Climate change is going to add significantly to the federal debt. The big question is how much.

White House economists have spent the first two years of the Biden administration beginning to answer that question so the government can make better decisions about budgeting and spending.

A warming world means more federal spending on disaster relief and recovery, health care and the repair and replacement of vital infrastructure. Economists expect it to take a toll on the broader economy — and, in turn, the tax base. The clean energy transition will also tax federal coffers, though there are economists who expect the Treasury to see some upside.

And that’s before accounting for areas of the federal budget where the role of climate change may be harder to tease out, such as the demands placed on the military and on humanitarian budgets by a less stable, climate-stressed world.

“This is why climate change is an existential threat, because it affects every aspect of our world, literally,” said Cecilia Rouse, who recently stepped down as the chair of the White House Council of Economic Advisers. “And to understand and disentangle and to quantify every relationship is really a challenge.”

Meeting that challenge will make federal budget projections more realistic. It’s also likely to show that climate change will strain federal resources and fuel more political fights like the one that Washington just played witness to over the debt ceiling.

Republicans and Democrats alike spent the spring rehashing responsibility for today’s $31.4 trillion federal debt, armed with comprehensive analysis about the budgetary implications of the war on terror, former President George W. Bush’s tax cuts and their extensions and President Joe Biden’s spending bills.

But climate change wasn’t part of the discussion. The literature is skimpy on the toll warming is taking on the U.S. government’s financial resources.

“We have spent so much time, mental effort, energy and money trying to deal with other aspects of the economy,” said Amir Jina, an assistant professor of public policy at the University of Chicago. “Climate change, I think, is going to be a problem of equal or maybe greater magnitude in the future, and yet we give barely any thought comparatively speaking towards thinking about policies and solutions there.”

There’s still a long way to go before climate change can be built into the White House’s long-term economic forecasts.

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Areas of Focus: Climate Change
Climate Change
Climate change is an urgent global challenge. EPIC research is helping to assess its impacts, quantify its costs, and identify an efficient set of policies to reduce emissions and adapt...