parts of military bases along the East and Gulf coasts for up to three months a year as soon as 2050. Inland military installations near rivers are also vulnerable, because they can overflow with heavy precipitation, which is expected to become more common as the atmosphere warms. Extreme weather will necessitate more maintenance and repair for runways and roads, infrastructure and equipment.

In addition, our communication systems will be affected. A 2018 study   found that over 4,000 miles of fiber optic cable as well as data centers, traffic exchanges and termination points — the lifeblood of the global information network — are at risk from sea level rise. According to NOAA’s sea level rise projections, this infrastructure could be underwater by 2033 because most of it is buried along highways and coastlines. When it was built 25 years ago, climate change was not a concern, so while the cables are water resistant, they are not waterproof. New York, Miami and Seattle and large service providers including CenturyLink, Intelliquent and AT&T are most at risk. Threats to the internet infrastructure could have huge implications for businesses in the U.S.

Human health and productivity

If temperatures rise 4.5˚ C by 2090, 9,300 more people will die in American cities due to the rising heat. The annual losses associated with extreme temperature-related deaths alone are projected to be $140 billion.

Increasing warmth and precipitation will also add to the risk of waterborne and foodborne diseases and allergies, and spur the proliferation of insects that spread diseases like Zika, West Nile, dengue and Lyme disease into new territories. Extreme weather and climate-related natural disasters can also exacerbate mental health issues. The most vulnerable populations, such as the elderly, children, low-income communities and communities of color, will be most affected by these health impacts.

Temperature extremes are also projected to cause the loss of two billion labor hours each year by 2090, resulting in $160 billion of lost wages. Because of heat exposure, productivity in the Southeast and Southern Great Plains regions is expected to decline by 3 percent, and some counties of Texas and Florida could lose more than 6 percent of labor hours each year by 2100. According to a 2014 Rhodium Group study, the largest climate change-related economic losses in the U.S. will be from lost labor productivity.

Two billion dollars could be lost in winter recreation due to less snow and ice. For example, rapid warming in the Adirondack Mountains could decimate the winter activity sector, which makes up 30 percent of the local economy.

In addition, as water temperatures increase, water quality could suffer due to more frequent and more intense algae blooms, which can be toxic, thus curtailing recreational water activities and freshwater fishing. More frequent and severe wildfires will worsen air quality and discourage tourism. Sea level rise could submerge small islands and coastal areas, while deforestation and its destructive impacts on biodiversity could make some tourist destinations less attractive.

Businesses and the financial market

Climate change and its impacts across the globe will threaten the bottom line of businesses in a variety of ways. The frequency and intensity of extreme weather, both in the U.S. and in other countries, can damage factories, supply chain operations and other infrastructure, and disrupt transport. Drought will make water more expensive, which will likely affect the cost of raw materials and production. Climate volatility may force companies to deal with uncertainty in the price of resources for production, energy transport and insurance. And some products could become obsolete or lose their market, such as equipment related to coal mining or skiing in an area that no longer has snow.

Whether in the U.S. or abroad, new regulations such as carbon pricing and subsidies that favor a competitor may affect a business’s bottom line. A company’s reputation could also suffer if it’s seen as doing something that hurts the environment. And investors and stakeholders are increasingly worried about the potential for “stranded assets”—those that become prematurely obsolete or fall out of favor, and must be recorded as a loss, such as fossil fuels that many believe should stay in the ground or real estate in a newly designated flood plain.

In 2018, the Carbon Disclosure Project asked more than 7,000 companies to assess their financial risks from climate change. The CDP found that, unless they took preemptive measures, 215 of the world’s 500 biggest companies could lose an estimated one trillion dollars due to climate change, beginning within five years. For example, Alphabet (Google’s parent company) will likely have to deal with rising cooling costs for its data centers. Hitachi Ltd.’s suppliers in Southeast Asia could be disrupted by increased rainfall and flooding. Some companies have already been impacted by climate change-related losses. Western Digital Technologies, maker of hard disks, suffered enormous losses in 2011 after flooding in Thailand disrupted its production.

