On Tuesday, October 24, the Government Accountability Office (GAO), the official auditor of the federal government, made public a report on the economic effects of climate change. The report characterizes climate change as a “fiscal exposure,” and finds the government’s management of climate change risks to be inadequate. The report is highly critical of the lack of coordination in the federal government’s response to climate change. Although many federal agencies plan for climate change individually, there is no strategy connecting agencies, resulting in both gaps and redundancies in government planning. GAO also takes issue with the scarcity of funds for building resiliency, pointing out that most federal funding for mitigation is not available until after disaster strikes. The report calls on the government to take a strategic and proactive approach to managing the financial risks associated with climate change. This is not the GAO’s first warning, as climate change has been included on its biennial High Risk List since 2013.

The report was requested by Senators Maria Cantwell (D-WA) and Susan Collins (R-ME) in 2015 out of concern about the impacts of climate change on the federal budget. Senator Collins announced the report on the Senate floor, saying, “Most of the past focus of the impact of climate change has been on public health and the environment, important to be sure, but there has not been nearly enough analysis on the consequences for our economy, and for the federal budget in particular.” Between December 2015 and September 2017, GAO evaluated the economic information on climate change through an extensive literature review and 26 expert interviews. Most of the findings in the GAO report are based on two national studies, American Climate Prospectus, published by the Rhodium Group in 2014, and Climate Change Impacts and Risks Analysis, released by the Environmental Protection Agency (EPA) in 2015.

According to analysis by the Office of Management and Budget, the federal government spent $350 billion on extreme weather and fire events in the last decade, and annual disaster spending could increase by $12-$35 billion per year by 2050. By 2100, the economic effects of climate change could represent as much as 2.4 percent of United States GDP, per the Rhodium Group’s American Climate Prospectus study. These figures were calculated before the recent string of hurricanes and wildfires, and emerging evidence suggests that disaster spending is increasing much faster than predicted by the study. A report by the Universal Ecological Fund estimates that the United States will spend as much as $300 billion on natural disasters in 2017 alone.

Examples of the potential economic effects of climate change by 2100 in regions throughout the United States. Credit: Government Accountability Office (GAO)

The GAO report emphasizes the uneven distribution of climate change effects across economic sectors and geographic regions. The report determines that the Southeast, Midwest, and Great Plains are the most economically vulnerable regions of the United States. Coastal communities in the Southeast are prone to storms and sea-level rise. In Florida, climate change costs are likely to amount to 10-24 percent of the state’s economic output by the end of the century. Meanwhile, the agricultural economies of the Midwest and Great Plains will suffer as crop yields decline, although these losses may be partially offset by agricultural gains for more northern states where warmer temperatures improve growing conditions. Other regional economic effects of climate change include losses for the shellfish industry of the Pacific Northwest, where ocean acidification threatens marine ecosystems, and higher fire suppression costs in the Rocky Mountains, where the size of wildfires is expected to increase by 1.9 million acres by 2100. The human health costs associated with climate change have the potential to disrupt the national economy. The estimated range of human health outcomes varies significantly based on the calculation, but generally, extreme heat and poor air quality are expected to cause a significant number of premature deaths, costing the United States billions of dollars.

The GAO report acknowledges at length that existing climate change information can be imprecise, yet still advises the federal government to respond urgently. The report reminds the government that most areas of federal policymaking involve high degrees of uncertainty, and the government has tools for accounting for these risks. GAO concludes that uncertainty in the case of climate change is no excuse for inaction, and lays out a path forward for public officials. First, the federal government should assess the risks of climate change, next, prioritize the most significant and immediate risks, and finally, implement investments that minimize these risks. The report contains a specific recommendation for executive action, directing bodies within the Executive Office of the President to develop a clear strategy on climate change. The GAO characterizes its recommendation as merely an “initial step” for the federal government.

The GAO report is a call to action, although it remains unclear how the current administration may respond. The executive bodies targeted in the report—the Council on Environmental Quality, Office of Management and Budget, and Office of Science and Technology Policy—did not offer comments on the report and have not responded since its public release.


Author: Beatrix Scolari