The Price of Climate Resilience
The United States now faces the task of fortifying its infrastructure and communities against the escalating costs of extreme weather events driven by climate change. While much focus has been on Carbon Offsets, ‘Net-zero' goals, and other strategies to reduce CO2 levels, the immediate financial reality is undeniable, even among climate deniers.
According to recent analyses conducted by leading climate economists and policy researchers, the United States is projected to require $500 billion to $1 trillion in expenditure for climate resilience initiatives over the next half-decade. This encompasses a wide array of investments, including upgrades to infrastructure, ecosystem restoration, disaster preparedness, and community resilience measures.
Note: this publication believes the above estimate is as much as
3-5 times below what the actual costs of climate change will be.
Specifically, the National Climate Assessment, a report issued by the U.S. Global Change Research Program, estimates that the country will need to invest approximately $250 billion per year in adaptation measures to mitigate the impacts of climate change by 2050. Extrapolating this figure over the next five years yields a total expenditure ranging from $1.25 trillion to $1.5 trillion.
However, the burden of financing climate resilience initiatives does not rest solely on government shoulders. Individual homeowners across the nation also face significant expenditures to safeguard their properties against climate-related risks. According to a study conducted by the Wharton Risk Center at the University of Pennsylvania, homeowners are expected to bear an additional $75 billion to $125 billion in costs over the next five years for climate resilience measures.
This estimate takes into account a range of factors, including the cost of retrofitting homes to withstand extreme weather events, implementing flood protection measures, and investing in fire-resistant landscaping. For instance, retrofitting a single-family home to meet FEMA's recommended standards for flood resistance can cost between $10,000 to $50,000, depending on factors such as location, elevation, and construction materials.
Read the introduction to Building financial resilience in an uninsurable world: ‘Inevitable surprises’ to learn how financially ill-prepared most Americans are.
Moreover, homeowners in high-risk areas may face even greater financial burdens, as insurance premiums soar and property values decline in response to escalating climate risks. According to a report by the Union of Concerned Scientists, rising sea levels alone could put $1 trillion worth of coastal real estate at risk of chronic flooding by 2100, with homeowners bearing the brunt of associated costs.
Much of the funding provided through the Inflation Reduction Act is targeted towards community or civic projects. But consider that legislation will authorize $20B for ‘green banks’, a small fraction of the predicted costs and perhaps a drop in the bucket compared to what this publication believes will be the real costs.
Learn more about building financial resilience for an uninsurable future; the impact of climate change on personal finances and the wealth of the nation.