PG&E became liable for fire damages and had to file for bankruptcy after its power lines sparked California’s deadliest wildfire last fall. And GE cost its investors $193 billion between 2015 and 2018 because it overestimated demand for natural gas and underestimated the transition to renewable energy.

“The movement away from fossil fuels will have a big impact which could affect banks and investment firms that have relationships with the fossil fuel industry,” said Heal. “For example, the stock market value of the U.S. coal industry in 2011 was something like $37 billion. Today it’s about $2 billion. So anybody that lent a lot of money to the coal industry 10 years back would be in trouble. One of the things worrying those in the financial field is that this could happen to the oil and gas industry. So people who have invested in them or lent money to them are potentially at risk.”

Climate change and opportunity

The good news is that climate change also presents business opportunities. The Carbon Disclosure Project reported that 225 of the world’s 500 biggest companies believe climate change could generate over $2.1 trillion in new business prospects.

There will be more opportunity in clean energy, resilient and green buildings, and energy efficiency. Hybrid and electric vehicle production and the electric public transit sector are expected to grow. Construction of green infrastructure and more resilient coastal infrastructure could create many new jobs. Carbon capture and sequestration and uses of captured CO2  present opportunities, especially in light of the new 45Q federal tax credits. In addition, there are forward-thinking new businesses—witness the dramatic rise of Beyond Meat, the company selling plant-based burgers at Carl’s Jr. and A&W.

As the Arctic sea ice melts, new shipping lines will open up for trade, substantially cutting transport time. The warming Arctic could also offer more prospects for oil and gas drilling. Weather satellites and radar technology will be in demand to monitor extreme weather. Air conditioning and cooling products will be needed around the world. Biotech companies are developing new crops that are resistant to climate change impacts. Pharmaceutical companies expect increased demand for drugs to combat diseases such as malaria and dengue and other infectious diseases. And the market for military equipment and private security services may expand because the scarcity of resources could trigger civil unrest and conflict.

What individuals, businesses and governments can do to protect themselves

How much climate change will hurt the economy depends on what measures we take to adapt to and prepare for it.

Individuals

Individuals need to consider the implications of climate change when choosing where to spend and invest their money. And be aware that while a particular risk may not seem to be factored into prices yet, things could turn on a dime when the realization of risk sinks in, resulting in a massive redistribution of wealth. So it’s best not to buy or move to an area near wild lands, which have a higher risk of wildfires. Don’t move into a flood zone or buy real estate in an area that’s vulnerable to sea level rise. And in any case, purchase flood and fire insurance, and diversify your investments.

Individuals should also think about different opportunities in terms of new places that people are moving to. And, if possible, people who work outdoors in construction, agriculture or tourism should consider alternative jobs within the sector or new industries to work in.

Businesses and financial entities

Businesses need to scrutinize their operations carefully. “There’s a groundswell towards the view that any companies that fail to study their exposure to extreme weather and fail to disclose the types of vulnerabilities, including indirect ones, are going to have a hard time in the future,” said Horton. “Are companies looking at what’s coming down the road and making strategies to deal with it? I think investors are going to demand that and the companies that don’t do that are going to have trouble getting underwriting, getting infrastructure funded by the Moody’s of the world, and getting insurance.” He added that he’s seen a change in the last three or four years in what his students are demanding and believes that young people in the future will not work for companies that are not thinking about climate change.

Banks and funds need to analyze where their investments are and see if they are vulnerable to climate change. Have they invested in someone who has coastal property, or given a loan to a fossil fuel company or in agriculture operations that might be affected by climate change? Sixty-three percent of financial risk managers surveyed now believe climate change is a major concern. As a result, “The total value of funds that have integrated environmental, social and governance factors into their investment process has more than quadrupled since 2014, rising to $485 billion as of April,” reported the Wall Street Journal .

Governments

Governments should proactively think about the risks their communities face before disaster strikes.

