How Everybody Ends Up Paying for Climate Crisis

By and | March 15, 2021

Fallout from last month’s deadly deep freeze in Texas has quietly spread to people living hundreds of miles away. Minnesota utilities have warned that monthly heating bills could spike by $400, after the crisis jacked up natural gas prices across the country. Xcel Energy’s Colorado customers could face a $7.50 per month surcharge for the next two years.

This is a subtle demonstration of the way Americans already share the collective financial burden of climate change, even if we don’t realize it. The national bill for global warming is here, and it’s rising.

Perhaps it’s easier to see this dynamic playing out beyond February’s Texas cold snap. That disaster left dozens dead, stranded millions in dark homes, and sent a shockwave of higher gas prices across the nation. But since there remains scientific uncertainty over the role of global warming, let’s examine two other calamities for which the climate link is clearer: wildfires and tropical storms.

A car drives down a street during a power outage in McKinney, Texas, on Feb. 16. Photographer: Cooper Neill/Bloomberg.

The federal government spent about $2.3 billion fighting fires last year, roughly 10 times what it spent in 1985, an increase tied to the hotter, drier conditions of global warming has created in the western U.S. That money comes from taxes. So, too, does funding for the National Flood Insurance Program, which has piled up $20.5 billion in debt after a record-setting hurricane season across the Southeast and Gulf Coast. The program now pays about $1 million in interest per day, according to a recent federal report, and won’t be able to repay its existing debts in the next decade as warmer oceans bring more flooding.

“There’s just no question that we’re paying the costs of climate change today—this isn’t something that’s going to happen to polar bears in 2050,” said Michael Wara, director of the climate and energy program at Stanford University. “And in certain parts of the country, those costs are becoming more apparent than others.”

Socialized Costs

The costs may be more obvious in whichever state is suffering the latest fire or flood. But all Americans shoulder some of the financial burden. Many climate costs have become socialized, spread out among taxpayers throughout the country, even as some Americans still insist global warming is a hoax. That socialization wasn’t the result of a deliberate, comprehensive federal policy on climate. It just happened that way, as programs created decades ago to deal with weather-related disasters became more and more essential.

“It’s a bit of a roulette how much these disasters cost year after year, but Congress always steps in,” said Tamara Grbusic, a senior associate on climate finance at the RMI think tank in Colorado.

U.S. lawmakers over the past two decades have failed to enact a more cohesive approach to these costs. The government could impose a carbon tax, which would prod businesses to cut their emissions while creating a pool of money to help communities prepare for climate-related disasters. “A carbon tax is a prudent choice because we are already paying the climate disaster tax,” Grbusic said. “It’s just that most of us aren’t aware of it.”

Blaming any single storm or blaze on a warming world is always difficult, even if the trends are clear. In the 1980s the U.S. suffered an average of 2.9 weather or climate disasters per year, at a cost of $17.8 billion, according to the National Oceanic and Atmospheric Administration. By the 2000s the averages had grown to 6.2 disasters and $51.9 billion in spending per year. The 2010s brought averages up to 11.9 events and $81.1 billion, with NOAA dubbing it “a landmark decade of U.S. billion dollar climate and weather disasters.” (All cost estimates are in 2020 dollars.)

While federal spending is spread out nationwide, residents of individual states may face their own climate costs. In California, for example, many wildfire-prevention efforts are now funded through utility bills. That socialization of costs came as a result of two decades that saw an increasing number of fires triggered by fallen power lines. The state has been warming up and drying out, leading Governor Gavin Newsom last year to label wildfires “a climate damn emergency.”

A hillside burns during the Glass Fire in Napa County, California, in September 2020. Photographer: Philip Pacheco/Bloomberg.

PG&E Corp., the state’s largest utility, tumbled into bankruptcy after its equipment sparked fires that killed more than 100 people and destroyed thousands of homes. The utility emerged from Chapter 11 last year, having settled claims for $25.5 billion that will be covered by the company’s shareholders. California’s three big investor-owned utilities could spend an estimated total of $40 billion on wildfire prevention over the next decade, according to a recent state report.

To pay for that work, the average California utility customer will see an additional charge on their bill this year that is estimated to be in the range of $96 to $144 a year, according to the state report. By 2030 those charges will likely rise by another $30.

Handling those costs through utility rates presents a small part of a big climate problem: inequality. Rates tend to be more regressive than taxes, with a larger impact on low-income households than wealthier families. “We’re not thinking systematically on this,” Wara said.

Considering the costs Americans already incur responding to climate-related disasters, spending more to prevent them or reduce their impact may seem a hard sell for politicians. Roy Wright, chief executive officer of the Insurance Institute for Business and Home Safety, says such investments can “absolutely save money,” just as pre-emptively strengthening a roof can help a home survive a major storm.

“They don’t eliminate the storm, they don’t eliminate the wildfire,” said Wright, who used to serve as the chief executive of the National Flood Insurance Program. “But they can narrow the impact.”

–With assistance from Brian Eckhouse.

Top Photo: Idle oil drilling rigs in the snow at a lot near Midland, Texas, U.S, on Saturday, Feb. 13, 2021. The arctic freeze gripping the central U.S. is raising the specter of power outages in Texas and ratcheting up pressure on energy prices already trading at unprecedented levels. Photographer: Matthew Busch/Bloomberg.

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Latest Comments

  • March 16, 2021 at 5:17 pm
    Wayne says:
    Only in man’s hubris would it be possible for us to consider that we have an impact on the climate of the Earth. Man made global cooling from the late 1960s through early 19... read more
  • March 15, 2021 at 2:58 pm
    John says:
    With the current trend of rhetoric toward climate change and the trend politically, we need to become familar with the term "energy poverty". The elderly and lower income fol... read more
  • March 15, 2021 at 1:47 pm
    Rosenblatt says:
    December 25-26, 2000: Ice storm in TX causes major outages February 1-5, 2011: Ice storm in TX causes major outages February 11, 2021: Ice storm in TX causes major outages You... read more

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