The Office of Management and Budget has released an initial risk assessment highlighting the impacts of climate change on the federal budget and U.S. economic development.
Candace Vahlsing, associate director for climate, energy, environment and science at OMB, and chief economist Danny Yagan said in a blog published Monday the report found that the U.S. government could lose about $2 trillion annually in revenue by the end of the century due to climate change.
The report also estimates that the federal government’s expenditure on climate change-related issues could be between $25 billion to $128 billion annually. Crop insurance premium subsidies are projected to grow from 3.5 percent to 22 percent annually as a result of crop losses and annual spending on coastal disaster response could increase up to $94 billion annually by the end of the century.
The OMB recommended that Congress enact budget allocations in fiscal year 2023 that address the threats of climate change, including more than $7 billion to reduce emissions in the power sector and more than $5 billion to help the Department of Transformation transition to renewable energy.
“Funding these activities will not only help confront the risks created by the climate crisis, but help ensure that 40 percent of the benefits from climate and clean energy funding is directed through the Justice40 Initiative toward addressing the disproportionate impacts of climate change on disadvantaged communities,” the OMB personnel said.
The report was published in compliance with an executive order signed by President Biden in May 2021 that directed agencies to analyze and mitigate the risks climate change poses to Americans’ financial security.