As Climate Change Strains Federal Funds, FY16 Budget Request Invests in Resilience

Energy and Climate Report provides current, thorough coverage of clean energy, efficiency, and climate change legislation, regulation, policy, legal developments, and trends in the U.S. and...

By Andrea Vittorio

Feb. 2 — The Obama administration is making the case for investing in efforts to stem the risks of climate change as economic damage from rising seas, increasingly extreme weather events and other impacts put a growing strain on the federal government's budget.

“The ability of policymakers to make smart investment decisions and to steward the Federal budget over the long term is increasingly dependent on understanding the Federal Government’s exposure to climate risks,” according to an analysis included as part of the president's fiscal year 2016 budget request, released Feb. 2.

Over the past decade, the federal government has incurred more than $300 billion in direct costs due to extreme weather and fire alone, including $176 billion in disaster relief and $85 billion for federal flood and crop insurance programs.

Though it is not possible to pin a specific portion of these costs on climate change, “the directional impact on the Budget of expected climatic changes is clear,” the analysis said.

Flood Insurance Losses 

The federal government's exposure to potential insurance losses through the National Flood Insurance Program, for example, has quadrupled during the past two decades to $1.3 trillion.

The program, which is one of the government's biggest fiscal risks related to climate change, owes about $24 billion in debt to the Treasury as of September 2014, primarily because of claims associated with Hurricane Katrina in 2005 and Hurricane Sandy in 2012.

With climate change likely to increase the frequency and severity of storms, floods and other extreme weather events, the financial liability for the federal budget is expected to continue to grow, the analysis said.

‘Costs Add Up.'

The federal government also faces indirect costs of climate change to health care, federal property management, national security and biodiversity loss—along with potential revenue losses from hampered economic production. Unabated climate change could cost the U.S. economy as much as 0.7 percent of U.S. GDP in 2100, or more than $120 billion in today’s dollars, according to the analysis.

“The costs of climate change add up, and ignoring the problem only makes it worse,” an overview of the FY 2016 budget said.

It echoed the findings of a July 2014 report from the White House that said delaying international policy action to mitigate climate change could impose extra costs on the global economy and make it harder to hit climate targets in the long run.

Funding for Resilience

Rachel Cleetus, the lead climate economist at the Union of Concerned Scientists, told Bloomberg BNA Feb. 2 these “runaway costs” provide important context for federal spending on making communities more resilient to climate change.

“I think what the federal government needs to do is chart a course for spending limited taxpayer dollars wisely,” Cleetus said. “There are some items in the budget that are going to contribute to that.”

The president's budget request includes $400 million for work at the National Flood Insurance Program to identify areas at risk of floods, an increase of $184 million over current funding levels. It also includes $50 million each for two new coastal resilience grant programs at the National Oceanic and Atmospheric Administration and the Interior Department.

Another $200 million would be provided for the Federal Emergency Management Agency’s pre-disaster mitigation grant program—a significant $175-million increase compared to current funding levels—to help invest in building resilience before a disaster strikes.

New Flood Standard 

Cleetus said existing federal money also will be spent more wisely thanks to an executive order Obama issued Jan. 30 that establishes a higher flood elevation standard for federally funded buildings, roads and other infrastructure.

The new standard is meant to ensure that communities build back stronger after storms by taking future climate risks into account. It allows federal agencies to choose from one of three approaches. They can:

• use data and methods informed by best-available, actionable climate science;

• build 2 feet above the 100-year (1 percent-annual-chance) flood elevation for standard projects, and 3 feet above for critical buildings such as hospitals and evacuation centers; or

• build to the 500-year (0.2 percent-annual-chance) flood elevation.

The new national standard is based on a strengthened regional standard used in the aftermath of Hurricane Sandy.

Damages from Hurricane Sandy are estimated at $67 billion, with recovery efforts still ongoing. The Sandy-affected region will face increasing flood risk in the long-term due to a combination of population increases, climate change and other factors, with especially high risks in areas such as Norfolk, Va., and parts of New York and New Jersey, according to a two-year study conducted by the Army Corps of Engineers.

To contact the reporter on this story: Andrea Vittorio in Washington at

To contact the editor responsible for this story: Larry Pearl at

The analysis of federal budget exposure to climate risk is available at

More information on the new federal flood risk standard is available at