How A Changing Climate Is A Threat To The Stability Of Our Federal Budget

By Bill Frist | June 14, 2023

According to recent data from the National Oceanic and Atmospheric Administration (NOAA) and NASA, 2022 tied as the fifth warmest year on record. Why does this matter? Well, a warming climate directly affects the health of you as an individual – and your family, communities, businesses, and our overall economy. We are seeing these effects now and scientists anticipate that they will grow.

Yes, climate change and changing weather patterns create an environmental crisis, but increasingly we are realizing they create a health crisis, and a food crisis, and ultimately a threat to our economic security and to the stability of our federal budget.

The budgeting agencies of both the White House (Office of Management and Budget) and the United States Congress (the nonpartisan Congressional Budget Office or CBO), have both projected sizable budgetary impacts from climate change. The CBO states it succinctly: “Climate change increases federal budget deficits, on net.” A reduction in economic output related to lower worker productivity and damage to physical capital and the corresponding drop in income and payroll taxes will create a drag on federal revenues, while mandatory and discretionary spending demands will increase.

Indeed, climate change touches nearly all aspects of what in the aggregate comprises our national economy. And it is through this policy lens of the federal budget (The author served on the Budget Committee of the U.S. Senate from 1995 until 2002 and testified before that committee on May 10, 2023) that our elected public officials are called upon to look to the future, assess, and react to public risk. While Congress is notorious for delaying action until absolutely necessary — as we saw with the recent debt limit debate — I hope our elected officials will begin in earnest to address climate change and its impact, as we are in uncharted territory and there will come an unpredictable time in the future when failure to act will balloon budget costs exponentially.

Here, slanted slightly by my experience as a physician and thus viewed in part through the lens of health, are examples of how climate change is already affecting our lives and communities, with a net financial cost to each of us – which rolls up to an indisputable impact on our federal budget.

1. More extreme and dangerous heat waves

Rising greenhouse gas concentrations increase average temperatures and are making extreme heat waves more frequent and more intense. Clinical cases of heatstroke, hypothermia, and related conditions brought on by these new extreme temperature conditions are steadily climbing. They in turn increase morbidity and mortality of existing heart, vascular, lung, and kidney disease. The associated cost of diagnosis and treatment of this additional burden of disease is added to the already sky-high costs of healthcare delivery we have today.

Recall the 2021 unprecedented heat wave that hit the Pacific Northwest. Scientists found that the heat wave, which was made worse by climate change and killed hundreds of people in the U.S. and Canada, combined with drought conditions at the time, added additional costs of $8.9 billion to the economy.

2. Increased wildfire risks

More people, communities, and assets are being exposed to fire risk and are more vulnerable to harm. At the same time, wildfires are increasing in frequency and intensity. Science tells us that the megafires we are witnessing with increasing magnitude and frequency are not cyclical outliers but rather a new normal that can be traced back to our changing climate. A 2021 study published in the Proceedings of National Academy of Sciences found that the uptick in fire weather in the Western U.S. was largely attributable to human-caused climate change. And in the last 10 years, federal fire suppression costs alone have grown by nearly 400%, while wildfire resilience investments have remained essentially flat.

We’ve also seen the number of people exposed to wildfire-related, health-damaging pollution through smoke increase a shocking 27-fold in the past decade. The current record-setting fires in northern Canada, for example, have compromised air quality along the Eastern Seaboard down through the Mid-Atlantic region and parts of the South – impacting the health and economic vitality of towns and cities hundreds of miles away.

All this affects our ability to be outside and breathe comfortably, but it's the wildfire air pollution and its stress on the organs of the body that is responsible for killing over 33,000 people a year worldwide. Less visible but well documented is the clear-cut association between fire smoke and the rise in pregnancy loss, premature births, lower birth weights, and perinatal heart and lung problems, all of which can plague children and adults for years.

3. Increase in serious vector borne diseases

Warmer temperatures are allowing some vector-borne diseases— illnesses carried and transmitted by insects or other animals — to move further north and greatly expand their geographic range and reach.

Several vector-borne diseases such as West Nile virus and Chikungunya virus have appeared for the first time in recent years in the United States. Ticks, fleas, and mosquitos carrying debilitating diseases like Lyme disease and malaria have seen their range expanded and their periods of activity substantially lengthened over the past decade. Data indicate that other pathogens, such as the Zika virus, respond similarly to a temperature increase. This rise in transmission carries a very real budgetary cost, with one study estimating the annual, aggregate cost of diagnosed Lyme disease alone to be $345–968 million to U.S. society (2016 dollars).

Additionally, deforestation at scales we have previously not experienced across the Congo and Amazon basins and the forests of South East Asia is causing a precipitous decline in biodiversity. This rapidly accelerating biodiversity loss, and the encroachment of human civilization into new ecosystems, presents new openings for disease transmission.

4. Reduced and contaminated water supplies

Droughts limit access to water for agriculture, transportation, power generation, and household use. The drought that spanned the western and central U.S. in 2022 cost over $22 billion and was the second most expensive extreme event for that year.

We are also seeing more frequent and intense precipitation in certain regions, which increases runoff into our water systems, and increases the risk of water- and food-related illness. When it comes to acute gastrointestinal sickness, eight pathogens are responsible for 97 percent of waterborne illnesses and all eight are affected to some extent by climate. These waterborne illnesses, like many of the climate change impacts, have a disproportionate impact on vulnerable populations, including the poor, elderly, and immunocompromised populations.

Coastal communities, moreover, are experiencing greater algal blooms or “red tide.” Contaminated oceans and lakes close beaches, reduce tourism, diminish biodiversity, and contaminate seafood supplies, all adding costs and reducing revenues from a budgetary viewpoint.

