Climate change is already greatly affecting the United States. Its impact on the country’s economy and finances are substantial. However, Treasury Secretary Janet Yellen warned that it might trigger more asset value losses in the coming years that could ultimately cascade through the American financial system.
Yellen intends to speak to a new advisory board of academics, along with private sector experts and non-profits. She reported that the annual number of disasters that have already cost the government billions increased five-fold over the past five years compared to the 1980s. This news is disturbing because this account makes allowances for soaring inflation.
On Tuesday, Treasury Secretary stated that as climate change intensifies, warming temperatures and natural disasters can easily lead to decreases in asset values. That will likely impact the financial system, as well. Moreover, a disorderly and delayed transition to a net-zero economy could lead to additional shocks to the U.S. financial system.
In states like California, Florida, and Louisiana, people have to face severe storms and wildfires. At the same time, tornadoes are more common across the South, and storms are intensifying on the West Coast. The increased statistic shows how climate change is accelerating.
The U.S. government has to pay billions of dollars to mitigate damage
The American authorities reported in January that last year tied 2011 and 2017 for the third highest number of billion-dollar disasters. The government named a total price tag of approximately $165 billion.
The report showed that 18 weather and climate disasters brought substantial damage. Each costs at least $1 billion in the year. That includes massive wildfires across the west and two tornado outbreaks in the southeast and South in March and April.
The new Climate-related Financial Risk Advisory Committee plans to bolster the country’s efforts to mitigate climate change risks to its economic and financial stability. But it has lots of work to do.
