Securing Growth and Robust Leadership in American Aviation Act--
Floor Speech
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Mr. WHITEHOUSE. Madam President, I am back with my trusty battered ``Time to Wake Up'' chart here to talk about the climate warnings that now predict climate-related damage in the trillions of dollars-- trillions of dollars.
A full third of our national debt already comes from economic shocks like COVID and the 2008 mortgage meltdown. I have been using the Budget Committee to spotlight warnings that the next big economic shock will be caused by climate change. Climate change is not just about polar bears or green jobs. It is about economic storm warnings to which we had better start paying attention. Today, I will talk about three.
The most recent comes from the Potsdam Institute.
Here we use recent empirical findings from more than 1,600 regions worldwide over the past 40 years to project sub-national damages from temperature and precipitation, including daily variability and extremes. Using an empirical approach that provides a robust lower bound on the persistence of impacts on economic growth, we find that the world economy is committed to an income reduction of 19% within the next 26 years independent of future emission choices (relative to a baseline without climate impacts, likely range of 11-29% accounting for physical climate and empirical uncertainty). These damages already outweigh the mitigation costs required to limit global warming to 2 deg.C by sixfold over this near-term time frame and thereafter diverge strongly dependent on emission choices. Committed damages arise predominantly through changes in average temperature, but accounting for further climatic components raises estimates by approximately 50% and leads to stronger regional heterogeneity. Committed losses are projected for all regions except those at very high latitudes, at which reductions in temperature variability bring benefits. The largest losses are committed at lower latitudes in regions with lower cumulative historical emissions and lower present-day income. Main
Projections of the macroeconomic damage caused by future climate change are crucial to informing public and policy debates about adaptation, mitigation and climate justice. On the one hand, adaptation against climate impacts must be justified and planned on the basis of an understanding of their future magnitude and spatial distribution. This is also of importance in the context of climate justice, as well as to key societal actors, including governments, central banks and private businesses, which increasingly require the inclusion of climate risks in their macroeconomic forecasts to aid adaptive decision-making. On the other hand, climate mitigation policy such as the Paris Climate Agreement is often evaluated by balancing the costs of its implementation against the benefits of avoiding projected physical damages. This evaluation occurs both formally through cost-benefit analyses, as well as informally through public perception of mitigation and damage costs.
Projections of future damages meet challenges when informing these debates, in particular the human biases relating to uncertainty and remoteness that are raised by long-term perspectives. Here we aim to overcome such challenges by assessing the extent of economic damages from climate change to which the world is already committed by historical emissions and socio-economic inertia (the range of future emission scenarios that are considered socioeconomically plausible). Such a focus on the near term limits the large uncertainties about diverging future emission trajectories, the resulting long-term climate response and the validity of applying historically observed climate--economic relations over long timescales during which socio-technical conditions may change considerably. As such, this focus aims to simplify the communication and maximize the credibility of projected economic damages from future climate change.
In projecting the future economic damages from climate change, we make use of recent advances in climate econometrics that provide evidence for impacts on sub- national economic growth from numerous components of the distribution of daily temperature and precipitation. Using fixed-effects panel regression models to control for potential confounders, these studies exploit within-region variation in local temperature and precipitation in a panel of more than 1,600 regions worldwide, comprising climate and income data over the past 40 years, to identify the plausibly causal effects of changes in several climate variables on economic productivity. Specifically, macroeconomic impacts have been identified from changing daily temperature variability, total annual precipitation, the annual number of wet days and extreme daily rainfall that occur in addition to those already identified from changing average temperature. Moreover, regional heterogeneity in these effects based on the prevailing local climatic conditions has been found using interactions terms. The selection of these climate variables follows micro-level evidence for mechanisms related to the impacts of average temperatures on labour and agricultural productivity, of temperature variability on agricultural productivity and health, as well as of precipitation on agricultural productivity, labour outcomes and flood damages (see Extended Data Table 1 for an overview, including more detailed references). References contain a more detailed motivation for the use of these particular climate variables and provide extensive empirical tests about the robustness and nature of their effects on economic output, which are summarized in Methods. By accounting for these extra climatic variables at the sub-national level, we aim for a more comprehensive description of climate impacts with greater detail across both time and space.
