Climate events have cost the US economy more than $500 billion over the last 5 years, Fed official says

AP Photo/Jae C. Hong
  • Climate- and weather-related events have directly cost the US more than $US500 billion over the past five years, according to a Federal Reserve official.
  • In addition to causing damage to natural resource and infrastructure, global warming is expected to disrupt business operations and economic activity in the coming years.
  • In January, top economists from both sides of the aisle signed a letter that said climate change was “a serious problem calling for immediate national action.”
  • Visit the Business Insider homepage for more stories.

Climate and weather-related events have directly cost the US more than $US500 billion over the past five years, according to Kevin Stiroh, an executive vice president at the New York Fed who is responsible for bank regulation.

“Climate change has significant consequences for the US economy and financial sector through slowing productivity growth, asset revaluations and sectoral reallocations of business activity,” Stiroh said at the GARP Global Risk Forum in New York on Thursday.

In addition to causing severe damage to natural resource and infrastructure damage, global warming is expected to disrupt business operations and economic activity in the coming years. Stiroh said climate-related changes raised the potential for losses related to policy changes, consumer sentiment, and how technological innovations affect the value of certain assets and liabilities.

“These effects will be felt across business sectors and asset classes, and on the strategies, operations and balance sheets of financial firms,” Stiroh said.

Fed Chairman Jay Powell told Congress this year that while addressing climate change fell under the direction of other agencies, the central bank would “use its authorities and tools to prepare financial institutions for severe weather events.” Others in Washington have issued similar warnings.

In a more than 1,500-page report released in late 2018, scientists from 13 federal agencies predicted that climate change would slash gross domestic product by a tenth by 2100 if steps weren’t taken to reduce the carbon emissions that warm the planet.

The scientists said extreme weather would wreak havoc on growth through adverse effects on the healthcare system, infrastructure, supply chains, labour productivity, agriculture, tourism, power generation and electricity costs.

“With continued growth in emissions at historic rates, annual losses in some economic sectors are projected to reach hundreds of billions of dollars by the end of the century-more than the current gross domestic product of many US states,” the report said.

In January, top economists from both sides of the aisle signed a letter that said climate change was “a serious problem calling for immediate national action” and called for a national tax on carbon.

But President Donald Trump has steadily taken steps in the opposite direction. Over the past several years, the White House has taken steps to loosen environmental rules and shrugged off a series of landmark reports on climate change.

Now read: The economic picture is darkening in states critical to Trump’s reelection bid

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