They should be investing in resiliency measures such as hardening infrastructure, improving water resources, building redundancy into important systems, moving people out of harm’s way and improving health care services. “You want to do it before the disaster but you also need to be cognizant that the only time people will listen seems to be right after a disaster,” said Horton. “Those are also the times when money’s available to rebuild.”

Government leaders are currently debating whether the country can afford the Green New Deal (an ambitious plan to address climate change) or something like it. The question should be, ‘can we afford not to afford it?’ Nobel Prize-winning economist Joseph Stiglitz, a professor at Columbia University, wrote in an op ed , “We will pay for climate breakdown one way or another, so it makes sense to spend the money now to reduce emissions rather than wait until later to pay a lot more for the consequences… It’s a cliché, but it’s true: An ounce of prevention is worth a pound of cure.”

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Degrowth is the most effective solution. Eco-sufficiency and life quality are more important than profit maximization. Please read https://www.degrowth.info or https://en.wikipedia.org/wiki/Degrowth

how os quality of life gonna go up when people have less resources from degrowth

Don’t state the obvious. You said the quite part out loud.

Well, many people will have the chance to grow and adapt, making this obvious statment stupid. Many have already died, and many more will, but we can eventually get better. I don’t have much faith though.

Hey there, this was a very informative and we’ll written article. Thank you kindly

Right. Helps a lot in an essay!

I used this for a essay and this helped a lot! Thanks!

Hello, This is a big problem economically and globally. Climate change has impacted us in so many ways.

https://www.cbsnews.com/video/climate-refugees-the-quest-for-a-haven-from-extreme-weather-events/#x

Is this all rights reserved? Can I use some info from here?

why was this made, and how the hell does texas have enough buildings to cost 71 billion dollars in damages.

because they built buildings

To Renee Cho,

I first want to start off by saying thank you for sharing your knowledge of this subject with the world. It’s extremely important to share these types of ideas publicly, and it’s helpful when trying to formulate an opinion on this subject when you aren’t an expert on it.  I agree with your article. I think Climate change, if not dealt with, can have a bigger effect on our lives than we often think. Yes, the climate and earth would suffer, but so will our economy in the years leading up to the point of no return. The damage to the supply chain and factories, which you mentioned, is a huge deal. If our supply can’t withstand the strength of the demand in the future, then we will have more problems than just climate change. Because of the genera; nature of the market however, businesses will start to see that renewable energy is more profitable, and the market will start to shift. If fossil fuels become obsolete, companies wont run the risk of receiving a bad reputation for using them. I hope that this is what our economy will look like soon, instead of companies holding onto fossil fuels and other things that are harmful to our earth. They can’t make money if the world isn’t safe to make it on.  Another thing I found interesting is how instead of just focusing on what businesses need to do to mitigate this issue, you also target the individual consumer. Individuals play a big part in the market and economic health, so the choices they make can really make a difference in how climate change affects our economy.  Everyone needs to read this article, or articles like this; it’s crucial that you understand how not only the world is affected by this issue, but how you as an individual are affected as well. 

Can i use the above stated information for an article to be published in our college Magazine

This article is great! very informative can i use some of the content for my assignment?

All people must start to learn to control and reduce emission of greenhouse gases.

This was incredibly helpful, thank you!!

I like the article! it’s very descriptive.

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Three essays on the economic impacts of climate change.

A growing consensus indicates that climate change will impact economic well-being, and understanding the cost of this event is important to optimize climate policies. Over the past decade, an expanding body of literature estimated the impacts of climate change on significant facets of economic well-being; however, I have identified three shortcomings in the literature. First, previous studies predominantly focused on temperature and precipitation while ignoring other climatic variables, such as humidity and wind speed. Climate change is predicated on the shifts in a set of climatic variables, including temperature, precipitation, humidity, and wind speed; therefore, omitting any of these components may generate bias in the estimates. Second, although economists have examined various economic impacts caused by climate change, some topics have not been investigated thoroughly, and micro-mechanisms are lacking. Third, most of these studies largely focused on the U.S. context, whereas developing countries, especially China, have received little attention. The impacts of climate change may be particular strong on such countries given their increased vulnerability to this event, such as credit constraints and restricted access to irrigation. My dissertation aims to fill these research gaps.