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Mr. WHITEHOUSE. The institute warns that ``global annual damages are estimated to be at 38 trillion dollars, with a likely range of 19-59 trillion dollars in 2050.'' Thirty-eight trillion dollars is the midpoint in a range that could go as high as $59 trillion. That is pretty bad.
But it gets worse. This is not a complete accounting of the expected damages. It does not fully account for damage from weather extremes, things like storm and wildfire damage.
To quote the Potsdam report about its damage predictions, ``accounting for other weather extremes such as storms or wildfires could further raise'' these predictions.
And even that is not the end of it. It gets worse still. The Potsdam economic estimates leave out damages that are hard to monetize but, nonetheless, can be very real to real people. Again, quoting from the report, ``that is without even considering non-economic impacts such as loss of life or biodiversity.''
If your grandfather taught you to fish in a certain place and you can't pass that on to your granddaughter because the fish aren't there or because the creek isn't there, that is a real and genuine harm, but they can't monetize it. So they don't even count it.
I am sorry to report that it gets even worse. The Potsdam global damage estimates are based on existing levels of fossil fuel pollution.
Back to the report:
These near-term damages are a result of our past emissions. We will need more adaptation efforts if we want to avoid at least some of them. And we have to cut down our emissions drastically and immediately--if not, economic losses will become even bigger in the second half of the century.
Well, with an entire industry and an entire political party, dedicated here in Congress to make sure that we do not cut down our emissions drastically or immediately, this damage estimate is virtually certain to be worse in the out years.
In sum, economic damages could be as high as $59 trillion annually in 2050, plus whatever added damages come from storm and wildfire, plus whatever added damages come that are hard to monetize, plus whatever economic damages come from failing to reduce emissions drastically and immediately.
How do these damages hit us? Here is the report:
These damages mainly result from rising temperatures but also from changes in rainfall and temperature variability.
Those factors lead to ``income reductions . . . for the majority of regions, including North America . . . caused by the impact of climate change on . . . agricultural yields, labor productivity or infrastructure.''
The result:
Climate change will cause massive economic damages within the next 25 years in almost all countries around the world, [including] the United States.
That is report one: ``massive economic damages'' to the United States.
Let's move on to report two, the cover article from a recent issue of the Economist magazine, titled ``The Next Housing Disaster.''
From the Economist's opening paragraph:
About a tenth of the world's residential property by value is under threat from global warming--including many houses that are nowhere near the coast. From tornados battering Midwestern American suburbs to tennis-ball-size hailstones smashing the roofs of Italian villas, the severe weather brought about by greenhouse-gas emissions is shaking the foundations of the world's most important asset class.
Going on, the article says:
The potential costs . . . are enormous. By one estimate, climate change and the fight against it could wipe out 9 percent of the value of the world's housing by 2050--which amounts to $25 trillion.
We have had testimony in the Budget Committee about how this works. There is the potential direct cost of damage from wildfires or major storms. Hurricane Ian cost Florida more than $100 billion, and it was just a category 4 storm at landfall, below the maximum category 5 strength.
Some scientists believe we will actually need category 6 in the future for storms that are made even more powerful due to ever-warming seas.
There is the related risk of insurance coverage failing to pay claims after such a major disaster, leaving homeowners stranded economically in ruined homes. Then, there is the broader risk of insurance collapse, even without a single devastating storm.
How does that work? Again, from Budget Committee testimony: First, unprecedented, unpredictable wildfire or flooding risks drive up insurance costs. We are already seeing that happen.
Then, continued unpredictability and worsening risk make properties in certain areas uninsurable. We are beginning to see that. You can't get a policy for any amount of money.
