A recent National Bureau of Economic Research report reveals that American families face $400 to $900 in yearly climate-related expenses. These costs stem from extreme weather events impacting insurance, energy, taxes, and health. The study highlights rising burdens, especially in disaster-prone areas.
The National Bureau of Economic Research's study, titled “Who Bears the Burden of Climate Inaction?”, analyzes data from insurance records, federal disaster costs, energy surveys, and mortality statistics to map climate's financial impact across U.S. counties. It estimates national costs at $50 billion to $110 billion annually, with households in the 10 percent of counties affected by disasters paying over $1,300 each year.
Insurance drives the largest share, with climate-related premium hikes of $75 to $360 per household. Flood insurance adds an average $142, though it reaches $2,500 in high-risk spots. Homeowners' premiums surged 33 percent from 2020 to 2023, widening the gap between risky and safer areas from $300 in 2018 to $500 by 2023. Insurers pass on $375 or more yearly for their own protections. Energy bills rise by about $25 annually for cooling, plus utility surcharges like Florida Power and Light's $12.02 monthly fee in late 2024 for hurricane repairs. In California, wildfire expenses make up 15 to 21 percent of major utilities' costs.
Taxpayer contributions average $142 per household for FEMA aid, flood subsidies, and recovery funds, excluding extra congressional allocations. December 2024 saw over $100 billion approved for Hurricanes Helene and Milton, while California requests $40 billion after January 2025 Los Angeles wildfires.
Health effects add $64 to $103 per household, with wildfire smoke linked to 35,000 annual deaths since the 2010s. U.S. temperatures have climbed 2.5°F since 1970, faster than the global 1.7°F average. Disaster costs hit $1,500 per capita in 2023 and 2024, causing over 2,500 deaths in five years. Heat claims about 1,500 lives yearly.
Costs vary by region: South Florida and Gulf Coast households pay $242 more in premiums than northern states' $35. Rural areas face higher per-capita losses, while urban heat islands disproportionately affect people of color. Lower-income and Black Americans bear heavier burdens due to limited adaptation resources.
The authors note, “Although the costs we highlight are modest at present, most climate modeling indicates the importance of threshold effects that can cause costs to rise steeply in the future if climate change is not addressed.” Extreme events, not gradual warming, dominate current expenses, urging policy focus on hurricanes, wildfires, and floods.