The first chapter, coauthored with Junjie Zhang and Minpeng Chen, discusses the importance of climatic variables other than temperature and precipitation. Two models are estimated and compared using county-level agricultural data derived from China for the period of 1980 to 2010 to identify the possible omitted-variable bias. The restricted model includes temperature and precipitation only, whereas the full model includes a set of climatic variables that also contains humidity, wind speed, sunshine duration, and evaporation. The results show that omitting humidity tends to overpredict the cost of climate change on crop yields, while ignoring wind speed is likely to underpredict the effect.

The effect of temperature on economic growth needs to be understood to optimize climate policies, and much of the existing literature has estimated this relationship with aggregated economic data. Chapter 2 presents the micro-mechanism behind this relationship by employing detailed firm-level production data collected from the Chinese manufacturing sector for the period of 1998 to 2007. Upon estimating the effect of temperature on the four components in a Cobb-Douglas production function (output, total factor productivity (TFP), labor, and capital inputs), the reduction in TFP in response to high temperatures is determined to be the primary driver behind output losses. Given that TFP is invariant to the intensity of labor and capital inputs, I am able to estimate the net effect of temperature on productivity while separating any factor allocation effect.

Climate change remains as a major threat to food security, particularly for China because of its enormous population living off limited cropland. Evaluating the cost of climate change on agriculture requires estimates on both crop yields and cropland, where analysis on the latter has been limited. The third chapter, coauthored with Jianghao Wang and Junjie Zhang, utilizes unique high-resolution satellite data from 1980 to 2010 to estimate the effect of temperatures on cropland changes in China. We find that extremely high temperatures have significantly negative effects on the area of cropland, and the majority of the decrease in cropland is likely to be the conversion to built-up lands. As a result, climate change is likely to severely threaten the food security in China in the absence of countervailing investments. Ultimately, this dissertation aims to empirically evaluate the impact of climate change on the Chinese economy. This research is expected to contribute to a growing body of literature by improving on existing methodologies as well as by developing micro-mechanisms and discovering new concepts. Furthermore, this work has significant policy implications. As the world's largest CO2 emitter, China's climate strategy is critical to mitigating global climate change.

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2017 Theses Doctoral

Essays on the Economics of Climate Change

Merte, Steffen

Climate change is a major environmental threat and likely one of the most important challenges of our time. In particular, climate extremes –such as heat waves– can have a significant negative effect on society. Yet, many impacts of climate change are poorly understood and binding international climate change agreements are notoriously hard to reach. This work deals with the economics of climate change in three separate essays. The first one introduces a new methodology to estimate the impacts of climate extremes on public health. The second utilizes this methodology to assess the impacts of several climate change scenarios on Europe. The third explores a way to increase cooperation on climate change mitigation policies through explicit communication of the uncertainty of future climate change impacts. In general, human mortality shows an oscillatory pattern on top of a nonlinear trend. It tends to be highest in winter and lowest in summer. The nonlinear trend follows changes in health policies, economic growth rates, and other institutional factors. The first essays shows that singular spectrum analysis can be used for the estimation of this base rate mortality and thus allows to isolate the impacts of climate extremes on human mortality. This methodology is an improvement over approaches based on fixed effects or classic spectral analysis. It makes it possible to extend climate impact analysis to regions and countries for which there are no detailed data from hospital records as only coarse monthly data on mortality are needed. The danger of climate change lies not necessarily in the shift in average temperatures, but more so the increase in frequency of extreme heat events. Yet, while heat waves become more common, cold spells become less frequent. As both types of extreme temperature events increase human morbidity and mortality, the net effect of this shift is unknown. The second essay finds that a scenario of moderate warming can have a positive net effect on some European countries, creating winners and losers. In contrast –severe warming as a result of failed climate change mitigation policies– affects all examined European countries in a negative way. There would be no winners, just losers. As a result of the uncertainty associated with it, climate change poses a different challenge than other social dilemma situations: The negative effects of climate change do not necessarily take place incrementally. While this should be a focal point for policy makers, the costs of climate change tend to be presented within an expected utility framework. Yet, the potential behavioral reactions to this uncertainty are –so far– neither explored nor accounted for in game-theoretic models of climate coalition building. The third essay finds that cooperation in a public goods game can be increased when the uncertainty is communicated explicitly. This means that uncertainty should not be hidden behind expected costs and benefits, but rather be acknowledged when the goal is to form a climate change mitigation agreement.

