Climate change costs the US a trillion dollars a year

Hurricane Helene itself, which hit Florida in September 2024, was the strongest in the history of the northwestern part of the state. Ten days later, another one, Milton, hit. The two disasters caused a combined loss of $113 billion. To this should be added the January fires in Los Angeles, which, according to the National Oceanic and Atmospheric Administration, cost another $65 billion.

The report, “The Climate Economy: Projections to 2025,” shows that the total value of global spending on the effects of climate disasters since 2000 has been $18.5 trillion. In the US, the largest costs related to climate change include rising insurance premiums (which have doubled since 2017), spending on disaster recovery, and public funds allocated for federal aid. The total costs resulting from power outages, uninsured damages, and compensations account for $7.7 trillion – or 36 percent of the growth in US GDP since 2000.

Meanwhile, federal support, which covered about a third of climate-related costs before 2016, has now fallen to just 2 percent. Budget freezes and planned cuts could deepen this trend, forcing local governments to take on more debt—even though their economies aren’t always able to sustain such debt after disasters.

An example is the situation in Lake Lure, where local authorities plan to build a new dam for $200 million and relocate the sewage treatment plant and replace the sewage system, which could cost more than $300 million in total. Although the Federal Emergency Management Agency initially declared its readiness to support projects that increase disaster resilience, the current Trump administration has announced a gradual phase-out of the agency's activities, considering some programs "ineffective" and too political.

In recent weeks, the federal government has rejected requests from six states — including North Carolina — to extend full funding for conservation projects, forcing local governments to seek funding from other agencies, such as the U.S. Army Corps of Engineers. North Carolina’s governor says the new cost-sharing model could add an additional $200 million to the state’s budget, which could force cuts in other areas, such as education and road infrastructure.

Some companies have benefited from the rising costs of climate, however. Bloomberg Intelligence’s Andrew John Stevenson has created an index of 100 companies in the insurance, engineering, materials and retail sectors that are benefiting from the growing demand for services before and after disasters. The companies in the so-called Climate Index have grown an average of 7% a year faster than the S&P 500 over the past three years.

The data shows that insurance is one of the “hidden costs of the climate economy.” In 2023 alone, premiums went up by 22 percent, and this year they could increase by another 6 percent. Because rising insurance premiums are not included in the official inflation index (CPI), the actual cost of housing in the US may already exceed 40 percent of a household budget – especially in regions at risk of climate disasters.