Who Pays for Climate Change? U.S. Taxpayers Outspend Private Insurers Three-to-One to Cover Climate Disruption Costs

Issue Paper
May 14, 2013

Despite the lengthy debate on the federal budget in Congress, climate change rarely gets mentioned as a deficit driver. Yet paying for climate disruption was one of the largest non-defense discretionary budget items in 2012. Indeed, when all federal spending on last year's droughts, storms, floods, and forest fires are added up, the U.S. Climate Disruption Budget was nearly $100 billion.

The startling reality:

  • America's taxpayers paid three times what private insurers paid out to cover losses from extreme weather.
  • The federal government spent more taxpayer money on the consequences of 2012 extreme weather than on education or transportation.

Overall, the insurance industry estimates that 2012 was the second costliest year in U.S. history for climate-related disasters, with more than $139 billion in damages. But private insurers themselves only covered about 25 percent of these costs ($33 billion), leaving the federal government and its public insurance enterprises to pay for the majority of the remaining claims.

In fact, the U.S. government paid more than three times as much as private insurers paid for climate-related disasters in 2012.