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• Climatic changes--Economic aspects
• Public policy (Law)
• Sustainable development

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The Economic Consequences of Climate Change

• Climate change
• Environment
• Climate adaptation and resilience
• Biodiversity, water and ecosystems
• Environment-economy modelling and outlooks

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This report provides a new detailed quantitative assessment of the consequences of climate change on economic growth through to 2060 and beyond. It focuses on how climate change affects different drivers of growth, including labour productivity and capital supply, in different sectors across the world. The sectoral and regional analysis shows that while the impacts of climate change spread across all sectors and all regions, the largest negative consequences are projected to be found in the health and agricultural sectors, with damages especially strong in Africa and Asia.

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Journal of Economic Perspectives

• Spring 2009

The Economic Effects of Climate Change

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

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The Importance of Measuring the Fiscal and Economic Costs of Climate   Change

By Candace Vahlsing, Associate Director for Climate, Energy, Environment, and Science, Office of Management and Budget & Zach Liscow, Chief Economist, Office of Management and Budget

Climate change impacts our economy, health, well-being, security, and quality of life. According to the National Oceanic and Atmospheric Administration (NOAA), the cost of climate and weather disasters in the United States last year totaled more than $165 billion—the third most costly year on record. And this cost fails to capture the devastation from lives lost, the toll on our healthcare, and the impacts on American families and communities upended and displaced by increasing climate crises. As temperatures continue to increase—causing more severe heat waves, coastal flooding worsened by sea-level rise, and other natural disasters—the costs of climate risk will likely continue to rise in the coming years.

In recognition of these risks, President Biden’s Executive Order on Climate-Related Financial Risk directed the Council of Economic Advisers (CEA) and the Office of Management and Budget (OMB), along with experts across the U.S. Government, to develop methodologies to integrate climate risks into the President’s Budget. Climate risks could affect the Budget and the overall fiscal outlook through a number of pathways, including altering total tax revenue through effects on Gross Domestic Product (GDP) growth, and changing Federal spending to respond to climate impacts, both to ameliorate climate damages and spur the transition to clean energy.

To conduct this vital work, the U.S. Government established two interagency working groups. The first group was established to assess the fiscal risk posed by the impacts of climate change through its effects on the macroeconomy. The second was formed to develop methods and conduct assessments concerning how climate risk directly impacts the cost of Federal programs and to share climate data across the Federal government. Over the last two years, these groups engaged in a range of analyses incorporated in both last and this year’s Budgets and helped produce four white papers. Thus far this work points to three overarching conclusions:

• $134 billion in annual expenditure impacts for just six types of disasters – and as much as $2 trillion in lost revenue annually by the end of the century.
• Existing quantitative assessments of the fiscal cost of climate change have already resulted in new Fiscal Year (FY) 2024 Budget proposals that will decrease the Federal government’s short- and long-term climate fiscal risk.
• Existing climate-related financial risk data, analytical tools, and methodologies require further refinement to more accurately quantify specific risks from climate change and inform our policies to combat these risks.

Even as further data and methodological advances are necessary, the U.S. Government has made substantial progress in evaluating climate risk to specific Federal programs. Through its FY23 analysis, OMB sharpened our understanding of some of the largest impacts of climate change on the Federal Budget. These findings directly informed new policies in the FY24 Budget that aim to reduce climate risks and the costs of climate change in the long term. For example, last year OMB found that the Federal cost of crop insurance could increase by more the $2.2 billion by the end of the century due to climate change. The FY24 Budget includes a new proposal to provide incentives for farmers to plant cover crops to make their fields more resilient to climate change. For this year’s Budget, OMB committed to collaborate with our interagency partners on a framework for conducting assessments of climate-related financial risk to Federal assets and expenditures and to coordinate on sharing climate risk data across the Federal government.

