Climate Change

Climate Change


Our changing climate has dramatically increased the frequency and severity of some natural catastrophes. According to the National Oceanic and Atmospheric Administration’s (NOAA) National Centers for Environmental Information, the U.S. has, in the last five years, experienced 65 natural catastrophes with losses exceeding $1 billion, or “billion-dollar events.” Those storms resulted in total damage of $535 billion and claimed 3,862 lives. In 2019 alone, there were 14 billion-dollar events, which is more than double the annual adjusted average of 6.5 events per year between 1980 and 2018.[1]

Climate change is likely to increase levels of taxpayer spending. Between 2005 and 2015, FEMA spent almost $70 billion on public assistance due to natural disasters caused by climate change. $53.31 billion of that was spent on state, tribal, and local governments, in some respects demonstrating the insufficient level of preparedness among state and local governments.[2] Adding to the financial burden shouldered by taxpayers, the federal government’s own balance sheet has tremendous direct exposure to enhanced climate risks. The Department of Defense (DoD), for example, owns and operates domestic and international infrastructure valued at $1 trillion. In its 2015 National Security Implications of Climate Related Risks and a Changing Climate report, DoD indicated that “[a] changing climate increases the risk of instability and conflict overseas, and has implications for DoD on operations, personnel, installations, and the stability, development, and human security of other nations” and that “[m]easures will also likely be required to protect military installations, both in the United States and abroad…”. Beyond DoD assets, the U.S. government owns 650 million acres of land that are vulnerable to climate change.[3] Potential losses will prove to harm taxpayers more as climate resilience efforts for infrastructure become more costly over time.


The nation lacks a comprehensive policy framework to address climate change and relies on antiquated natural disaster policies that emphasize and fund responses to disasters after they strike as opposed to those that prioritize pre-disaster protective measures to reduce devastation.

Federal, state, and local policymakers must find ways to make every dollar go farther, and incentivize climate adaptation mitigation at the government and individual level. For example, rather than simply funding post-disaster aid that does not reduce the impact of future climate-related events, the federal government must make new spending contingent on concrete commitments and results, such as implementation of building standards that promote climate adaptation, resilience, and smarter and safer planning.

Additionally, policymakers should consider enhanced public-private partnerships and risk-transfer opportunities to guard against climate-related financial risk. The private sector, particularly the insurance industry, has both the willingness and capacity to take on additional risk associated with natural disasters. Organizations across the globe have called for stronger alliances to shift certain financial burdens associated with climate change and natural disasters from the balance sheets of government to willing private sector participants. The Munich Climate Insurance Initiative, for example, has called on the G20 nations to develop a plan to allow for “cost-effective transfer of catastrophe risks to insurance and capital markets through public-private partnerships, in particular with the domestic insurance industry.”[4]

Policy Recommendations

  • Enhance opportunities for public-private risk transfer.
  • Incentivize investment in pre-disaster climate adaptation mitigation efforts to protect taxpayer dollars and federal facilities.
  • Promote federal incentives for green housing and home retrofit resilience projects.
  • Provide additional support to provide climate-resilient housing in low-income communities.
  • Incentivize greater responsibility by tying federal disaster spending to pre-disaster mitigation efforts.
  • Promote pre-disaster mitigation such as smarter and safer construction policies and the expanded use of natural barriers such as marshes and dunes.
  • Increase scientific climate data information sharing among federal agencies.