CLIMATE CHANGE: THE FISCAL RISKS FACING THE FEDERAL GOVERNMENT
4. COASTAL STORM DISASTER RELIEF
Modeling by the Congressional Budget Office (CBO) suggests the Federal Government could incur additional disaster relief expenditures of tens of billions each year by 2075 due to higher sea levels and more intense hurricanes caused by climate change.
Climate Change and Disaster Relief
When a storm devastates a community, the Federal Government responds. Discretionary spending to provide relief in the aftermath of coastal hurricanes has exceeded $200 billion since 2000 (CBO, 2016). Climate change is driving sea level rise and more intense hurricanes, amplifying the probability of catastrophic storm damages each year in America’s coastal communities and posing a significant fiscal risk for the Federal Government (Melillo et al., 2014; CBO, 2016).
A CBO study estimated that total expected economic damages[1] would be roughly $120 billion higher per year in real dollars by 2075 compared to today, or roughly 0.18 percent of 2075 real GDP (Congressional Budget Office, 2016). The study shows that, assuming population and incomes continue to grow in coastal communities, climate change contributes roughly two-thirds of the modeled increase in expected hurricane damages, or about $80 billion per year by 2075. About half of this climate change-attributed increase is essentially the effect of climate change on existing coastal property, and half is the effect of climate change on expected future development in coastal communities. The remaining one-third of the total increase ($40 billion) would occur due to continued coastal development alone, holding current sea levels and hurricane frequency constant.
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- ↑ Expected damage reflects the average annual costs that can be expected for over several years, but is typically higher than actual damage in most years since it captures small probabilities in each year of particularly catastrophic storms.
