Harvey, Irma, and the Economic Risks of Doing Nothing

09/16/2017 11:48 am ET

Inaction on climate change comes at high cost to taxpayers and the future of a nation

Hurricanes Irma and Harvey, and unnamed weather events in Mumbai, Bangladesh, and Niger, have in less than a month claimed thousands of lives, displaced hundreds of thousands more, and wrought catastrophic losses of hundreds of billions of dollars.

The risks of life on a warming planet have been made plain. While individual events cannot be linked to climate change, they are part of a long-term trend toward increasingly powerful, costly, and destructive, extreme weather events. In North America alone, the number of extreme weather-related losses has nearly quintupled in the past three decades. As the five-year anniversary of Hurricane Sandy approaches for those of us in the New York region who know first-hand the massive impact of extreme weather and sea-level rise, it's clear we have entered a new normal.

When Irma, the most energetic cyclone ever recorded, closed in on Florida, U.S Environmental Protection Agency head Scott Pruitt protested, "This is not the time to talk about climate change." But this is precisely the moment to talk about climate change.

Whether one believes in climate change or not, it's happening, and it's touching our lives personally. In a prescient analysis of Tampa's exposure to flooding, property losses were estimated at more than $15 billion for a three-foot inundation, with a lasting 2 to 3 percent decline in jobs, personal income, population, and tax revenue for the region, decades into the future. Irma's actual storm surge was five feet. Losses across Florida and Texas are estimated at hundreds of billions of dollars, making this the most expensive year for storm damage ever. With the Federal Emergency Management Agency and National Flood Insurance Program out of money, taxpayers can be expected to foot the bill.

As the great value-investor Warren Buffet has observed, "Risk comes from not knowing what you're doing." President Trump and his administration has been busy dismantling climate research funding when we need it most. They have moved to repeal pollution and flood regulations, and defund and muzzle government agencies with relevant expertise. They have tried to pull the United States out of the Paris climate deal, inspiring state governments and Fortune 500 companies to forge ahead and cut carbon emissions on their own.

Catastrophic events like Harvey and Irma put a human face on climate change. Because they are so disruptive, these events pose real risks to job growth, the economy, and personal security. A recent economic risk analysis estimated US climate-related losses at 1-2% GDP annually by 2050, or an average additional cost of $180-360 billion. For context, this approaches one-half of what we spend on national defense each year.

Though place-specific, climate change will have negative effects on much of the country. Coastal states face property loss due to stronger storms and rising seas, Midwest and Western states face crop and timber losses, while more frequent heat waves across the American south and southwest pose workforce and energy security challenges.

A recent Yale University study provides a stunning example of Americans' cognitive dissonance. Seventy percent of respondents believe climate change is happening, but only 40 percent think it will affect them personally. We need only to look at the recent $15 billion authorization for Texas, and the much larger bills anticipated for Texas and Florida, to realize how much we underestimate the risks of climate change. We're paying for it whether we believe in it or not. And like paying off a high-interest loan, the costs will only grow the longer we remain in denial.

There is also the opportunity risk of missing out on the renewable energy revolution sweeping the world. This is one of the most propitious investment and employment opportunities the nation has seen since the railroads were built. Solar and wind costs are now more cost-effective per watt of delivered electricity than most fossil-fuels.

Renewables can decarbonize the economy, provide clean domestic sources of energy, offer high returns to investors, and create thousands of skilled, high-wage jobs in a rapidly growing market. As companies race for market share, battery storage costs are also dropping. In the U.S. alone, sustainable investments have surged from $3 trillion to $9 trillion between 2014 and 2016. Meanwhile, the Trump administration is fighting to save the dying coal industry, the equivalent of selling buggy-whips in an age of electric cars.

This is largely an American narrative because the rest of the world gets climate risk and is working on solutions. Since 2015, most of the world's leading economies prospered even as carbon emissions fell, mainly due to declining coal use and an increase in renewables. As the global economy decarbonizes, California and the northeastern U.S. are leading a defiant fight to switch to clean energy and lower emissions.

As we grieve the losses of life and property in the wake of recent extreme weather events, now is the time to transcend denial and anger, and plan for a resilient future. We should heed Warren Buffet's advice and adapt to the risks ahead by mobilizing our best scientific minds to understand how climate will shape our future while working with the public and private sector to build a new clean-energy infrastructure. In the wake of Harvey and Irma and extreme weather-related loss events worldwide, it's time for economic reality to overcome ideology.

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