Climate Change Expected to Raise U.S. Wildfire Costs by $10 Billion- $60 Billion per Year in Just Four Decades

Groups issue report of first-ever cost estimates for climate change-magnified wildfires, and urge inclusion in national “social cost of carbon” estimates of the economic impacts of carbon pollution

WASHINGTON (September 16, 2014) – Climate change could take a serious toll on the U.S. economy by expanding by 50 percent the area that wildfires burn —and raising projected damages by tens of billions of dollars a year by 2050, according to a new economic study released today.

The study, Flammable Planet: Wildfires and the Social Cost of Carbon—by the Environmental Defense Fund (EDF), the Institute for Policy Integrity at NYU School of Law (Policy Integrity), and the Natural Resources Defense Council (NRDC)—provides the first estimate of the future economic costs of wildfires that will be magnified by climate change.  

The study shows that wildfires already cost the U.S. between $20 billion and $125 billion a year. With climate change that number could climb drastically, adding an additional $10 billion to $60 billion per year to the cost of wildfires within just four decades. In today’s economy, that’s about $80 to $500 per household.

“Climate change is here now and its toll on our health and economy is rising every day,” said Laurie Johnson, chief economist at NRDC. “Wildfires that already destroy millions of acres of forests and thousands of homes will cause much more damage if we don’t take strong steps to reduce the carbon pollution driving climate change. We’re losing time but not solutions to this grave threat, and we must act now.”

President Obama has taken steps to do just that, using his authority under the Clean Air Act to propose carbon pollution limits on power plants built in the future and the first-ever limits on carbon pollution from plants operating now.

The standards, set to be in place by 2015, will address nearly 40 percent of the nation’s carbon pollution.

This pollution imposes economic costs by damaging public health and driving destructive climate change. Working together, the White House and key federal agencies have put a dollar value on those damages, a figure known as the “social cost of carbon.” The administration’s best estimate is $40 per ton of carbon pollution.

The social cost of carbon incorporates economic costs of factors such as climate impacts on health and agriculture, but omits many extreme weather events including wildfires. Today’s new report shows that wildfires should be incorporated as well.

Given the future outlook for wildfires, that makes sense. Scientists predict that climate change will intensify, and with it wildfires will become more frequent and intense, and fire seasons will get longer. Acres burned could surge by 50 to 100 percent in four decades, some studies suggest, with the heaviest damage in America’s Western states.

“It’s clear that climate change-driven wildfires pose a serious economic risk, and should eventually be part of the administration’s assessment of the cost of carbon pollution. Wildfire risks are yet one more reason we must address climate change now, as we’re putting future generations in jeopardy the longer we delay,” said Richard Revesz, director of the Institute for Policy Integrity.

The social cost of carbon is a powerful tool that has guided development of the carbon pollution standards for new and existing power plants, and for standards to improve vehicle fuel efficiency. Recently, the Government Accountability Office, the independent investigative arm of Congress, endorsed the administration’s methodology in a report that also noted some experts contend that the dollar figure may be low because it leaves out the cost of damages from factors such as certain catastrophic events.

“Increasing bills for wildfire damage are just one example of how much climate inaction will cost us,” said Gernot Wagner, Lead Senior Economist at EDF. “The public has to pick up the tab after the weather disasters that we’ll see more frequently because of climate change. We need to fully assess climate risks so we can make good public policy decisions.”

Earlier this year, NRDC, EDF and Policy Integrity launched the Cost of Carbon Pollution project to focus on the social cost of carbon and how it is used to develop federal standards. Their first report addressed costs missing from the administration’s current calculation: “Omitted Damages: What’s Missing from the Social Cost of Carbon.”

The new report, authored by Peter Howard, an economics fellow at Policy Integrity, analyzed the types of damage from wildfires such as loss of timber, health effects, loss of ecological services, and costs for fire prevention, suppression and rehabilitation, both in the U.S. and globally. The report is the first of a series planned to put dollar figures on damages partially and fully left out of the social cost of carbon.

To read the “Flammable Planet” report, click here:

To read the “Omitted Damages” report, click here:

For more on the Cost of Carbon Pollution project, click here:


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