The White House’s Office of Management and Budget (OMB) on Monday issued its first risk assessment for the impact of climate change on the federal budget, calling the fiscal risks associated with climate change “immense.”
OMB personnel cited estimates by the Network for Greening the Financial System, a network of dozens of central banks around the world that develops best practices for climate finance, which said the current trajectory of climate change could lead to a 3 to 10 percent drop in gross domestic product by the end of the 21st century.
Meanwhile, OMB analyses determined climate change could cost federal revenues of about 7.1 percent, or $2 trillion a year, by the end of the century.
Specific costs would include increases in crop insurance subsidies, which are projected to rise anywhere from 3.5 percent to 22 percent annually as a result of crop losses, while more frequent hurricanes could lead to up to $94 billion in annual spending on coastal disaster response by the end of the century. Meanwhile, under a 10-foot sea level rise, the replacement cost to more than 12,000 federal buildings would come to more than $43.7 billion.
The analysis calls for a number of the priorities outlined in President Biden’s fiscal 2023 budget to be enacted to counteract these risks, including more than $7 billion to reduce emissions from the power sector and more than $5 billion to transition the transportation sector to renewable energy.
The budget has no realistic chance of passing Congress but outlines the president’s priorities, particularly after ambitious climate provisions within the Build Back Better package stalled out in the Senate last year.
“Investments to confront the climate crisis will reduce greenhouse gas emissions, drive down clean energy prices, make our Nation more resilient, present new opportunities for American innovation and well-paying jobs, provide benefits to historically underserved communities, and work to protect against the long-term fiscal risks identified in the new Budget analyses released today,” the OMB document states.