On Tuesday, Treasury Secretary Janet Yellen spoke to a new advisory board of experts and non-profits, warning that climate change already has a significant impact on the U.S. economy. She cautioned that climate change could trigger asset value losses that could cascade through the U.S. financial system in the coming years.
Yellen informed the advisory board that, even after considering inflation, the disasters costing billions had increased by fivefold. As climate change intensifies, natural catastrophes can cause asset values to decline, causing a ripple through the financial system. She added that a delayed and disorderly transition to a net-zero economy could lead to shocks to the financial system.
The Treasury Secretary pointed to the intensifying storms on the West Coast, severe storms and wildfires in states like California, Florida, and Louisiana, and tornadoes across the South as evidence that climate change is accelerating. In January, the U.S. government reported that 2022 tied with 2017 and 2011 for the third-highest number of billion-dollar disasters, with a total cost of at least $165 billion.
According to Yellen, insurance companies have already raised rates or stopped providing coverage in high-risk areas due to climate-related events, which could devastate homeowners and their property values. The financial system could be affected in other ways as a result. Despite this, the Biden administration is facing challenges from Republicans seeking to constrain administrative oversight of climate rules and other issue.
