Here's How You're Paying for Climate Change

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·5 min read
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States in the Midwest and Northeast set record temperature highs on Monday as an extreme heat wave moved across the country from drought-ridden areas in the West, while at the other end of the spectrum, states in the South faced downpours and flash flooding.

The consequences of extreme weather are varied across regions, but universally, researchers know that extreme weather events are likely to become more frequent and costly for consumers.

It may be impossible today to put a quantifiable price tag on exactly how much climate change costs the typical American family in any given month, but researchers are working toward more closely tracking its economic effects.

At the current trajectory, global economic output is projected to decline between 11% to 14% by 2050 -- translating to a global loss of $23 trillion -- compared to a world with no temperature change, according to a Swiss Re Institute report released in April. This analysis accounts for both gradual climate changes and acute events, which have obvious costs for families like property damage, medical bills resulting from severe injuries and lost wages.

[Read: How to Make a Budget -- and Stick to It.]

But both extreme weather events and gradually increasing temperatures come at a cost for consumers, who may experience rising personal expenses in these climate-sensitive sectors:

-- Energy and electricity costs for those not transitioned to more efficient options.

-- Food costs as crops are affected by temperature shifts.

-- Insurance premiums or a lack of insurance coverage entirely.

-- Medical bills resulting from climate-related health issues.

Energy

The average temperature is rising across the vast majority of the U.S., and many regions are experiencing more extremely hot days. In a Climate Central analysis of temperatures in 246 U.S. locations, 38% of locations reported, on average, at least seven more days of extremely hot temperatures annually compared to 1970, and 59% have reported an annual increase of at least three days.

In some areas, hotter temperatures may lead to more days and nights that require air conditioning, says Jennifer Brady, senior analyst at Climate Central.

The average monthly electricity bill in the U.S. rose from $104.52 in 2009 to $115.49 in 2019, according to the U.S. Energy Information Administration. However, in the same time period, monthly electricity consumption in the U.S. declined 2.3%. This may be the result of consumer trends toward more energy-efficient products such as "the increased use of behind-the-meter generation (such as rooftop solar panels), high-efficiency appliances, more efficient lighting, and smart energy-saving devices," an EIA analysis notes.

[See: 12 Ways to Save on Utilities.]

Food

Hotter temperatures and changes in typical weather patterns can lead to crop losses and supply chain disruptions. Some variation in food availability and cost is normal, says Sarah Dougherty, senior manager of the Natural Resources Defense Council's Green Finance Center. "But you have to imagine that happening more frequently and more extremely," she says.

Dougherty says consumers aren't often facing more expensive food as a result of temperature increases today, but that this trend may become more common as farmers work to adapt to changing weather conditions.

[See: How to Save Money When Grocery Shopping on a Budget.]

Health

It's not yet possible to attribute specific health costs to climate change, according to Vijay Limaye, a scientist at the National Resources Defense Council, but environmental conditions may lead to costly health conditions.

"Climate change has made recent events more severe. It's not a great leap of faith to say that more severe events lead to more health costs," Limaye says.

Consumers face medical costs related to the physical risks of events like wildfires and hurricanes as well as treatment for conditions like asthma resulting from poor air conditions, he says. But he says hotter days may also lead to less productivity and unsafe work conditions that could result in lost wages.

Insurance

The cost of insurance coverage for extreme events such as fire and flood may rise in certain vulnerable regions, and rising costs affect individuals beyond just those directly hit by a natural disaster.

"As there's more and more damage, the insurance is going to get more expensive or you're going to get less coverage," Dougherty says. "For insurance companies, if claims get larger and larger and more frequent, they have to cover them. Even if you weren't hit by the wildfire, there's a chance if you have any fire risk they might raise your rate, or if hurricanes are coming so often that everyone's premiums go up."

Though there are many factors at play, Brady says consumers can begin to see the costs of climate change across sectors in small ways that require some attention to detail.

"Are you seeing changes to your cooling bill? Are you seeing different things in your environment, in your yard, flowers blooming earlier? You might talk to your grandma, and she says that certain bush never used to bloom in April. Maybe into the fall you're thinking, we never used to do this in September, now we can go to the lake," she says. "It's these little things you take for granted and don't think about."

Emma Kerr is the personal finance editor at U.S. News. Previously, her reporting focused on education finance topics including college financial aid, student loan debt and employment. In her current role as personal finance editor, Kerr reports and writes about taxes, family finance, banking, credit, debt, spending and other topics related to financial health and smart money management. She also oversees the Your Money Decisions newsletter, delivered to inboxes twice weekly.

Kerr's work has appeared in the Frederick News-Post, the Chronicle of Higher Education and the Daily Beast, among others. She graduated from the University of Michigan, where she served as the managing news editor of The Michigan Daily. Follow her on Twitter or email her at ekerr@usnews.com.