ICYMI: Chairman Murray Holds a Hearing on The Costs of Inaction: The Economic and Budgetary Consequences of Climate Change
Yesterday, Chairman Patty Murray (D-WA) and the Senate Budget Committee held a hearing on the Costs of Inaction: The Economic and Budgetary Consequences of Climate Change.
In her opening statement, Chairman Murray discussed how climate change is not only an environmental and economic challenge, but also increasingly a fiscal challenge.
“This isn’t just an environmental issue. It also poses serious risks to our economy and the federal budget. And if we fail to address these threats, it will weaken economic growth and increase costs for the federal government. These costs are too important to ignore, and it’s time for the Budget Committee to begin to assess the damage climate change will have on our budget and economy.”
Murray explained how failing to mitigate the risks associated with climate change will affect the U.S. federal budget.
“Taken together, the impacts of climate change will have major implications for our nation’s economy and budget. Across federal, state, and local governments, it will further strain budgets that are already being stretched. And its threat to our economy and budget will only add to an already-challenging fiscal picture. While budget projections have improved significantly in the near-and-medium term, we still face serious long-term fiscal challenges. But, the added costs of climate change impacts are not adequately accounted for in current long-term budget outlooks.”
“Failing to act now will only make it more difficult to solve this problem later, and will force us to divert resources away from other priorities. So, let me be clear on this point. Anyone who, like me, wants to tackle our long-term fiscal challenges fairly and responsibly, needs also to worry about the impacts of climate change.”
Read Chairman Murray’s Opening Statement here.
Murray questioned witness Mindy Lubber, President of Ceres, on why businesses are thinking through the costs of climate change.
MURRAY: “You talked in your testimony, some of the issues that businesses and investors will face as a result of climate change. What reasons do companies that you work with cite when they decide to address climate change?”
LUBBER: “Companies are averse to risk; I mean risk, as we all know is an intimidating factor for companies and for the investors who invest in them. When they look at the depletion of natural resources – can you run a manufacturing facility if there’s not enough water? From the west coast, and certainly California, where this is certainly not about models, it is not about the future. It is about today. Companies, ranches, agricultural farms, do not have enough water- they are seeing catastrophic risks. Financial risks today, to companies, to consumers, to shareholders and to investors. So certainly physical risks is a big issue. For large land owners, for people who are worried about the impacts, whether you’re Jones Lang in the south, or any other large company, the fact of the matter is the impact on real estate —matters depending on where the real estate is. So it varies sector by sector, but some of the largest issues are physical risks, certainly some reputational risks, ligation risks…”
MURRAY: “So they’re looking at their bottom lines?”
LUBBER: “It is all about the bottom line. The investor network that we run is a hundred and five investors, thirteen trillion dollars in assets under management, who say climate risk is an issue they need to address, they need to analyze and they need to begin to invest taking advantage of…They’ve got shareholders, they go to work having to make money, and beat the guy down the block, and they are focusing in a way different than we’ve ever seen before on climate risk as a financial risk.”
Read Lubber’s testimony here.
Witness Alfredo Gomez, Director of Natural Resources and Environment at the Government Accountability Office, explained that climate-related extreme weather impacts have an effect on federal spending.
“Extreme weather impacts on physical infrastructure such as buildings, roads, and bridges, as well as on federal lands, increase federal fiscal exposures. Infrastructure is typically designed to withstand and operate within historical climate patterns. However, according to NRC, as the climate changes, historical patterns do not provide reliable predictions of the future, in particular, those related to extreme weather events. Thus, infrastructure designs may underestimate potential climate-related impacts over their design life, which can range up to 50 to 100 years. Federal agencies responsible for the long-term management of federal lands face similar impacts. Climate related impacts can increase the operating and maintenance costs of infrastructure and federal lands or decrease the infrastructure’s life span, leading to increased fiscal exposures for the federal government that are not fully reflected in the budget.”
Read Gomez’s testimony here.
Witness Sherri Goodman, Executive Director of the I Military Advisory Board stated in her testimony stated that climate change could impact military readiness.
“The projected impacts of climate change could be detrimental to military readiness; strain base resilience, both at home and abroad; and limit our ability to respond to future demands. More forces will be called on to respond in the wake of extreme weather events at home and abroad, limiting their ability to respond to other contingencies. Projected climate change will make training more difficult, while at the same time, will put at greater risk critical military logistics, transportation systems, and infrastructure—both on and off base,” Goodman said.
Read Goodman’s full testimony here.
Democratic members of the Committee highlighted the economic consequences of inaction on climate change and called for action on the issue:
Senator Chris Coons highlighted that the consequences of climate change could be less burdensome if the government starts tackling them now: “In my county government role one of the challenges we faced was the future expense of health care and pension plans. One of the greatest challenges we face in our federal budget is the future growth in entitlement costs and as we’ve often debated around this hearing room, the sooner we begin to tackle long term costs and the rate of growth in costs, the easier the difficult choices will be. Isn’t there a clear parallel here with climate change? The sooner that state and local governments, the federal government, get serious about tackling this issue, the less burdensome and difficult the long-term consequences will be of those changes in direction.”
Senator Angus King (I-ME) stated that the United States must be the leader in addressing climate change: “The big question here is: what is the rest of the world going to do? I have a hard time telling people in Maine they’ve got to pay six dollars for a gallon for gas, if China and India do nothing. On the other hand, the question is: what is going to provoke them to do something? And I’m sure that our doing nothing is not going to provoke them to do something. This is a global issue and it has to be dealt with on a global basis. But, somebody’s got to lead. And it seems to me, as you’ve pointed out, we’re the wealthiest country in the world. We’re in the best position to lead.”
Senator Sheldon Whitehouse (D-RI) noted that all five witnesses agreed that climate change is real and is related to carbon emissions: “First of all, it appears to me that everybody on this panel agrees that climate change is real, it’s really happening, and it relates to carbon emissions. Is that true across the board of all five of you? Yes. Very good, that’s a start.”
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