The Personal Costs of Climate Chaos
The household financial dangers of disasters, disruptions and discontinuities... and how we can start to protect our families.
It can be an electrifying — and terrifying — moment.
At some point, every person who thinks seriously about the planetary crisis comes to the realization that few people with real power are responding to our circumstances with the seriousness and commitment we need. There isn’t some secret plan to save the world you just don’t yet know about.
Indeed, looking forward, we find ourselves short on answers and long on unknowns — with little reason to believe that any of these remaining uncertainties will break much in our favor.
We still don’t know how bad we’re going to let this crisis become, by burning fossil fuels, logging forests, destroying vital habitat, and transgressing natural limits in a hundred ways.
We are not sure how bad the climate chaos and ecological collapses loosed by this crisis will be, after we stop making the crisis worse. (We don’t know the magnitude of discontinuity we’re already in making predicting the future much harder, and forcing us to work surrounded by deep uncertainties.)
We can’t say yet how quickly we’ll begin to take seriously the need to rebuild our society to respond to this change in eras. We don’t whether the intensification of all these problems will make us rally together in solidarity, or drive more desperate conflicts over what remains.
Most of all, we’re still fumbling to grasp the all-encompassing nature of this crisis, how it shifts and unsettles all of our assumptions about how the world works. No matter what we do together, each community and family faces unprecedented challenges. We are not only unprepared, we are not even, as a society, preparing (at least on any scale that maps to the magnitude of the crisis).
“… like rising floodwaters in a flat riverside town, [these changes] flow through our societies in all directions; they suffuse all our decisions; they wash away boundary lines and landmarks; each of us finds ourselves a stranger now in a strange land, a xenotopia. You and I and all the people we know live in a moment when learning how to move through a landscape stripped of its familiar reference points is an essential life skill.”
Anticipating how this crisis will undermine families’ prosperity — especially families who are struggling already — gives us a window on how fast these flood waters are rising.
Researchers at the U.S. Department of the Treasury have made a serious contribution to that anticipation with an excellent new report: THE IMPACT OF CLIMATE CHANGE ON AMERICAN HOUSEHOLD FINANCES.
This is one of the best attempts I’ve seen to get at the very real, tangible economic costs of worsening chaos on families and communities.
The report highlights a number of vectors of climate precarity and how climate disasters threaten the economic wellbeing of America households.
The news isn’t great: “American households are increasingly exposed to climate hazards, with cascading impacts on household finance.”
On a public policy level, their findings should inform discussions of how we work to make our responses to this crisis less inequitable. On an individual level, these findings point out the vulnerabilities we face ourselves, and serve as a stark reminder of just how critical personal ruggedization has become.
Here are some of the most important of those findings. I’ve highlighted some sections I think are worth considering as we look to our own futures, and added a few notes.
EMPLOYMENT
Disaster will more frequently cause “interruptions to employment-related income and benefits.”
“Climate events such as flooding and wildfires can damage businesses, as well as key infrastructure such as power systems, roads, and internet service. Moreover, hazards like wildfires or heat waves have the potential to create unsafe working or operational conditions that necessitate closures of businesses and infrastructure. Workers in areas impacted by these hazards may face income loss due to reduced working hours, job loss, or furlough, or could be forced to spend time away from work due to illness or injury. Further, prolonged exposure to climate hazards such as extreme heat can impair workers’ physical and cognitive abilities, which can lower their overall productivity and, consequently, result in a decline in their earnings.
“Over the longer-term, recurring climate hazards, like wildfires or heatwaves, could prolong financial strain by reducing available jobs in certain sectors, potentially extending unemployment into months or years. Interruptions in employment have been shown to have persistent, negative impacts on workers’ long-term earnings. Adding to these challenges, prolonged time away from work may cause workers to lose access to employer-provided health insurance benefits, income replacement or paid leave, and employee assistance programs.”
[Of course, concentrated job losses can have a ripple effect, sapping the customer base for local businesses, triggering further job losses and business closures. Think about how many restaurants and stores went under during the pandemic.]
HOUSING
“Climate hazards can lead to significant financial strain by causing damage and destruction to households’ property, requiring expenditures on repairs or replacement and potential impacts to property value. American households already face significant property damage costs related to climate change. A recent study found that in 2021, climate hazards affected one in ten homes in the United States and resulted in a total of approximately $56.92 billion in property damage among impacted households… [and] when climate hazards cause property damage and destruction, some households may be required to relocate.”
[Also, after repeated disasters, recovery funds are likely to be depleted. Construction materials and skilled labor may be in more demand — spending on recovery from the effects of disasters has made up 32% of GDP growth since 2016 — driving up prices. There are many reasons to believe that rebuilding after disasters is going to grow more difficult as the sheer number of impacts grows.]
CONSUMER GOODS (COST OF LIVING)
“Climate hazards can also strain household finances by increasing the costs of consumer goods through interruptions to production or distribution, including through impacts on established supply chains. For example, climate hazards such as droughts, floods, and extreme temperatures can reduce crop yields, creating shortages and higher food prices. Further, when climate hazards occur, they can disrupt supply chains by interfering with transportation and logistics. Delays and increased costs for shipping and storing goods can increase consumer prices. Because the U.S. imports a substantial amount of consumer goods from abroad, American households are exposed to price increases from both foreign and domestic climate hazards.”
