Wake up daily to our latest coverage of business done better, directly in your inbox.


Get your weekly dose of analysis on rising corporate activism.

Select Newsletter

By signing up you agree to our privacy policy. You can opt out anytime.

Mike Hower headshot

Climate Change Inaction Costs Taxpayers Billions

There is a lingering perception that investing in technologies, initiatives and processes aimed at countering climate change is just another drain on already troubled U.S. taxpayers. But what about the cost of inaction?

According to a new report by Ceres, extreme weather events cost the United States $100 billion in 2012, most of which went towards federal crop, flood, wildfire and disaster relief. While naysayers continue to claim weather events like Hurricane Sandy and climate change are unrelated, scientists agree that climate change exacerbates extreme weather events. They predict that the intensity and frequency of these events will only increase as the planet warms up.

With only 50 percent of the damages in the U.S. caused by extreme weather events privately insured, the  federal and state governments are left to pick up the rest, the report says. However, public disaster relief and recovery programs have been slow to recognize that worsening climate impacts will drive up future losses to unsustainable levels. Rather than encouraging behavior that reduces risks from extreme weather events, these programs continue to encourage behavior that increases these risks – such as agricultural practices that increase vulnerability to drought and new development in hurricane- and wildfire-prone areas.

"Taxpayers should be outraged that their tax dollars are incentivizing high risk behavior that increases federal disaster costs,” said Steve Ellis, vice president of Taxpayers for Common Sense. “Especially in light of increased risks in the future, policymakers need to reorient federal policies to encourage mitigation and prerespond to the disasters we know we face.”

“Every dime spent on disaster responses should help ensure we don’t have to spend that dime in the future,” Ellis added.

Recommendations from the report, Inaction on Climate Change: The Cost to Taxpayers, include:

  • Improving transparency and accounting of the costs of extreme weather events to disaster relief and recovery programs;

  • Boosting research to understand how climate change will impact these programs;

  • Requiring recipients of federal relief and recovery assistance to adopt more stringent building codes and prohibit development in vulnerable areas;

  • Finding ways to increase the level of private insurance market participation to reduce pressure on government relief and recovery programs.

“The report shows that dealing with climate change doesn’t require large-scale schemes or a total restructuring of our global economy,” said Eli Lehrer, president of the R Street Institute, a nonprofit think-tank that advocates for free market solutions. “The ideas outlined here are the basis of a true ‘no-regrets’ strategy for dealing with a significant problem.”

The report also makes specific recommendations for the National Flood Insurance Program (NFIP), Federal Crop Insurance Program (FCIP), disaster assistance and wildfire protection programs. These include:

  • NFIP: Implement the Biggert-Waters Act reforms, including phasing in higher insurance premium rates that better reflect risks and incorporating climate change risks into flood plain maps, loss models and insurance premium rate setting.

  • FCIP: Institute a pilot program to offer lower insurance premiums to farmers who adopt farming practices that increase resiliency to drought and other weather extremes, such as sustainable soil management practices.

  • Disaster Assistance: Budget for reasonable foreseeable annual costs of natural disaster assistance and reduce reliance on ad hoc funding; require that states use a percentage of federal assistance to make public infrastructure more resistant to extreme weather events.

  • Wildfire Protection: Allocate substantially more federal and state resources to wildfire prevention measures and adopt and enforce state and local regulations that require wildfire risk reduction actions, such as broader use of setback requirements.

The report also documents the skyrocketing loss exposure of state-run insurance plans, especially in hurricane-prone states like Texas and Florida – and steps that are needed to reform those programs, such as charging insurance premium rates that truly reflect risks and incorporating climate change risks into insurance premium rate-setting. In the past 20 years, the total loss exposure of these state-run insurance plans has risen by 1,550 percent, from about $40 billion in 1990 to over $600 billion in 2010.

In September, the Intergovernmental Panel on Climate Change (IPCC), a coalition of leading scientists from around the world, announced it is now 95 percent confident that human influence is the dominant cause of global warming. This means that that the debate is over — climate change is occurring due to human action.

While Congress has proven itself too inept even to pass a budget, much less tackle one of the greatest challenges of our time, the climate change debate is not as contentious as some might have us believe. An April study released by Yale and George Mason University found that nearly 80 percent of Republicans and Republican-leaning Independents support increasing renewable energy use and more than 60 percent believe the United States should take action to address climate change. Remarkably, only a third of Republican respondents said they agree with the GOP’s position on climate change, which has changed dramatically since 2008.

There may be hope for us yet.

Based in San Francisco, Mike Hower is a writer, thinker and strategic communicator that revels in driving the conversation at the intersection of sustainability, tech, politics and law. He has cultivated diverse experience working for the United States Congress in Washington, D.C., helping Silicon Valley startups with public relations campaigns and teaching in South America. Connect with him on LinkedIn or follow him on Twitter (@mikehower).

Mike Hower headshotMike Hower

Currently based in Washington, D.C, <strong>Mike Hower</strong> is a new media journalist and strategic communication professional focused on helping to drive the conversation at the intersection of sustainable business and public policy. To learn more about Mike, visit his blog,<a href="http://climatalk.com/&quot; > ClimaTalk</a>.

Read more stories by Mike Hower

More stories from Investment & Markets