Climate change could cost US$2 trillion annually by 2100: OMB

Dry, cracked ground is seen near Lake Powell, which was previously underwater on March 28, 2022 in Page, Arizona. As a severe drought gripped part of the western United States, Lake Powell’s water level dropped to its lowest level since the lake was created by damming the Colorado River in 1963.

Justin Sullivan | Getty Images

Floods, droughts, wildfires and hurricanes exacerbated by climate change could cost the US federal budget about $2 trillion a year by the end of the century, the White House said in a Monday estimate.

An analysis by the Office of Management and Budget, which manages the federal budget, found that climate change could lead to a 7.1% decline in federal revenue per year by the end of the century.

The report also indicated that the federal government could spend between $25 billion and $128 billion annually on costs such as coastal disaster relief, flood insurance, crop insurance, medical insurance, wildfire fighting, and flooding at federal facilities.

“The fiscal risk of climate change is huge,” said Candice Walsing, OMB’s deputy climate director, and Danny Yagan, its chief economist. wrote in the blog published on Monday.

“Climate change is threatening communities and sectors across the country, including through floods, drought, heat waves, wildfires and hurricanes that affect the US economy and the lives of ordinary Americans,” they wrote. “Future losses could exceed current losses if greenhouse gas emissions are not reduced.”

The news comes on the same day that a long-awaited report from a panel of UN climate scientists was released, warning that reducing global warming by 1.5 degrees Celsius below pre-industrial levels would require greenhouse gas emissions to peak before 2025.

The world has already warmed by about 1.1 degrees Celsius compared to pre-industrial levels and is on track to increase global temperatures by 2.4 degrees Celsius by 2100.

An OMB analysis warned that intensifying wildfires could increase federal firefighting spending by $1.55 billion to $9.60 billion a year, representing a 78% to 480% increase by the end of the century. Meanwhile, more frequent hurricanes could increase coastal disaster relief spending by between $22 billion and $94 billion a year by the end of the century.

In addition, 12,000 federal buildings across the country could be flooded with ten feet of sea level rise, with a total replacement cost of more than $43.7 billion, the analysis said. However, this will be an extreme measure of sea level rise for 2100. In the 2021 report US National Oceanic and Atmospheric Administration predicted US sea level rise from 0.6 meters (nearly two feet) to 2.2 meters (just over seven feet) by the end of the century.

President Joe Biden last week unveiled his 2023 budget proposal, which calls for almost $45 billion in new funding for climate change, clean energy and environmental justice programs. The budget, which includes a nearly 60% increase in climate change funding compared to FY 2021, was passed as the president’s primary climate change bill stalled in Congress.

The climate portion of a $1.75 trillion bill passed by the House of Representatives, called the Better Recovery Act, will be the largest ever federal investment in clean energy and could help the U.S. meet about halfway to the president’s pledge to halve emissions by 2030. according to impartial analytical firm Rhodium Group.

Earlier this year, Biden said he would likely have to cancel the plan, but said he thought Congress would still pass parts of it, including $555 billion in climate spending.

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