[Also, as we saw with COVID, some businesses will use upheavals as an excuse to jack up prices (and thus profits), reduce offerings, or both; some individuals will hoard and attempt to profiteer off consumers in need. Sudden surges of demand may leave suppliers backlogged for unusual lengths of time.]
INCREASED SPENDING ON ENERGY
[The causes they cite are mostly interruptions to fossil fuel infrastructures. If we were to consider all impacts, including slow-moving shifts in climate zones, we can imagine more expenses like rising temperatures that demand more air conditioning or increased wildfire smoke that demands more air purification. Families can buffer energy disruptions by taking actions like increasing home efficiency or building home energy and storage systems, but many households lack the capital or access to information to do so.]
DISRUPTIONS TO DEPENDENT CARE
“Climate events and conditions may lead to interruptions or cessations of childcare, senior care, and other care services, which could cause difficulty and financial strain for households that rely on these services… these stresses exacerbate the existing crisis in the cost of childcare.”
[Extended school closures and loss of recreational facilities (for example community centers and public pools) can exacerbate the challenges of care.]
TRANSPORTATION
“[C]limate events can also damage roads and transportation infrastructure, and may disrupt service or limit access to public transportation. Households relying on public transit could be forced to shift to costlier alternatives…”
[Even if a place is not hit too hard itself, nearby bridges going down or highways washing away can sever important economic connections. Also, in many places, post-disaster repair of bicycle and pedestrian infrastructure usually lags behind road repair, making life more difficult for those who regularly bike or walk.]
CHALLENGES WITH HEALTH CARE ACCESS AND EXPENSE
“Climate events and conditions can result in physical injuries, including those requiring medical care. For impacted households, climate-related hospitalization or care services could lead to an overall increase in healthcare expenditures. The total cost of these expenses can be staggering. An analysis of 10 climate events
in 2012 concluded that they created a total of $10 billion in health-related costs. Hurricane Sandy alone was estimated to have caused $3.1 billion (2018 dollars) in health-related expenses.
“Climate hazards can also have far-reaching impacts on vast portions of the population, negatively affecting public health. For example, the 2023 wildfires in Canada led to poor air quality across the U.S., far from the fires themselves. In addition, climate events can create financial challenges by reducing the availability of regular healthcare services. Events like flooding or hurricanes could cause damage forcing hospitals or emergency services to close. If individuals are unable to access routine medical care, chronic health conditions could worsen, requiring more expensive treatment or increased time away from work.”
[Public health experts also have serious concerns about the increasing number of vectors for disease that come alongside climate chaos and ecological disruption, from mosquitoes to molds. In the wake of disasters, toxic chemical exposures can also be dangerous.]
FINANCIAL VULNERABILITIES
“In 2022, a Federal Reserve Board (FRB) survey found that roughly 63 percent of Americans reported they could not cover a $400 emergency expense using cash or its equivalent. Households could experience financial strain if climate hazards interrupt access to their funds. Immediately following a climate event affecting electrical power and cell service, physical cash may be needed to conduct transactions. This interruption creates challenges for the growing proportion of households that rely primarily on online or mobile banking services and may not have cash on hand.”
Also, “Climate hazards can also strain household finances by causing interrupted access to public benefit programs.”
[More attention should be paid, I think, to the financial exposure of pension funds and retirement accounts to serious losses from rapid devaluation of brittle or unsustainable assets.]
REDUCED AVAILABILITY AND INCREASED COST OF CREDIT
“Delinquencies, forbearances, and other modifications to regular payments can lead to a range of negative consequences, including lower credit scores, which can raise household borrowing costs and reduce households’ ability to obtain credit in the future. These effects may be more pronounced for younger borrowers with thin credit files, and may also be more likely to occur following disasters that do not trigger special appropriations for disaster assistance beyond typical assistance allocations.
“While credit can provide an affordable short-term solution for those households able to access it, climate hazards may cause credit to become generally costlier or less accessible. Some research has demonstrated that financial shocks from natural disasters can harm household credit access for years following a disaster. As households struggle to repay debt, financial institutions may reduce new credit offerings in areas struck by climate events as a de-risking measure, with significant consequences for community access to credit in the medium and longer-term.”
[Predatory lending practices spreading in the wake of disasters is also a pressing concern.]
INSURANCE
“Insured households tend to recover better from disaster events than uninsured households, lessening the financial burden on policyholders as well as enhancing community recovery and disaster mitigation efforts. Insurance providers are increasingly facing greater uncertainty surrounding climate hazards and growing numbers of claims, making it more difficult for insurers to predict losses, set premiums, and underwrite policies. As a result of these pressures, insurers could increase households’ premiums, reduce coverage, or choose not to renew coverage for households in certain areas. Reduced availability of insurance can negatively affect household finances by increasing risk exposure, limiting asset protection, and hampering the ability to make financial plans for the future.”
