How The US Plans (And What It Forgets) About Climate Risk
The most dangerous climate threats and how to beat them, according to the federal government
Markets are unprepared for the level of risk that climate change currently poses to them. Federal governments and regulators are finally waking up to the risks inside and outside of their borders and driving new adaptation strategies.
Already, this year is on track to be one of the most active and costliest years for disasters in the United States — these first nine months have seen 18 single weather and climate disasters that have cost at least $1 billion. That puts 2021 in second place for the most billion-dollar disasters behind 2020, when there were 22. But beyond that, last year shattered the previous annual record of 16 events, which occurred in 2017 and 2011.
A few weeks ago, the U.S. had a major development when the Federal Emergency Management Agency (FEMA) raised rates for many homeowners living in flood-prone areas, by factoring climate risk into its policies for the first time. The implications could be massive — a report from the First Street Foundation released Monday found that the effects of climate change will place 1.2 million additional residential properties at serious risk of flooding over the next 30 years. (The picture below shows the risk to beachfront Southern California, according to the report.)
It’s not just the U.S. — a lawsuit against the Australian government is proceeding, in which the administration is being sued for misleading investors by “failing to disclose the impact of climate risk in its bonds,” after government lawyers failed to get the case dismissed.
Identifying climate risk has been a major priority for U.S. President Joe Biden’s agenda since he was elected last year, and last week, the White House released the climate-adaptation plans of 23 government agencies, including Agriculture, Energy, Homeland Security, Transportation, and more.
The plans, according to the New York Times, “include core themes: ensuring that new facilities meet tougher construction standards, using less energy and water at existing buildings, better protecting workers against extreme heat, educating staff about climate science, and creating supply chains that are less likely to be disrupted by storms or other shocks.”
They also starkly lay out the risks and the costs of inaction: overheating asphalt roads; extreme weather danger to advanced research laboratories to storage facilities for radioactive waste from the nuclear weapons program; water shortages at overseas U.S. military bases; Changes in temperature and precipitation patterns, more pests and disease, and reduced soil quality that could reduce crops and livestock.
While these climate risk plans name the threats across sectors, they still need to come up with comprehensive plans to address them. They also need to work with companies to provide them with guidance so they can better analyze, map, and mitigate risks across their supply chains.
There are some good signs: Some agencies are revamping supply chain policies and operations to create a more climate-resilient system. For example, the Department of Treasury is developing contingency plans for sustaining critical supply chains for operational mission requirements, including materials needed for currency and coinage production, according to the White House. Additionally, earlier this year, the Biden administration earmarked about $5 billion for community projects to prepare and protect against extreme weather and climate disasters.
Climate threats won’t spare any part of the economy or members of the population — and with more government regulation coming, forward-thinking key players need to take action now to avoid breakdowns and ensure continuity. When climate change hits, those that pursued adaptation early will be able to ensure this.