Without insurance, then, it is near impossible to get a mortgage. And by the way, a 30-year mortgage doesn't look just at today's conditions; it looks out 30 years.
So a mortgage crisis follows the insurance problem. And when properties can't get a mortgage, the only buyers for the property are cash buyers. Buyer demand crashes, and your property values crash along with that.
This is how the chief economist of Freddie Mac predicted, years ago, a coastal property values crash that he said could hit the American economy as hard as the 2008 mortgage meltdown and subsequent global economic crisis: first, insurance crisis; second, mortgage crisis; third, coastal property value crisis.
And unlike the mortgage meltdown of 2008, when property values could recover and did recover from an economic shock, properties that are predictably going to be underwater physically or repeatedly burn down during the 30-year period of a mortgage, they won't recover their value. This is not a temporary market panic that crashes and then rebounds to something near normal.
In this kind of crash, the unpredictable conditions and the underlying risk that caused it just get worse--for decades, if we get serious, finally, about fossil fuel emissions, and for centuries or forever if we don't. We are playing near the edge of an economic precipice.
Back to The Economist:
The $25 trillion bill will pose problems around the world. But doing nothing today will only make tomorrow more painful.
This is what is called a systemic shock. It does not stay confined to the affected homeowners and industries.
To quote The Economist here:
The impending bill is so huge, in fact, that it will have grim implications not just for personal prosperity, but also for the financial system.
I continue here:
If the size of the risk suddenly sinks in, and borrowers and lenders alike realize the collateral underpinning so many transactions is not worth as much as they thought, a wave of repricing will reverberate through financial markets.
The punch line:
Climate change, in short, could prompt the next global property crash.
Now, The Economist article is a prediction just as to property markets.
For report three in this speech, let's go to Deloitte's research arm, which looks at broader economic trajectories: A, if we do respond effectively to climate change and, B, if we don't. The stakes are huge.
Deloitte is a corporate consulting firm; it is not a Green New Dealer. And Deloitte estimates that the global cost of doing nothing on climate will be around $180 trillion in economic damage by 2070--$178 trillion to be exact.
To quote the Deloitte report:
If we allow climate change to go unchecked, it will ravage our global economy.
Ravage our global economy.
But the Deloitte report goes on to say that if we act responsibly and enact policies that limit warming to 1.7 degrees Celsius, we can save ourselves from that ravaging and actually grow the global economy by over $40 trillion--$43 trillion to be exact.
So the swing in our economic future, based on what we do on climate, is over $220 trillion, the difference between a negative $178 trillion bad climate outcome if we keep shirking and dawdling, and a positive $43 trillion good climate outcome if we shape up. And to be clear, that $220 trillion, that is adjusted to present value.
Dialing down to the United States, the report predicts:
For the United States, the damages to 2070 are projected to reach $14.5 trillion, a lifetime loss of nearly $70,000 for each working American.
On the upside, a responsible climate path could add $885 billion in economic benefit for the United States for a swing of over $15.3 trillion, again, net present value, depending on which path we choose.
The Deloitte report warns:
[W]e have squandered the chance to decarbonize at our leisure. Given the costs associated with each tenth of a degree of temperature increase, every month of delay brings greater risks and forestalls the eventual economic gains.
They continue:
The global economy needs to execute a rapid, coordinated, and sequenced energy and industrial transition.
This is not the speech to lay out how we do that; that speech will come later, so stand by.
This speech is simply to highlight that there are now multiple damages assessments out there looking at the climate threat and assessing that threat into the tens of trillions of dollars.
There is much that we don't know, but the common level, moving into the tens of trillions ought to be a wake-up call for all of us.
There are some things that we do know. We do know that getting serious about these warnings will require breaking the filthy political hold of the fossil fuel industry on Congress.
It will require exposing and defeating fossil fuel's dark money influence and disinformation armada. And it will require learning to deal with the facts as they are, not as a deeply, ill-motivated industry would have us wrongly believe.
Wow, is it ever time to wake up.
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