Climate change could devastate household finances, U.S. Treasury warns

Makatla Ritchter wades through flood waters after having to evacuate her home when the flood waters from Hurricane Idalia inundated it on August 30, 2023 in Tarpon Springs, Florida.

Joe Raedle | Getty Images

Climate change is expected to impose “substantial financial costs” on U.S. households in the coming years, according to a new report by the U.S. Department of the Treasury.

Between 2018 and 2022, weather and climate disasters cost more than $617 billion, it found — a record. Within the last year, 13% of Americans reported economic hardship due to severe weather events and disasters.

“Severe flooding, wildfires and extreme heat are imposing significant financial burdens on households across the country,” Graham Steele, assistant secretary for financial institutions at the Treasury Department, said in a statement.

The government report flags the biggest financial risks from a warming planet. Here are some of them.

Pay and benefit disruptions

Property destruction

Climate disasters impacted 1 in 10 houses in the U.S. in 2021, and led to damages exceeding $56 billion, according to one recent study by CoreLogic, a global property information firm.

Families unable to quickly pay for repairs in the wake of climate disasters may see their property values decline or vanish, the Treasury Department says. It points out that Hurricane Katrina damaged about 70% of all Louisiana properties. Nearly a fifth of those properties remained unrepaired five years later, and 8% were uninhabitable.

Many families could have to relocate due to climate change, incurring relocation expenses.

Higher prices for consumer products, energy

Andrew Rumbach, a senior fellow at the Urban Institute, said he was glad to see the government focusing on climate change’s financial impacts on households. Usually that discussion is centered on societal expenses, he said.

But, “at the end of the day, it is individuals and families that will carry a lot of these costs,” he added.

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