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How climate change could impact Americans’ wallets
A delivery driver takes a break in the shade during scorching temperatures in Philadelphia on June 21, 2024.
Joseph Lamberti/Bloomberg via Getty Images
Not to mention perhaps more obvious costs, such as rebuilding or relocating after a hurricane, flood, or wildfire — disasters that are increasing in frequency and intensity.
An American born in 2024 can expect to pay about $500,000 over their lifetime as a result of the financial impacts of climate change, according to a recent study by ICF, a consulting firm.
“Climate change is already affecting us and will of course affect us much more in the future,” said Gernot Wagner, a climate economist at Columbia Business School.
“There are a zillion paths” to adverse financial impact, he added.
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However, by 2024, only 55% of Americans believe global warming will “at least moderately harm them,” according to a study joint report published Monday by Stanford University and Resources for the Future.
The study revealed that this represents a drop of 8 percentage points from the all-time high of 63% seen in 2010.
It’s likely that survey respondents were thinking more about the physical impact than the financial impact when answering the survey question, said Jon Krosnick, a co-author of the report and director of Stanford’s Political Psychology Research Group.
However, when it comes to financial impact, “I think you could argue that the correct answer is [people] is: ‘It’s already hurting me,'” Krosnick said.
People stand outside a bodega during a summer heat wave in the Bronx borough of New York City on July 11, 2024.
Angela Weiss | Afp | Getty Images
Climate-related disasters because the US at least $150 billion a year in “direct” damages, according to the Fifth National Climate Assessment, a report the federal government issues every four to five years that summarizes the latest knowledge about climate science. (The latest edition was published in 2023.)
The economic consequences will be “increasingly adverse” with each additional degree of warming, the report said. For example, 2°F of additional warming is expected to cause more than twice as much economic damage as a 1°F increase.
And this financial accounting is only for “direct” and not indirect purposes.
Climate change is already affecting us and will of course affect us much more in the future.
Gernot Wagner
climate economist at Columbia Business School
Many of the impacts can be somewhat unpredictable, Wagner added.
For example, in addition to the negative effects on human health, smoke from wildfires also reduces the incomes of workers in sectors such as manufacturing, agricultural production, utilities, health care, real estate, administration and transportation, according to one report. 2022 Study by economists at the University of Illinois at Urbana-Champaign and the University of Oregon. Some of this impact may be due to lost work days, for example.
On average, lost earnings for workers totaled $125 billion a year between 2007 and 2019, the economists found.
This became relevant for workers in perhaps unexpected places like New York last year, when smoke from wildfires in Canada drifted into the U.S., creating an orange haze over the city. On at least one day during that period, the city was rated as having the worst air pollution in the world.
“Nobody had this specific entry on the climate effect bingo card five years ago,” Wagner said.
Workers stand in the afternoon heat in Baker, California, on July 10, 2024. A long-lasting heat wave has caused many California cities to break all-time heat records, while several wildfires have sparked across the state.
Mario Tama | Getty Images News | Getty Images
Wagner’s own research shows that extreme heat causes labor productivity to plummet, leading to reduced incomes.
Workers lose about 2 percent of their weekly wages for each day over 90 degrees Fahrenheit, he found. For the average person, that would amount to a roughly $30 pay cut for each day over 90 degrees — which could be extremely consequential for people living in certain places. like Phoenixhe said.
June 2024 was the 13th consecutive month of record global temperatures.
Climate change also worsens inflation, research shows — a dynamic called “climate inflation.”
Warming is expected increase global inflation by 0.3 to 1.2 percentage points per year on average by 2035, according to a recent study by researchers at the European Central Bank and the Potsdam Institute for Climate Impact.
“This is big,” Wagner said, noting that more than half of the U.S. annual inflation target (about 2% per year) can potentially be attributed to climate impact alone, he said.
So-called climate inflation is partly due to the effects on food prices: for example, if extreme weather disrupts a harvest of crops such as avocados, corn, rice, cornstarch or wheat, causing global prices to soar, he added.