Why climate change may cost you big bucks — and what to do about it

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The following is an excerpt from “This week, your wallet,” an audio program produced by CNBC’s Personal Finance team. Listen to the latest episode here. [Editor’s note: Audio clip begins at the 2:33 minute mark.]

Climate change has been described as a ticking time bomb, the threats of which extend beyond ecosystems and biodiversity to big financial impacts on households and the U.S. economy.

Those financial costs are largely the result of extreme weather events.

The White House issued a report last week — the Fifth National Climate Assessment, issued every four to five years by the federal government — warning that heat waves, heavy rains, drought, hurricanes, floods and wildfires “are becoming more frequent and/or severe,” with a “cascade of effects” in all areas of the U.S.

“It’s no longer just a problem for Florida, or just a problem for Louisiana and New Orleans,” said Andrew Rumbach, senior fellow and co-lead of the climate and communities program at the Urban Institute. “More and more people are experiencing these extreme events and they carry all kinds of different costs, both direct and indirect, for those families.”

Here’s what to know, according to Rumbach and David Pogue, host of the podcast “Unsung Science” and author of “How to Prepare for Climate Change: A Practical Guide to Surviving the Chaos.” Both experts were interviewed by CNBC during a recent discussion about climate change and its impact on personal finance.

We already feel the impact — and it’s likely to worsen

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Weather-related disasters cost the U.S. at least $150 billion a year, according to the White House report, which calls that estimate “conservative.”

The U.S. now experiences a billion-dollar disaster every three weeks, on average; during the 1980s, that happened every four months, the report notes.

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The economic toll — due to such things as water stress, agricultural loss, tourism impacts, falling real estate value, and property and infrastructure damage — is expected to grow.

“Over time, each incremental increase in climate change is going to up the economic cost bit by bit,” Rumbach said.

Every additional degree of global warming translates to “increasingly adverse consequences,” the White House report said. For example, warming by 2°F is projected to more than double the economic harm from 1°F of warming, it said.

The effects can be ‘weird and unpredictable’

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Climate change’s impacts can be “weird and unpredictable,” Pogue said.

“I prefer the term ‘global weirding,’ because warming is only just part of it,” he said.

I prefer the term ‘global weirding,’ because warming is only just part of it.

David Pogue

author of “How to Prepare for Climate Change: A Practical Guide to Surviving the Chaos”

Further, for every additional “hot day” per year, especially in Western states, the prevalence of workplace injuries increases by 5% to 15%, Rumbach said, citing peer-reviewed scientific analyses. There’s also $10,000 in additional emergency room costs per 100,000 people, especially among the elderly, he said.

Plus, for every 1% decline in crop yields, there’s an estimated 0.1% out-migration of the population — a significant impact both for places losing people and for those receiving them, Rumbach said.

Declining agricultural output may fuel higher food prices, experts said, and greater property damage will likely fuel higher insurance rates.

There are ways consumers can prepare

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It’s no longer just a problem for Florida, or just a problem for Louisiana and New Orleans.

Andrew Rumbach

senior fellow at the Urban Institute

Those with renters or homeowners insurance should make sure they’re not underinsured, Rumbach said.

Prospective homebuyers can consult tools to choose homes in areas with reduced climate risk, he added. For example, Redfin offers climate risk assessments based on geography, he said.

There are also potential ways for investors to bolster their investment portfolio and have a positive impact on the environment, Pogue said.

Supporting an industry or company that’s “green” is “in effect helping everyone,” he said.

The best approach wouldn’t be to invest broadly in solar and wind companies, for example — those are commodities that keep getting cheaper, Pogue said.

Instead, it may involve investing in utility companies that get all their electricity from renewable energy sources, Pogue said. Thirty-eight states now have mandates about getting a certain amount of power from renewable energy, he added.

Investing in the electric-vehicle revolution may include buying into companies that produce electric car batteries or those that mine lithium, a key component in electric car batteries, for example, he said.

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