Funding the Future: What’s the Cost of Climate Action?
Anna Paddock, Climate Action Planning Fellow, explains the challenges in determining the exact financial costs of implementing climate action plans and why investing in climate action now is essential to mitigate future financial losses and protect communities from the impacts of climate change.
“How much is this going to cost?” It’s the question everyone wants an answer to. As towns across Maine work on creating and implementing climate action plans, many townspeople are concerned with what that means for their tax contributions. It is a completely fair question to ask – with any major project there is usually some form of economic analysis. However, with climate action planning, the answer is not straightforward, and you would be hard pressed to find the exact dollar amount it will cost your town to enact their plan. Comprehensive municipal plans guide the direction of legislation and infrastructure development. This gives flexibility to implement the plan in line with the capacity of the Town and community, but also provides limitations. Furthermore, the context of climate action must be considered to develop a fair financial assessment.
Climate action takes time. Systemic change does not happen overnight, and that is the case for reducing greenhouse gas emissions and community vulnerability. Maine Won’t Wait, the State’s climate action plan, is set on achieving the goals laid out by 2050. Most municipal plans are also following 2030, 2040, and 2050 emission reduction timelines. That presents a glaring problem – not even the best models can know the exact cost to upgrade a culvert in 2032 or to buy a heat pump in 2045.
Climate action planning also addresses social vulnerabilities. A CAP isn’t just about reducing a community’s emissions, it is also to ensure the community is in the best position possible to respond to climate-induced hazards. Social investments, such as educational programs on local risks and preparedness or a heating/cooling center, will provide support to residents and increase public safety. Coastal Maine is facing more flooding events, high heat events, and power outages as grid usage increases. While these events could very likely be fatal to some, planning and readily available social resources can prevent those fatalities. Which is yet another reason it is difficult to put a price on climate action – it is impossible to assign a dollar value to human life.
Sustainable technologies are getting cheaper. During 2021, electricity costs from the three major sources of renewable energy dropped by at least 13%. The International Renewable Energy Agency (IRENA) has assessed that renewable energy is much cheaper than fossil fuels, and that fossil fuels will become less competitive as fuel costs rise. While the global oil reserves are significant, the finite nature of the fuel source coupled with its associated political turmoil means availability will decrease. Individual sustainable technologies are getting more cost effective too. Heat pumps use less energy than fossil fuel heating sources, and save homeowners an average of over $500 annually. Electric vehicles’ upfront cost is, on average, $10k more than their gasoline equivalents, but also save about 60% annually on fuel costs. The initial investment for “greenifying” is high, and a significant barrier for the average Mainer. The federal and state governments are attempting to reduce this barrier by providing rebates and other financial incentives to improve energy efficiency. Currently, Efficiency Maine offers rebates up to $8,000 for insulation updates and $2,400 for electric heat pumps.
It is more expensive to not change. Climate change will not leave a single person unaffected – the massive scale of this crisis is unprecedented. If we do not reduce global emissions, the associated costs and impact on the global economy will be similarly massive. In 2022, weather and climate disasters had their third most expensive year in U.S. history, totaling over $165 billion. Maine’s coastline will likely experience more intense and frequent storms and floods, and costs to repair infrastructure and relocate residents will continue to rise. Most Americans have flood insurance through the National Flood Insurance Program, a federally funded program under FEMA. With more claims filed for flooding, the NFIP will require more funding, potentially increasing taxes or reducing funding for other crucial programs. The Deloitte Economics Institute published a report in 2022 that projects that the U.S. economy could lose $14.5 trillion to insufficient climate action over the next 50 years. This loss is attributed to infrastructure damage, industry deterioration, and a workforce hindered with high heat and disease. The same report also projects a growth of $3 trillion and 1 million jobs for the country’s economy in the next 50 years with rigorous decarbonization efforts. Growth in the renewable energy sector will provide jobs for Americans across the country.
There will be significant money spent to combat climate hazards over the next several decades. Our choice is to spend that money now on mitigation and adaptation, or later on repairs and rebuilding. The bottom line is that climate change is a crisis – bringing loss, sacrifice, and financial turmoil. As intimidating and demoralizing as it is, the alternative is to allow our planet to become uninhabitable. While putting an exact price on climate action is tricky, there is no doubt that investing in our physical, social, and environmental resilience is the best way to protect our communities from looming disasters.
Anna is originally from New Hampshire, but grew up in Jordan, Tunisia, Egypt, and around the United States. For her undergrad, Anna attended the University of South Florida for biochemistry and environmental science & policy. Through research and volunteer projects there, Anna became very interested in environmental resilience and community planning. She loves spending time outdoors, whether it be biking, walking, or painting. Anna loves cooking and is always looking for new foods to try! She is excited to learn about the Portland community and improve sustainable practices locally.