Earth Day occurs four days after Tax Day this year. But climate change now imposes a hidden tax on every American every day of the year.
Climate-related disasters caused nearly $150 billion in damage to the country’s economy last year, according to data from the National Oceanic and Atmospheric Administration (NOAA). That was almost 50 percent more than in the previous year.
For comparison: $150 billion is larger than the gross national product of almost a third of our states. That’s more money than either Microsoft or General Motors made last year. Spread over the calendar year, it’s the equivalent of setting fire to $400 million every day and watching it go up in smoke.
And guess who pays for that? You, me, all of us.
The fact is, on this Earth Day, climate change is no longer just an environmental issue or a social issue—it’s an economic issue. And we have to face this concern.
Earlier this month, on the same day, the United Nations released the latest report from the Intergovernmental Panel on Climate Change (IPCC), showing that the world is now on a path where it may be too late to face ever greater climate catastrophes avoid, according to the US Office of Management and Budget (OMB) released another worrying report. According to the OMB, increasing climate-related disasters will cost the federal government—read, U.S. taxpayers—$2 trillion each year by the end of the century if we don’t do something to prevent them. That makes the cleanup costs of last year’s 21 named hurricanes, four of which were major hurricanes with winds of 110 mph or more, wildfires, droughts and floods, look like small change.
And remember, so far we’ve only been talking about the cost of damage from climate-related disasters. Countless other climate-related costs are also rising sharply.
According to industry estimates, home insurance rates nationwide are up 34 percent from a decade ago. In some states, residents’ insurance premiums have doubled in the past year. At worst, insurers are refusing to write more homeowner policies as climate change drives up the risk and cost of disasters.
“Natural disasters” is the latest misnomer as wildfires, extreme floods and severe droughts have redefined causes and require new solutions. According to figures from the National Interagency Fire Center, taxpayers spent about $4.5 billion in firefighting expenses to fight nearly 50,000 wildfires nationwide. We’re spending another tens of billions in taxes to clean up military bases in North Carolina, Florida, Nebraska and elsewhere that have been hit by hurricanes and floods in recent years.
We also pay a hidden climate tax with every restaurant and grocery bill. Between 2020 and 2022, floods, droughts and other weather disasters will help the cost of corn, soybeans, wheat and other commodities included in the Bloomberg Agriculture Spot Index rise nearly 75 percent. Yes, inflation makes everything go up, but as the Wall Street Journal put it, “Blame your bigger bills on bad weather.”
Fortunately, there are two sides of the coin when it comes to the economics of climate change.
As climate change kills our economy, clean energy and climate action can save it—and make it stronger, better, and more competitive.
Thanks to government investment a decade ago, solar and wind power are now the cheapest available energy in most parts of the country. Almost every automaker is now trying to switch to electric vehicles because they’re better, cost less, and are what Americans want and need to shake off the shackles of sky-high gas prices. All of this creates jobs: More than 3 million Americans are now working in clean energy, clean vehicles and energy efficiency.
However, to contain the future economic costs of climate change, we must act much, much faster. The good news is that we’ve already written the guidelines that can do this.
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Sitting in the Senate today is a budget cleanup bill that would invest about $500 billion over 10 years in building a cleaner economy, in part by giving tax credits to consumers and businesses to build and build more clean energy and clean vehicles to buy. With climate-related disasters now costing us $150 billion a year, $50 billion a year for 10 years seems like a steal.
On this Earth Day, we don’t need any more speeches or demonstrations or waiting. President Biden needs to get back to work and push those overdue investments to scale up clean energy and address the costs of climate change. We need Congress to pass the legislation before it. And we must do it now.
Bob Keefe is executive director of the national bipartisan business organization E2 (Environmental Entrepreneurs) and author of the forthcoming book, Climatenomics: Washington, Wall Street and the Economic Battle to Save Our Planet, available May 17.
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