Page:OMB Climate Change Fiscal Risk Report 2016.pdf/6

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CLIMATE CHANGE: THE FISCAL RISKS FACING THE FEDERAL GOVERNMENT

will place further strain on Federal fire suppression resources. Climate change shocks and stressors worldwide pose global security risks and affect resource needs for defense operations and infrastructure. Wide-ranging impacts will impede economic production and diminish Federal revenue.

Although the presence of risk across these and other exposure points is clear, we remain in the early stages of quantifying the total likely burden for American taxpayers. In several critical areas, quantitative projections of specific climate impacts are not yet available. The projections we do have are useful in approximating the order of magnitude of potential impacts of climate change on the Federal Budget, but are still subject to significant limitations and uncertainty. As a result, because of these limitations and because other impacts are not considered in this assessment, the total costs of climate change for the Federal Government may be greatly underestimated, and other costs affecting the American people are not considered here. Despite these limitations, the accumulated evidence suggests the fiscal impacts of further unmitigated climate change could leave a significant imprint on the Federal Budget over the course of this century.

Expenditure Impacts

On the expenditures side of the Federal ledger, each of the five program-specific assessments conducted for this report unambiguously illustrates that climate change will raise expenditures. The table below shows estimates of recurring, annual expenditures due to climate change across four of the five program areas—totaling $34-$112 billion per year by late-century, the equivalent of $9-$28 billion per year in today’s economy.

Increased federal expenditure from climate change late 20th century.png

Quantified Increases in Annual Expenditures Due to Climate Change in Modeled Scenarios[1]
Billions of Real dollars
(GDP-Adjusted)
[2]
Mid-Century Late-Century
Mean Lo[3] Hi[3] Mean Lo[3] Hi[3]
Wildland Fire
Suppression
$1.3
($0.6)
$0.8
($0.4)
$2.0
($0.9)
$2.3
($0.5)
$1.2
($0.2)
$5.0
($1.0)
Crop Insurance[4] -- -- -- $4.2
($1.0)
<$0.1
(<$0.1)
$9.3
($2.3)
Air Quality-Health Care[5] $0.6
($0.3)
<0.1
(<$0.1)
$1.5
($0.7)
$7.7
($1.2)
$0.6
($0.1)
$19.7
($3.2)
Coastal Disaster Relief $19
($8.7)
$11
($5.0)
$31
($14.2)
$50
($13.6)
$32
($8.7)
$78
($21.2)
Total Annual Expenditures[6] $21
($9.6)
$12
($5.4)
$35
($15.8)
$64
($16.3)
$34
($9.0)
$112
($27.6)

 6

  1. The costs in this table are not predictions of the future; they are projections of costs that would be incurred by the Federal Government given a set of assumptions that form the scenarios modeled. See each assessment for more information.
  2. Estimates represent snapshots of average annual expenditures due to climate change in the year(s) modeled for this assessment. Topline estimates are in billions of real dollars. Below the topline estimates (in parentheses) are equivalent dollar estimates in today’s economy in terms of percent of U.S. GDP. Adjustment factors vary due to differences in years modeled.
  3. 3.0 3.1 3.2 3.3 The range between Lo and Hi estimates reflects only a portion of the uncertainty associated with cost estimates. See relevant sections of this report for more information.
  4. Crop insurance expenditures were only modeled for the late-century time period (2080).
  5. While the other three assessments compare an unmitigated climate change scenario to a scenario characterized by historical weather patterns, the air quality assessment compares an unmitigated climate change scenario to a mitigation policy scenario. As discussed in the assessment, mid-century estimates may capture less than half of the full cost increase due to unmitigated climate change, while late-century estimates likely capture the vast majority of the increase.
  6. Several likely areas of fiscal risk related to climate change have not yet been quantified.