The Cost of Climate Change and Its Effect on Your Finances

Climate change isn’t just about our weather changing. If the world continues to heat up and continues to have more powerful storms and other natural catastrophes at what seems to be an increasing frequency, our finances will be taking a big hit. Even it doesn’t happen right where you live, you’ll still be affected financially. That’s not good news. As we just have all witnessed with Hurricane Harvey in Texas and Louisiana as well as in the western U.S. with numerous wildfires, not to mention the impending Hurricane Irma, the damages from weather can change your life in a heartbeat, and the recovery from it can take years of suffering and billions of dollars. The cost of climate change is real and will affect us all.

The cost of climate change may be more than you imagine. Here are just some of the ways it will affect our personal finances.


The changes in our climate are being debated and that seems like a waste of time and goes against one of the most basic planning techniques that exist. “Hope for the best and be prepared for the worst” has no truer relevance than when we look at the possibilities and effects of climate change, and you can quote me (and many others) on that one!

In the short term, we need to support those affected by these natural disasters. But for the longer term, we need to be focused on how to prevent some of those disasters from occurring at all. If we don’t, we’re going to have to pay a very steep price.

Effects of Climate Change on Your Finances

Here are just some of the ways your money and life could be impacted by climate change:

Property values will decline

Assuming you live in an area that becomes more and more drought-prone, or affected by flooding, people may not want to live there.

Drought-stricken areas may find populations migrating away, so you could have trouble selling your house and perhaps keeping your job. And while that sounds like an alarmist conclusion, and it may well be, a recent report released by the Environmental Protection Agency called “Climate Change in the U.S.: Benefits of Global Action” concluded that the U.S. could experience up to $180 billion in economic losses due to drought, water shortages, and catastrophic flooding or even wind damages in our near future.

Conversely, housing may become totally unaffordable or even non-existent in some current coastal areas like Miami or New York City where ocean levels continue to rise and flooding may be constant. Does beachfront property in Pittsburgh PA sound like an impossibility?

Home insurance costs will rise

A study published in the U.K. journal Nature Climate Change concluded that man-made global warming is responsible for about 75 percent of all hot-temperature extremes worldwide over the past 100 years as well as 18 percent of heavy rainfall. But even if you don’t believe that climate change is causing, or helping along, extreme weather, what matters is that the insurance industry does!

We all understand the debate on climate change is a huge issue and there are a lot of discussions about who is going to pay for all the losses caused by extreme weather. The cost of Hurricane Harvey may wind up being $8 billion dollars or more. That being said, homeowners will now find themselves with skyrocketing premiums when weather changes drastically like we are seeing.

But and it’s a big but, premiums have to be affordable. If they aren’t, nobody can afford to be covered and that means damages will go unaddressed and insurance companies may not remain in business due to either a loss of customers or premiums just too low to support all the payouts of the claims.

There is always the possibility of the linking of any higher premiums with other discounts and policies that could help lower potentially high premiums. I never underestimate the creativity of American business ingenuity so we’ll have to wait and see.

You could be out of a job

No need to look at online jobs boards…yet. Most of us probably don’t have to worry at the moment, but you may have reason to get nervous if you’re in an industry that’s likely to be impacted by warming temperatures and extreme weather.

You have to ask yourself some questions. Look at your household income. What is the source of that income? Is that source dependent on the climate? Farms, vacation destinations, golf courses and such could be affected by a future change in climate. California’s ski industry, for example, has seen dramatic declines in their revenues in recent years because of changing weather patterns.

Of course, you may find a job due to climate change as well. One can imagine that many sectors in the energy industry will thrive, and tourism may actually improve in some states like Maine where summers may actually become warmer longer and thus bring in more tourists and dollars.

In business there are real concerns and worry about the effect climate change may have on smaller companies. While many of the Fortune 500 companies are preparing for climate change, those big companies don’t even provide half of all jobs. Small businesses do and the vulnerability of smaller businesses to climate impacts means a very different future for the average working Jane or Joe.

Food prices will rise and variety offered will change

It doesn’t take much imagination to realize that food prices will go up if frequent droughts and floods become the norm. Even though our farmers try to deal with climate all the time, there is no doubt that it can and will create big problems. Sustainability, even with our food coming from around the world, is affected by climate change and can create shortages and necessary changes from our normal taste preferences and sensibilities out of necessity.

The costs of food production will increase because of climate change even though engineering technologies may emerge that would allow crops to be grown with less water and higher temperatures. Flooding however, will mean a possible catastrophe.

Energy costs will go up

Exactly how much one’s electric bill will climb because of climate change is difficult and may be impossible to accurately predict, but it will increase. According to the EPA, higher summer temperatures, particularly during heat waves, will likely increase peak electricity demand, placing more stress on the electricity grid, and increasing everyone’s electricity costs.

I guess you might say that may mean some “good news”. In the future, you’ll probably pay less on your heating bill, but overall, higher reliance on air-conditioning will negate the benefits of lower heating bills, meaning you’ll be paying a higher total utility bill annually.

Gasoline production and distribution are another area impacted by climate changes. Just this past week here in NJ, we saw an increase of over 50 cents per gallon at local gas stations just based on the fear of shortages caused by Hurricane Harvey. The gulf area is always under a threat of storms disrupting supplies and it can become more frequent in our future if climate change has a worst case scenario impact. That’s a big reason why we have to explore more earth friendly energy sources.

