Climate change is already greatly affecting the United States. Its impact on the country’s economy and finances is substantial. However, Treasury Secretary Janet Yellen warned that it could trigger further asset value losses in the coming years that could ultimately impact the US financial system.
Yellen intends to speak to a new advisory board of academics, along with experts from the private sector and nonprofit organizations. He reported that the annual number of disasters that have already cost the government billions has increased fivefold in the past five years compared to the 1980s. This news is worrisome because this account takes runaway inflation into account.
On Tuesday, the Treasury Secretary stated that as climate change intensifies, rising temperatures and natural disasters can easily lead to declining asset values. That is likely to affect the financial system as well. In addition, a disorderly and delayed transition to a net zero economy could generate additional shocks to the US financial system.
In states like California, Florida, and Louisiana, people have to deal with severe storms and wildfires. At the same time, tornadoes are more common in the South and storms are intensifying on the West Coast. The augmented statistic shows how climate change is accelerating.
The US government has to pay billions of dollars to mitigate the damage
U.S. officials reported in January that last year they tied 2011 and 2017 for the third-highest number of billion-dollar disasters. The government named a total price of about $165 billion.
The report showed that 18 weather and climate disasters caused substantial damage. Each cost at least $1 billion in the year. That includes massive wildfires in the West and two tornado outbreaks in the Southeast and South in March and April.
The new Climate-Related Financial Risk Advisory Committee plans to strengthen the country’s efforts to mitigate climate change risks to its economic and financial stability. But he has a lot of work to do.
