Climate Federal Risk: The Federal Government's Budget Exposure to Financial Risk Due to Climate Change
Posted by
CAKE TeamAbstract
The effects of human-caused climate change are already far-reaching and worsening across the United States. Across all regions of the Nation, people are experiencing warming temperatures and longer-lasting heatwave. Over much of the U.S., nighttime temperatures and winter temperatures have warmed more rapidly than daytime and summer temperatures. Many other extremes, including heavy precipitation, drought, flooding, wildfire, and hurricanes, are becoming more frequent and/or severe, with cascading effects in every part of the country.
One of the most direct ways that people experience climate change is through changes in weather-related extreme events. The U.S. has sustained 376 weather and climate disasters between 1980 and 2023 each with overall damages and costs of at least $1 billion. The total cost of these 376 events exceeds $2.660 trillion. Climate change will affect federal spending and revenue substantially. Damages from extreme weather events are expected to increase significantly in the coming decades because of the effects of climate change, spurring increases in federal relief and recovery requests.
This white paper provides a demonstration of the various approaches currently being employed to assess climate risk to agency programs, facilities, and services, including two analyses that provide detailed projections of quantified financial risks to agency programs.
Using statistical models relating climate to wildfire and suppression spending, we estimated federal wildfire suppression spending through the end of the 21st century. We project that area burned on national forest lands each year, on average, may close to double by mid-century. Across the ten different climate scenarios considered, expected increases in area burned range from 42% to 306%. By late century, national forest area burned would increase by 232% on average, with a range of increases from 29% to 2,488%. With these increases, median suppression real-dollar spending by the Forest Service would rise by 42% by mid-century (ranging from 20% to 84%) and 81% by late-century (17% to 283%). Suppression spending projections did not consider all costs of wildfire management or the value of damages created by wildfire. Hazardous fuels were not directly modeled, so this analysis does not account for the agency’s efforts under the Wildfire Crisis Strategy.
Citation
Prestemon, J.P., Erin Belval, Jennifer Costanza, Shannon Kay, Jeffrey Morisette, Karin Riley, Karen Short, Bruno Kanieski daSilva. 2024. U.S. Department of Agriculture Forest Service and U.S. Department of the Interior: Update on Projected Wildland Fire Suppression Costs Due to Climate Change Impacts. Pages 17-53, 96-131 in: White House, Office of Management and Budget, “Climate Financial Risk; The Federal Government’s Budget Exposure to Financial Risk Due to Climate Change.” March 2024, Washington, DC. 131 pages.