Climate threatsHow climate change impacts the economy
Warmer temperatures, sea level rise and extreme weather will be deleterious to the U.S. economy: Rising temperatures 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.
TheFourth 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.”
