Blog Archive

Thursday, February 14, 2013

GAO: Climate change is 'serious financial risk' to US government

by Corbin Hiar, SNL Financial, February 14, 2013

For the first time ever, the federal government's watchdog agency has declared that climate change poses a potentially devastating financial threat to the government.

"Climate change is a complex crosscutting issue that poses risk to many environmental and economic systems — including agriculture, infrastructure, ecosystems and human health — and presents a serious financial risk," the U.S. Government Accountability Office wrote in a major biennial risk assessment published Feb. 14. "The federal government is not well positioned to address the fiscal exposure presented by climate change, and needs a government-wide strategic approach with strong leadership to manage related risks."

The study highlights 30 "high-risk areas needing attention by Congress and the executive branch," according to the GAO.

Two of these areas are related to climate change. The second new risk the GAO added to the 2013 list is expected gaps in environmental satellite data, which could leave communities less prepared for extreme weather events that are exacerbated by climate change. Flawed federal insurance programs have been on the risk list since March 2006 and "are not well suited to addressing emerging issues like climate change," the report noted.

Other risks the study highlighted with implications for the energy industry include the management of federal oil and gas resources, as well as the protection of the nation's cyber-critical infrastructure.

Why climate change is a threat
Now is the time for the federal government to prepare for climate change, according to the GAO. "While implementing adaptive measures may be costly, there is a growing recognition that the cost of inaction could be greater and — given the government's precarious fiscal position — increasingly difficult to manage given expected budget pressures which will constrain not just future ad hoc responses but other federal programs as well," the report said.

Unlike other government efforts to calculate the risk of climate change, the GAO's report did not attempt to quantify the cost of inaction. It simply noted that the federal government has spent more than $80 billion on disaster relief since 2004, with the number of disaster declarations hitting a record 98 in fiscal year 2011. On the other hand, the U.K.'s 2006 Stern Review of climate change economics estimated that unabated global warming could reduce global annual economic output by 5% to 20%, or perhaps more.

The challenge to addressing climate change risks is the need to "develop a cohesive approach at the federal level that also informs action at the state and local levels," the GAO said. In addition to making a broad plan, the report recommends that the federal government find a way to work around the expected gap between the launch of new weather satellites and the obsolescence of the old satellites, as well as reform the federal crop and flood insurance programs to account for a changing climate.

How Congress will complicate adaptation measures
Although the technical and practical GAO report does not directly address the issue, the biggest hurdle to addressing its climate change warnings is likely to be the political climate in Washington, D.C. Until President Barack Obama made climate change a surprising focus of his second-term inauguration speech and promised to tackle the issue in his Feb. 12 State of the Union address, it was a threat that many national politicians had been unwilling to talk about, much less mitigate against.

Two of the four lawmakers to whom the report is addressed — Senate Homeland Security and Governmental Affairs Committee Ranking Member Tom Coburn, R-Okla., and House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif. — have publicly questioned climate science. That sentiment is widespread within the Republican Party, and no GOP Congress members chose to attend a Feb. 13 Senate hearing on climate science.

Some lawmakers are now hoping that this study will force their skeptical colleagues to rethink the issue. "GAO's landmark decision to list climate change in its High Risk report is a critical wake-up call for Congress and the country," Maryland Democrat Elijah Cummings, the ranking member on the House oversight committee, said in an emailed statement. "Although some may continue to disregard the science, this report warns that climate change is real, it is here now, and the economic consequences to our nation will be catastrophic if Congress ignores it any longer."

Cummings also asked the committee chairman to hold hearings on the GAO's conclusions.

Most political observers think quick action by Congress is unlikely. But if the past is any guide, the GAO report does offer some reason for optimism.

"Attention to high-risk areas has brought results," GAO Comptroller General Gene Dodaro wrote in his letter to Issa, Cummings, Coburn and Delaware Democrat Tom Carper, the chairman of the Senate Homeland Security and Governmental Affairs Committee. "More than one-third of the areas previously designated as high risk have been removed from the list because sufficient progress was made to address the problems identified."

1 comment:

Brian Jackson said...

I couldn't agree with this more. Green energy can help us both in the energy and financial sectors. If America can lead the way, meaning we create the technology first and built the products here...the future is without a doubt with renewable energy.

The recent weather has made many non-believers into believers, and that's a good thing coming from a bad situation.