While it’s true that energy costs would likely go higher if the U.S. passed legislation that forced energy providers to adopt more earth-friendly practices, we just may be talking about our ultimate survival and that’s a risk we shouldn’t be willing to take. If energy providers aren’t more highly regulated, you may save money on energy costs, but you will likely lose a lot more in other ways.

My Own Experience

In my own lifetime, I have seen our climate changing. I sometimes jokingly say that “it used to be cold in winter and hot in summer” and now it’s more like the same temperature all the time. It seems to be 50-60 degrees no matter what the calendar says the month actually is around where I live. Just a few years ago we had a complete summer here in NJ where the temperature never reached 90 degrees at any point, and that was a first! We also have many summers where we have extraordinary heat waves too.

We are breaking the warmth records regularly every year and that fact worries me and should worry you too. The power of storms such as Katrina, Sandy, Harvey and—as I write this—Irma are becoming the norm and not the exception.

All of this is fostering our acceptance that we will have to pay more for everything from homeowners insurance to food costs, from the cost of healthcare to energy and ultimately in taxes to finance the numerous and frequent weather disaster cleanups.

Final Thoughts

Some of us may already believe that it just is too late to do anything to stop the deterioration of our climate or even that it’s a “natural” cycle that occurs every few thousand years anyway and we just have no proof one way or another that it hasn’t occurred many times in history. But not knowing seems to me no excuse for ignoring and denying climate change.

I urge you to speak out and try and influence our representatives in government to address climate change now. This isn’t politics, but it is affected and controlled by politicians.

Scientists almost unanimously agree that climate change is real and must be addressed now. The last time I looked, I didn’t see any credentials amongst our elected officials indicating any sort of expertise in the sciences. And even if they did, all they’d really have to do is just open their eyes and take a good look at what is all around them.

So, the bottom line is this: we can spend the time and money now to fight climate change, or we can spend a lot more time and money not fighting it in what will be a very unpleasant future for you, your children, and your grandchildren.

What do you think about climate change? What are you doing to help fight against it?


  1. Thanks for addressing this! Everyone will be effected and costs for products will rise. We realized this risk and have reduced our consumption of animal products, especially at home. We also try to reuse products and reduce our consumption of goods. This helps us save money now and reduces our carbon footprint!

    It is frustrating that this has become a politically charged issue when the research is not divided.

    1. I really appreciate you being specific on how you’re helping in the battle to protect our environment. That would be another post in its entirety and maybe it will be one of my future ones. It’s a matter of each one of us doing a little so that as a whole, we make a big impact. Thanks for your comments, Mrs. Kiwi.

  2. Gary, thank you for writing this. Great post – I will be sharing it. I am extremely worried about climate change. I try to do what I can to make environmentally-friendly choices in my own life, including eating a plant-based diet, filling up our gas tank only once a month, flying less frequently, and purchasing from companies that are working to reduce their carbon emissions. I have also contacted my members of Congress regarding this issue. Yet, I still feel pretty powerless. It’s sad that members of our government who could make a real difference have chosen to turn a blind eye to the entire matter (or deny that it is even happening).

    I’m realizing that one of the best things I can do to help my own family cope with climate change is build a strong financial foundation so that we are prepared for the unexpected.

    1. It’s good news to hear that you are actually making a concentrated effort to make a difference on this very important issue. It really comes down to what we as individuals are willing to do because as you have said, we can’t rely on our elected officials. I think that you’re making the difference and I believe that I and others can too. It’s the moral thing to do. I really appreciate your comments.

  3. Mel

    Oh my gosh, this was all so depressing before even adding in the financial aspects. It is crazy to me the level of denial about climate change – especially considering “hope for the best but plan for the worst.” It’s insane.

  4. Emily @ JohnJaneDoe

    It drives me crazy that science is being ignored, even by folks who ought to know better. And the silencing is even worse, and the attempt to portray science as “anti-development.” It seems to me incredibly short-term and selfish.

    We just spent a week at the beach. It was lovely to be 30 yards from the ocean, but I’ll never buy one of these places we rent because they will wash away. It’s a matter of when not if. Insurance for these places is expensive, but also heavily subsidized by both the government and inland insurance customers. That’s a big transfer to wealthier individuals because there are no cheap beach properties, and yet the homes still get bigger, fancier, and more expensive to replace. Eventually, something’s going to have to give and the houses should become uninsurable. It’s a shame, but jeez, it’s gotten ridiculous how much value people build in places guaranteed to flood, erode, etc.

    1. I would agree, Emily, that knowing what we know and defying the odds when you locate your home in such locations just doesn’t make any sense. I sincerely hope that we are not too late to make the changes that will help protect future generations and reverse the damage to our climate. My fear is that we won’t even try. That’s why it’s important to talk to as many people as we can about taking action now. Thank you for your comments.

  5. I live in Bangladesh. I know how it feels though the situation has been changed a lot. Because our current government believes “Prevention is better than Cure.” I have experienced more than 10 natural calamities for the last 10 years. People hardly get chances to go outside.

    1. Keeping aware of what’s happening with climate conditions is so important. It has to be a top of the mind discussion or there’ll be much more catastrophic events than you’ve already seen. We have to do something as a citizen of the world in all countries or future generations will cease to exist. I appreciate your comments.

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