5. A threat to our food supply

Agricultural products are susceptible to toxins brought on by newly emerging pests as well as from extreme weather events. And changes in pollinator patterns and declines in the populations of pollinators due to habitat loss and climate change can result in reduced pollination and lower crop yields. This can lead to weaker and less resilient crops that are more vulnerable to pests, diseases, and environmental stressors. Furthermore, changes in pollinator patterns lead to decreased genetic diversity within crops, which can further reduce their resilience to stressors.

The Office of Management and Budget estimated that, due to the impacts of climate change, annual federal expenditures on crop insurance premium subsidies could increase between $330 million and $2.1 billion annually by later this century.

6. Poor air quality

Rising temperatures, precipitation, and extreme weather events, separately and together, are increasing the prevalence of harmful air pollutants, which worsens air quality. Existing heart and lung disease is aggravated, and new cardiovascular and pulmonary disease is created.

Ozone, commonly known as smog, is particularly harmful to those individuals who suffer from chronic respiratory illnesses, such as asthma, bronchitis, and emphysema. The costs are staggering. Annual U.S. health costs for ozone smog pollution are estimated to be $7.9 billion.

Federal Budget Implications

Each of these impacts has huge human financial and thus budgetary implications. For example, in 2022 NOAA calculated 18 separate weather and climate disasters that cost the United States at least one billion dollars. And, over the last seven years, 122 separate billion-dollar disasters have killed at least 5,000 people and cost more than one trillion dollars in damage.

The direct and after-effects of a changing climate here and around the world have direct implications across the entire U.S. federal budget, which today stands at $6.4 trillion. Whether infrastructure, healthcare, defense, foreign assistance, or social spending, the effects of climate change are increasing the risks to these investments, increasing costs, and expanding needs.

The impact on the individual can be seen in rising healthcare costs. Today, the federal government covers more than a third of the nation’s $4.3 trillion in annual healthcare costs. The escalating impact of climate change on new and magnified disease burden could increase federal healthcare spending between $824 million to $23 billion annually.

In total, the risk from just four program areas – crop insurance, coastal disasters, healthcare, and wildfires, could reach $134 billion annually by the later 21st century.

And in the The 2020 Long-Term Budget Outlook by the CBO, it’s projected that real GDP in 2050 will be “1 percent lower than it would have been if the climate of the late 20th century prevailed from 2020 through 2050.”

As a former member of Congress, I recognize the challenge policymakers face in drafting policy to address the long-term budget implications of climate change because the impacts are often felt outside their budgeting window. The budget window refers to the number of years in which spending and revenue decisions apply in a budget resolution. Congress currently budgets on a 10-year window, meaning they wouldn’t take into account the financial benefits of climate mitigation investments that are felt 15, 20, or 30 years from now. Options to address this include lengthening the budget window or changing scoring for certain policies to a net-present value-system.

Climate Solutions that Pay Financial Dividends

As daunting as these challenges may seem, demonstrable strides are beginning to be taken. Recently enacted policies in Washington could drive nearly $3.5 trillion in cumulative capital investment in new American energy supply infrastructure over the next decade (2023-2032).

With approximately half of human-induced, carbon dioxide emissions reabsorbed by healthy forests and oceans, we at The Nature Conservancy (where the author chairs the Global Board) underscore the powerful role nature-based solutions play in mitigating climate change and global warming. Nature-based solutions and investments to boost the carbon-storing potential of farmland, forests, and natural lands can reduce net emissions and help us adapt to climate impacts, while also creating new jobs and revenue streams for farmers, ranchers, foresters, and Indigenous communities.

If the United States stays the course, independent research commissioned by The Nature Conservancy shows the full suite of recently committed climate and clean energy investments will:

· Support nearly 537,000 jobs annually for 10 years, and

· Add $50.9 billion in value to the economy every year for 10 years – a return of $1.42 for every federal dollar invested.

Investments in nature-based solutions, in addition, provide effective means for hazard mitigation for all types of natural disasters at considerable cost savings for U.S. taxpayers over the long run. For example, people are safer during floods when rivers have more room for floodwaters to disperse and slow down. Along coasts, natural features like sand dunes, marshes, and reefs reduce wave heights and absorb storm surges. Data backs this up: in a 2017 study, The Nature Conservancy, in partnership with others, effectively modeled how coastal wetlands defend against storm surges and hurricane risk on the U.S. Northeast coast. Coastal wetlands saved more than $625 million in property damages during Hurricane Sandy and reduced annual property losses by nearly 20 percent in Ocean County, N.J. The Office of Management and Budget estimated that as a result of climate change, spending on coastal disaster response alone could be up between $22 billion and $94 billion annually, demonstrating the value these nature-based investments can offer.

Now is the time for American leadership and action to address the interconnected, worsening challenges that have evolved so rapidly over the past several decades — biodiversity and nature loss, climate change, emerging global health impacts, and additional economic burdens. Now is the time for policymakers to carefully assess the associated risks and have them reflected in our annual budgeting process. Left underinvested, these risks can severely undermine our federal budget, economic security, and, importantly, America’s place in the world.

Shared experience unites us. As we Americans are increasingly sharing in common the pervasive experiences of the damaging effects of rapid global warming, such as the seven phenomena outlined above, and as we increasingly are made aware of the science-based actions we can take now that reduce the risk of future damage, climate change thankfully is becoming a nonpartisan issue. Protecting nature and our natural resources brings us together as we find fiscally sound solutions to our escalating climate and weather pattern challenges. Preserving and building on the wins for nature and clean energy that Congress recently passed is a great first step in ensuring a world where nature and people can (and will) thrive.