Similarly, whereas last year’s analysis on long-term effects of climate on Federal debt only considered the macroeconomic consequences of a high-end, worst-case climate scenario, the FY24 Budget introduces a more robust analytic framework. The FY24 Long-Term Budget Outlook Analytical Perspectives chapter considers three different emissions scenarios to evaluate how the damages of climate change on U.S. GDP could affect the debt-to-GDP trajectory . A new CEA-OMB White Paper compiles evidence on a broad range of pathways by which climate change and building a clean energy economy can affect the macroeconomy and evaluates methods to improve assessments for future Budgets ( White House 2023 ). These improvements will strengthen the U.S. Government’s capacity to anticipate and to mitigate climate risks and to facilitate meeting the President’s goal of building a clean energy economy with net-zero emissions.

OMB’s FY24 analysis on the cost of climate change to the Federal Budget presents test case analyses to evaluate the impact of climate change on the Budget with a focus on three specific sectors – Federal lending for single-family housing, the cost of replacing Federal facilities due to sea level rise, and changes in heating and cooling costs. These analyses determined that existing climate related financial risk data, analytical tools, and methodologies have significant limitations that impede the ability to develop robust cost estimates for the sector evaluated this year. Despite these limitations, the results of these tests cases yielded initial sector-specific findings, including:

• Federal single-family housing portfolio : Five types of climate hazards are anticipated to cause half of the annual losses of unpaid principal balances across the United States Department of Agriculture (USDA), Department of Veterans Affairs (VA), and the United States Department of Housing and Urban Development (HUD)’s single-family housing portfolios.
• Heating and cooling assistance : By this century’s end, the 20-year average for heating degree days is projected to decline by up to 30 percent, while the average number of cooling degrees days is projected to increase by up to 60 percent. These changes may affect energy demand for heating and cooling, and in turn, the Low-Income Home Energy Assistance Program funding.

Climate risk data show us that if we fail to invest in building resilience to reduce climate change damages now, we will fail at our responsibility to properly manage Federal funding on behalf of tax payers.

In the face of increasing costs associated with the impacts of climate change, the Biden-Harris Administration continues to invest in mitigating climate related risk by taking steps to reduce greenhouse gas (GHG) emissions. If we do not continue to invest in steps aimed at reducing GHG emissions, the data indicates that the costs to the government, and society as a whole, will rise even more.

The first two years of the Administration marked a turning point in progress toward reducing GHG emissions, with the United States now on a clear path toward a transformed, clean-energy economy. Important GHG emissions-related policy changes from the past two years include:

• The Inflation Reduction Act , a $369 billion investment in modernizing the U.S. energy system.
• The Bipartisan Infrastructure Law , which makes major investments in infrastructure essential for the clean energy future such as public transit, electric vehicle charging, and transmission.
• Ratification of the Kigali Amendments to the Montreal Protocol , an international agreement to accelerate phase-down of highly potent hydrofluorocarbons .
• The 2021 EPA Light-Duty Vehicle Greenhouse Gas Standards and NHTSA CAFE Standards , which will avoid more than 3 billion tons of GHG emissions by 2050.
• The proposed EPA Methane Rule targeting methane emissions from the oil and gas sector .
• The FY24 President’s Budget investing a total of $52.2 billion in discretionary budget authority to tackle the climate crisis – the largest budget request for climate change in history.

The Inflation Reduction Act and Bipartisan Infrastructure Law investments put America on track to decrease greenhouse gas emissions by about 40 percent below 2005 levels in 2030—positioning America to meet President Biden’s climate goals of cutting greenhouse gases at least in half in 2030 and reaching net zero by no later than 2050.

