Weather-based disasters and duress have cost New Mexico $5.3 billion in the past 42 years while nationally, extreme weather events caused $150 billion in damage in the past year alone.
Those are two of the findings in a report on the economic impact of climate change commissioned by a nonpartisan group of eco-minded businesses called E2 — short for Environmental Entrepreneurs.
E2 wanted to gauge the changing climate’s direct economic impacts nationwide and determine whether the effects are getting worse as the weather grows hotter, drier and more unpredictable. The study examined the cost of weather disasters to states, counties and congressional districts since 1980 — and it turned out to be many billions of dollars collectively, with trillion-dollar threats on the horizon as the climate continues to warm.
New Mexico’s $5.3 billion total is due mainly to drought ($2.66 billion) and wildfires (about $1.5 billion), according to the report. The data didn’t include damage from the recent Hermits Peak/Calf Canyon Fire — the largest blaze in the state’s recorded history — and subsequent flooding on the scorched hillsides, which together would add billons of dollars to the total.
Bob Keefe, E2’s executive director, said he hopes this report contributes to the conversation of climate change being an economic problem.
“We’ve talked about climate change in this country and worldwide as an environmental issue,” Keefe said. “We’ve talked about it as a health issue. We’ve talked about it as a social justice issue. For sure it’s all of those things and more, but it’s also becoming a huge economic issue.”
Awareness is growing that climate change has economic consequences and that substantial investments must be made to mitigate and adapt, Keefe said.
On Wednesday, Keefe gave a presentation on the topic to the Legislature’s Revenue Stabilization and Tax Policy Committee, a sign that more leaders view climate change as a practical, dollars-and-cents matter and not just a green concept, he said.
No one asked whether climate change was real, nor did they voice doubts that it was human-driven, Keefe said. The panel members focused strictly on the economics, he said.
The increasingly severe weather events are making it impossible to dismiss global warming’s financial impacts, Keefe said. New Mexico just suffered its worst wildfire season, Florida was hammered by its most costly hurricane, and Lakes Mead and Powell are at record lows.
“It’s getting, unfortunately, an easier story to tell,” Keefe said.
The report was compiled by PSE Health Energy, a California nonprofit that researches how energy production and use can affect public health and the environment.
The group drew from a compendium of sources, including NASA, the Federal Emergency Management Agency and the National Oceanic and Atmospheric Administration.
Because the tracker only goes through June, it doesn’t include damage estimates from New Mexico’s worst wildfires this year, including the Hermits Peak/Calf Canyon Fire.
Also, the flooding costs for 42 years are listed as zero, even though post-wildfire floods have inflicted significant damage, partly by storm runoff carrying contaminants and debris into waterways.
Keefe said the report doesn’t cover the second half of this year because the data wasn’t available.
He noted the $2.5 billion federal relief fund for the fire victims that recently passed Congress would significantly bump up the price tag, and it’s merely a “down payment” on what the feds will shell out in the coming years.
Two planned burns that went astray later merged into the inferno that scorched 341,000 acres and destroyed an estimated 500 homes. The US Forest Service said lack of consideration for how climate change parched the landscape and made weather conditions more unpredictable were factors in the mammoth runaway blaze.
The report lists the states, counties and congressional districts that sustained the most damage from a weather event or trend.
The three states with the highest damage costs had the greatest vulnerability to extreme storms. They are Texas, $361 billion; Louisiana, $287.4 billion; and Florida, $257.2 billion.
New Mexico is down on the list in overall costs, and none of its counties made the top 100 for risk of loss through climate and weather.
Keefe said that’s probably because the state is sparsely populated for its land mass.
However, the state’s three congressional districts are expected to lose a combined $140 million a year because of drought. And Luna County is in the top 10 for areas projected to get the most extreme heat by 2040.
Drought, wildfire, storms, flooding and unseasonal freezes all pose risks to agriculture and will contribute to lower crop yields in the country’s farming regions, the report said. That would include New Mexico’s $3 billion agriculture industry.
An economist noted that the report focuses on the costs of disasters, but there are other impacts in a changing climate, such as rising temperatures and warming areas already relatively hot.
The longer-term costs include less access to credit, reduced investment, labor migration and decline in worker productivity, said Galina Hale, an economics professor at the University of California, Santa Cruz, and a former Federal Reserve economist.
Hale, who is researching the intersection of economics and climate change, said she is glad the report highlights the disproportionate impacts on disadvantaged communities.
“In the same way that climate change makes hot areas hotter and dry areas drier, it also is likely to make lower-income communities suffer more,” Hale said.
Keefe agreed the report doesn’t take into account all financial impacts, such as health care costs from people breathing wildfire smoke and the loss of timber in forest fires.
“If anything, the numbers that we have are pretty darned conservative,” Keefe said.
The report is not all doom and gloom. It points to efforts to reduce climate-warming greenhouse gases, such as developing more renewable energy, the gradual shift toward electric vehicles and the recently passed Inflation Reduction Act.
The new federal law makes $369 billion available for tax credits, programs and incentives to cut greenhouse gas emissions to 40 percent below 2005 levels by 2030.
Climate change creates economic challenges but also business opportunities, whether it’s installing windmills or creating a new, climate-saving technology, Keefe said.
Hale said financial institutions should base their pricing on climate-related risks — for instance, a company that emits heavy greenhouse gases has a greater risk of drawing regulatory action.
This is important for risk management but also to invest more in companies that are reducing their climate impacts and working toward climate solutions, she said.
Companies can protect themselves from regulatory risks by making sure all long-term capital investments, such as plants and equipment, are emission-free. Otherwise they could become obsolete, she said.
Keefe said he sells being climate-friendly as good economics, which takes the politics out of it.
“Look, I don’t care if you like polar bears,” Keefe said. “I don’t care if you believe in science. I don’t care if you drive a Prius or a pickup truck. The fact of the matter is the cost of climate change is hitting us all in the pocket book.”