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Taxpayers Get Nearly $100 Billion Bill for 2012 Extreme Weather, Equivalent to One-Sixth of Non-Defense Discretionary Spending

Dan Lashof

Posted May 14, 2013 in Solving Global Warming

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With all the debate on the federal budget in Congress, climate change rarely gets mentioned as a deficit driver. Yet dealing with climate disruption was one of the largest non-defense discretionary budget items in 2012. Indeed, as NRDC shows in Who Pays for Climate Change?, when all federal spending on last year’s droughts, storms, floods, and forest fires are added up, the U.S. Climate Disruption Budget was nearly $100 billion, equivalent to 16% of total non-defense discretionary spending in the federal budget—larger than any official spending category.

2012 U.S. Federal Non-Defense Discretionary Budget

(in Billions)

Source CRS, BEA, OMB (Table 8.7), NRDC estimates

 

Education, training, employment and social services

$95

Transportation

$91

Housing assistance and other income security

$65

Health

$60

Veterans benefits and services

$57

Administration of Justice

$54

International Affairs

$50

Natural Resources and Environment

$40

Science, Space and Technology

$29

Energy

$13

Other Non-Defense Discretionary

$61

Total FY2012 Non-Defense Discretionary Spending

$616

Federal Climate Disruption Costs, CY2012 Impacts

$96

That means that federal spending to deal with extreme weather made worse by climate change far exceeded total spending aimed at solving the problem. In fact, it was eight times EPA’s total budget and eight times total spending on energy.

Overall the insurance industry estimates that 2012 was the second costliest year in U.S. history for climate-related disasters, with over $139 billion in damages. But private insurers themselves only covered about 25% of these costs ($33 billion), leaving the federal government and its public insurance enterprises to pay for the majority of the remaining claims. As a result, the U.S. government paid more than three times as much as private insurers did for climate-related disasters in 2012.

That reflects a major shift in liabilities with respect to climate change away from private insurers to public alternatives that began in earnest following the $72 billion hit the industry took in 2005 from hurricane Katrina.

Federal spending related to climate disruption falls into two major categories: Storms and droughts.

Spending related to storms includes appropriated funds for the Federal Emergency Management Agency (FEMA) as well as emergency supplemental appropriations following major disasters, such as Superstorm Sandy. It also includes the National Flood Insurance Program, which is supposed to be self-supporting, but is increasingly under water.

Drought-related spending includes the federal crop insurance program as well as the government’s share of higher food costs (see this post for more details).

The figure below shows how the federal climate disruption budget breaks down.

While some of these federal programs—such as forest fire prevention, crop insurance, flood coverage, and disaster preparedness—offer wider benefits to the country, it should be noted that these liabilities have largely been assumed by the public sector due to a lack of private sector alternatives. The true scorekeepers of climate risk—the insurance industry—realizes it can’t win when the dice are increasingly loaded with carbon pollution, so it’s walking away from the table, leaving taxpayers holding the bag. Last year that cost amounted to over $1100 per taxpayer, and we can expect to see even higher costs in future as CO2 concentrations continue to soar past 400 parts per million.

Even as the budget to clean up climate disruptions hit a record high in 2012 and is expected to continue to grow, the budget for programs to fight climate disruption—such as environmental enforcement, energy efficiency, clean energy vehicle research, and ARPA-E—suffered cuts of more than $100 million the “sequester” that went into effect in March and remain under continued pressure from the budget-cutting process.

Our climate plan is, in effect, to cut critical investments now for the sake of small short-term deficit reductions and send our children the tax bills to clean up the mess.

That’s colossally short-sighted, even by Washington standards. 

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Comments

Mariann SpontakMay 17 2013 08:32 PM

The other important reason to oppose giving the oil industry what it wants is a big lesson from history. Early in the 20th century public transportation systems were well-developed. Oil subsidy allowances and other concessions kept the price of gasoline in the U.S. artificially low, encouraging the development of the auto industry (and suburban sprawl). An unintended result was the dismantling of streetcar and train transportation systems, resulting in more use of cars, more pollution, declining public health (lots less walking). Note the similar unintended consequence of promoting bio-fuels. Instead of using waste products for generating fuel, corn was used, driving up food prices. The world is complex and actions have complex results. Allowing decisions to be based on the needs and desires of one industry are likely to be disastrous for the country at large. Beyond the potential disaster of a pipeline spill is the real disaster of losing so many trees on extraction sites. Trees may be our only protection against greater damage from climate change. More trees may be the only way to reverse what has happened so far.

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Switchboard is the staff blog of the Natural Resources Defense Council, the nation’s most effective environmental group. For more about our work, including in-depth policy documents, action alerts and ways you can contribute, visit NRDC.org.

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