Climate change is already a strain on U.S. fiscal health and could be a further drag on the world’s largest economy if the problem goes unaddressed, according to one top Obama administration cabinet official.
“The world can either choose to ignore the challenge today and be forced take more drastic action farther down the road at greater costs. Or we can make sensible, modest and gradual changes now and in the process, create jobs, reduce business and household expenses and drive innovation, technology and new industries,” Treasury Secretary Jacob Lew said Monday at a Brookings Institution forum focusing on the economics of climate change.
The average temperature over the past decade in the U.S. was 0.8 degrees Celsius warmer than the 1901 through 1960 period, and the past decade has been the warmest in history in the U.S. and globally. If temperatures increase by another 3 degrees Celsius instead of 2, there could be nearly a 1 percent decrease in global output annually, according to a July report from the White House Council of Economic Advisers. That would mean a $150 billion loss in U.S. gross domestic product.
The cost of inaction now “is far greater than the cost of action,” Lew said, and therefore global leaders should act immediately to address the looming climate change concern, which threatens agricultural productivity and transportation infrastructure. Further, Lew said, pollution and extreme heat could drive up health care costs.
“If the fiscal burden from climate change continues to rise, it will create budgetary pressures that will force hard trade-offs, larger deficits or higher taxes, and these trade-offs would make it more challenging to invest in growth, meet the needs of an aging population and provide for our national defense,” Lew said.
Already the National Flood Insurance Program has borrowed $24 billion from the Treasury Department to cover costs associated with hurricanes Katrina, Rita, Wilma and Sandy, all which have occurred since 2005, he said.
Lew’s remarks came just ahead of the United Nations Climate Summit in New York Tuesday, which will draw more than 120 global heads of state. U.N. Secretary-general Ban Ki-moon has called climate change “the defining issue of our time” and has asked attending leaders to come prepared “to announce bold new actions” to address climate change.
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SOURCE: U.S. News & World Report