The Biden-Harris Administration’s climate policies strengthen our economy’s resiliency and efficiency. It is imperative that we continue to invest in climate programs through the annual appropriations process to achieve our climate goals and build clean energy projects all across America that create good paying jobs. Reducing GHG emissions provides real economic benefits, including reduced risks of current and future life-threatening heat waves and of future damage to homes and infrastructure caused by extreme weather ( White House 2022 ).

For example, calculations by CEA suggest cost reductions driven by Inflation Reduction Act subsidies just for solar and wind energy will reach $90 billion for capacity installed through 2035, savings that accrue both in the U.S. and globally. Larger cost declines—on a percentage basis—are expected for more nascent technologies, for which learning effects are often more pronounced, including geothermal electricity generation, hydrogen production, and the direct capture and storage of carbon dioxide from the air. These cost declines could spur economic productivity and lower inflation, but due to data limitations are as of yet unaccounted for in the economic analysis that underpins the Budget.

Through its budget development and implementation process, OMB identifies the benefits of climate investments through several avenues. OMB directs agencies to prioritize investments that create good-paying clean energy jobs and reduce GHG emissions in initial budget guidance, and asks select agencies to measure, when feasible, the relative GHG reductions of programmatic budget investments when submitting their budget request. In the budget implementation phase, OMB works with agencies to leverage appropriated dollars to reduce carbon pollution.

An important next step of this work will be to improve our capacity to incorporate our understanding of climate risk into the economic assumptions that underlie the President’s Budget. The extent to which the United States meets, exceeds, or fails to meet its emissions goals will impact the economic and fiscal outlook over the short, medium, and long term. Accurately incorporating the economic assumptions associated with climate risk into the President’s Budget moving forward will be vital to this nation’s long-term economic health. While substantial progress on this front has been made over the last two years, current economic data and analytic tools are not purpose-built to incorporate this progress into the analysis that underpins the Budget. CEA and OMB are jointly collaborating with interagency partners to improve existing methods to quantify the macroeconomic effects of climate change and building the clean energy economy of the future.

Accounting for climate risk in both the economic forecasting and the program analysis that underpins the President’s Budget will help limit the costs of climate change to our economy and our health – and help ensure a brighter future.

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Synergistic impacts of climate change and wildfires on agricultural sustainability—a greek case study.

1. Introduction

1.1. background to the study, 1.2. objectives of the study.

• To examine the effect of extreme weather events on agricultural sustainability in Europe.
• To evaluate the ecosystem disruption caused by climate change and its effect on agricultural sustainability in Europe.
• To evaluate wildlife habitat alteration by wildfires and its influence on agricultural sustainability in Europe.
• To examine the influence of wildfire smoke on the general sustainability of agriculture across Europe.

1.3. Literature Review

1.3.1. extreme weather events, 1.3.2. ecosystem disruption caused by climate change, 1.3.3. habitat alteration by wildfires, 1.3.4. wildfire smoke, 1.3.5. climate change and sustainability of agriculture across europe, 1.4. research questions.

• What is the effect of extreme weather events on agricultural sustainability in Europe?
• How does the ecosystem disruption caused by climate change affect agricultural sustainability in Europe?
• How does wildlife habitat alteration by wildfires influence agricultural sustainability in Europe?
• What is the influence of wildfire smoke on the general sustainability of agriculture across Europe?

1.5. Research Hypotheses

2. methodology, 2.1. research design, 2.2. target population, 2.3. sample size, 2.4. data collection, 2.5. data analysis, 3.1. descriptive results, 3.2. regression analysis, 4. discussion, 5. conclusions, limitations and areas for future research, author contributions, data availability statement, acknowledgments, conflicts of interest.

