The Office of Management and Budget (OMB) has formally accounted in the proposed Fiscal Year 2023 Federal budget for risks posed by climate change, and warned of potentially devastating impacts on U.S. gross domestic product along with flood risks to thousands of Federal facilities by the end of this century.
Last May, President Biden tasked OMB with developing and publishing an annual assessment of its climate-related fiscal risk exposure, and develop new methods for quantifying climate risk in the government’s economic assumptions.
“The new Budget analyses found that, at the upper end of that range, climate change could lead to an annual Federal revenue loss at the end of the century of 7.1 percent, which in today’s dollars would equal $2 trillion per year,” wrote OMB’s Associate Director for Climate, Energy, Environment, and Science Candace Vahlsing, along with OMB Chief Economist Danny Yagan in a post.
“Furthermore, the analyses found that the Federal Government could spend between an additional $25 billion to $128 billion annually on just six types of Federal expenditure: coastal disaster relief, flood insurance, crop insurance, healthcare insurance, wildland fire suppression, and flooding at Federal facilities,” they added.
Among examples the two listed for potential climate impacts include:
- U.S. gross domestic product could decrease by three to 10 percent by the end of the century;
- Federal expenditures on crop insurance premium subsidies could increase 3.5 to 22 percent each year, the equivalent to $330 million to $2.1 billion annually;
- Increased hurricane frequency could drive up spending on coastal disaster response between $22 billion and $94 billion annually;
- Wildland fire activity could increase fire suppression expenditures by $1.55 billion and $9.6 billion annually; and
- Over 12,195 Federal building and structures could flood with up to 10 feet of water due to sea-levels rising, with a total combined replacement cost of over $43.7 billion.
Currently, the President’s budget request for FY2023 invests $44.9 billion for climate change, which is an increase of nearly 60 percent over FY2021.