The Financial Fallout of Climate Change: From Disasters and Inflation to Retirement Savings and Career Shifts

Climate change has already proven to be financially expensive, according to a recent report from the U.S. Department of Treasury which found that weather and climate disasters in the country cost over $617 billion between 2018-2022 – a record figure. The rising temperatures are expected to cause further financial pain for Americans as extreme weather events become more common, experts warn. As each degree Celsius of warming is anticipated to double the economic impact caused by one degree’s worth of warming according to the Fifth National Climate Assessment report. By 2064, climate change could cost an individual born in that year almost $500,00 due to factors such as higher taxes and pricier housing and food, a study commissioned by Consumer Reports found. Andrew Rumbach of Urban Institute said: “The basic building blocks of our financial lives – housing, insurance, social welfare programs, taxes – will become more expensive or less valuable because of climate change”. These price increases may manifest through “climateflation,” according to Gernot Wagner, a Columbia Business School climate economist. As droughts lead to crop failures and food prices spike due to environmental changes, the cost could rise by as much as 3 percentage points per year over the next decade alone. The biggest financial risks of climate change come into play with housing since most household wealth is tied directly to this factor via disasters like floods or wildfires leading individuals towards displacement causing huge costs for both people and businesses, Urban Institute’s Rumbach added, whilst insurers increase their premium on homeowner policies or scale back coverage in affected areas. As a result of these expenses not being fully covered by insurance companies, governments may have to bear the brunt with larger medical bills also expected due to fossil fuel pollution and climate change costing Americans over $800 billion annually according to The Natural Resources Defense Council report. Federal, local or state taxes are likely to rise as communities deal with higher costs resulting from global warming disruption in working hours lost because of extreme temperatures – up to 3.8% by the International Labour Organization’s estimate within seven years and over 65 million adult workers at risk due to climate-related health hazards according to KFF analysis, whilst wages may shrink as businesses are affected by storms or heat waves. ICF warns that global warming could also jeopardise people’s retirement savings with decreased corporate productivity or resources and new costs associated with transitioning towards low carbon solutions resulting in lower values of stocks held within these accounts – further emphasizing the necessity to understand climate change’s effect on your finances. Education and career shifts are becoming a common reaction, Kantrowitz said as some colleges offer Climate Change Studies majors which have seen an increase in demand according to Urban Institute’s Rumbach, who noted that while it presents “a challenge” stopping global warming also provides opportunities for innovation and economic growth. In this new series by CNBC’s personal finance team, we will explore the impacts of climate change on household finances from retirement savings through insurance costs down to career outlook with one such article reporting individuals’ continuous habit to construct in or relocate into cities that experts like Urban Institute’s Rumbach identify as ‘ground zero” for global warming – an event repeating across nations. Readers affected by this phenomenon are encouraged to share their experiences via email at annie.nova@nbcuni.com