[Indeed, a brittleness bubble collapse could be set off by a widespread loss of insurability.]
How would these impacts hit your family?
My major criticism of the report is that, even in so grimly extensive a catalog of ways climate chaos can bankrupt us, much is missing. This is fair, as no report can cover everything. But the gaps themselves are illuminating.
The report limits itself to three specific kinds of disaster — floods, fires, and heat waves — and doesn’t attempt to factor in “chronic phenomena and broader conditions such as higher average temperatures or sea-level rise.” Other disasters — droughts, hurricanes, wind storms, plagues of locusts, etc. — can trash our lives as well. This is particularly true as complex disasters become more common, like when a town finds itself threatened by both destructive high winds and a drought-intensified wildfire.
More importantly, little losses count. This crisis’ constant and growing attrition on the functionality of systems, cities and institutions looks to be an even greater societal cost than direct hits from monster storms. A swarm of “non-disastrous” impacts are unfolding around us: changes in growing seasons straining ecosystems (and gardens); loss of predictability reducing the capacity of institutions to optimize their plans and pushing up the cost of finance; worsening air quality taking a toll on our health; wider temperature swings increasing wear and tear on buildings and roads; the social and psychological strains of experiencing discontinuity. And so on…
Finally, we still have not come to grips with the near-certitude that we will fail to ruggedize sufficiently against these onslaughts and erosions — at least not everywhere — meaning more and more collapsing communities and depressed local economies. This itself imposes more costs.
When a wave of hardships washes over a community, it creates an undertow of desperation, crime, despair, addiction and abuse. When a whole swath of communities are hit, that undertow can impose serious costs on neighboring communities, from spillover social impacts to loss of ability to collaborate with neighboring jurisdictions to solve mutual problems. Where many communities across a region are experiencing losses from a whole variety of climate and ecological damages, the result can be that even places doing okay may be undercut by the problems of neighboring places that are falling apart.
There’s likely to be much less help than there should be. Most of the massive costs of climate risks and impacts won't be covered by national governments (much less international groups). Those costs will be borne by individual families, communities, businesses and institutions. A huge number of people have been abandoned to face this crisis without the tools to meet it, and the effects for many (especially people struggling with poverty) will be ruinous and immiserating.
People living in places under the most serious threats, without much in the way of resources to prepare, and without the financial wherewithal to practice what has euphemistically been called “self-recovery”… they’re in for a world of hurt. Many millions of people face transapocalyptic futures.
To be totally clear: THIS SHOULD NOT BE.
I suspect every person reading this would prefer that their nation would respond to the planetary crisis with large-scale, rapidly-deployed mobilizations of resources, spent on decarbonization and equitable evidence-based ruggedization measures that simultaneously reduce pollution, prepare communities and infrastructure for a volatile future, and create platforms for inclusive and sustainable prosperity. In other words, we all would like to see our leaders take up the intensity of action this debacle demands. We’d like to act like we’re clear that we’re all in this together.
This should not be how things are, but it is.
I wouldn’t bet on that changing enough to guarantee that help from above is coming when you need it. Reducing your exposure to threats is mostly your job. No one is coming to make sure your life, your community, your region is ready for the crisis now upon us. If you want to be ready, you have to ready yourself. As adaptation researcher Jesse Keenan summed it up: “You’re on your own.”
Though these problems all fall heaviest on those with the least, we shouldn’t fool ourselves that those of us who have more are immune to the dangers of discontinuituy.
In a warming and weirding world, there’s not as much distance between our lives and the lives of those living in poverty as we might like to imagine. We all face many of the same steepening problems.
The critical difference is that the more education and means we have, the more options we have, especially if we move with some alacrity.
And options do exist. We can relocate to relative safety. We can educate ourselves for discontinuity, and learn to be native to now. We can intelligently prepare our homes, the systems we depend on, and our family finances for a wider range of interruptions and failures. We can help to accelerate ruggedization in our workplaces and communities. We can advocate for more rapid reforms and better plans. We can publically walk the talk that it’s time to take the destabilization of the climate and biosphere seriously, by taking them seriously in our own lives, and with the people who matter most to us.
I call this process of exploring and engaging our options personal ruggedization.
If you want to learn more, I’m teaching a class on the basics.
A Crash Course in Personal Ruggedization is a six-week online class, held live on Thursdays, from 10:00 a.m. to 12 p.m., Pacific time, from the 12th of October to the 16th of November.
Each session includes a deep-dive exploration of that week’s topics, and a group Q&A. Classes are recorded for those who cannot attend live.
Also included:
Reading lists and call highlights from each session to help you deepen your exploration.
An optional 90-minute group wrap-up call after the final session during which participants can explore questions and future explorations together (date TBD).
$100 off a one-on-one consultation with me to receive personalized guidance.
Or go to this link:
https://app.acuityscheduling.com/schedule.php?owner=18593954&appointmentType=52713479
(Enrollment closes in one week, on Wednesday, October 11th, at 10:00 am Pacific time.)