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Kalogiannidis, S.; Kalfas, D.; Paschalidou, M.; Chatzitheodoridis, F. Synergistic Impacts of Climate Change and Wildfires on Agricultural Sustainability—A Greek Case Study. Climate 2024 , 12 , 144. https://doi.org/10.3390/cli12090144

Kalogiannidis S, Kalfas D, Paschalidou M, Chatzitheodoridis F. Synergistic Impacts of Climate Change and Wildfires on Agricultural Sustainability—A Greek Case Study. Climate . 2024; 12(9):144. https://doi.org/10.3390/cli12090144

Kalogiannidis, Stavros, Dimitrios Kalfas, Maria Paschalidou, and Fotios Chatzitheodoridis. 2024. "Synergistic Impacts of Climate Change and Wildfires on Agricultural Sustainability—A Greek Case Study" Climate 12, no. 9: 144. https://doi.org/10.3390/cli12090144

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Climate Change through the Lens of Macroeconomic Modeling

There is a rapidly advancing literature on the macroeconomics of climate change. This review focuses on developments in the construction and solution of structural integrated assessment models (IAMs), highlighting the marriage of state-of-the-art natural science with general equilibrium theory. We discuss challenges in solving dynamic stochastic IAMs with sharp nonlinearities, multiple regions, and multiple sources of risk. Key innovations in deep learning and other machine learning approaches overcome many computational challenges and enhance the accuracy and relevance of policy findings. We conclude with an overview of recent applications of IAMs and key policy insights.

We thank Lint Barrage, Ghassane Benmir, Simon Dietz, Daniela Domeisen, Doris Folini, Stephie Fried, Aleksandra Friedl, Felix Kubler, Thomas Lontzek, Rick Van der Ploeg, Karl Schmedders, Christian Traeger, Frank Venmans, and Gauthier Vermandel for their valuable discussions and comments. This work was generously supported by grants from the Swiss National Science Foundation (SNSF), under project IDs “Can economic policy mitigate climate-change?,” and “New methods for asset pricing with frictions.” Simon Scheidegger gratefully acknowledges support from the Department of Economics, University of Pennsylvania. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

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Talen Energy's Brunner Island plant in York County is switching from coal to natural gas.

 Marie Cusick / StateImpact Pennsylvania

Pa. Senate votes to repeal climate program

Marie Cusick / StateImpact Pennsylvania

Pennsylvania’s Senate is trying again to overturn a regulation that would make power plants pay for pollution.

The chamber voted along party lines Tuesday to repeal the regulation that allows the state to join 10 other states in the Regional Greenhouse Gas Initiative.

The RGGI rule was finalized more than 2 years ago, but has never been enforced because of court challenges.

The Commonwealth Court struck it down as an unconstitutional tax. That decision is being appealed to the Supreme Court.

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Sen. Joe Pittman (R-Indiana) said the program threatens the state’s electricity industry.

“We are obsessed with removing the anvil that Democrat governors have put over the heads of thousands of workers who rely on the production of electricity in this commonwealth for their family sustaining job,” he said.

Democratic senators said RGGI takes a first step in helping reduce climate pollution that affects people’s health and safety. The fee for polluting is designed to help renewable sources be more competitive on the grid.

Sen. Katie Muth (D-Montgomery) said lawmakers have a duty to protect constituents from climate pollution.

“People are relying on us to make decisions based on how they will be impacted, not so that corporations can rake in more cash off the backs of our constituents,” she said.

Senate Minority Leader Jay Costa (D-Allegheny) said the repeal bill would be “dead on arrival” in the state House, which is controlled by Democrats.

Gov. Josh Shapiro has proposed an alternative to RGGI called PACER. Under Shapiro’s plan, Pennsylvania would establish its own system of charging power plants for climate pollution and would not collaborate with other states.

Shapiro has promised to pull out of RGGI if PACER is passed.

Shapiro’s spokesperson Manuel Bonder said the governor is focused on real action to address climate change and ensure reliable power.

“The Governor has made clear that inaction on this key issue is not an option, and instead of wasting time on messaging bills, his Administration will remain focused on actual solutions and delivering real results for Pennsylvania communities,” Bonder said.

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StateImpact Pennsylvania is a collaboration among WITF , WHYY , and the Allegheny Front . Reporters Reid Frazier , Rachel McDevitt and Susan Phillips  cover the commonwealth’s energy economy. Read their reports on this site, and hear them on public radio stations across Pennsylvania.

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