Americans often believe they are immune to the effects of climate change, but their financial stability suggests otherwise.

• A recent study by Stanford University and Resources for the Future reveals that only 55% of Americans believe global warming will have a moderate impact on them.
• Most Americans are already experiencing financial effects due to climate change, economists stated.
• Some broad economic impacts include higher insurance rates for homeowners, inflation for groceries, and lost earnings due to heat.

Household finances are being negatively impacted by climate change, despite many Americans believing they are immune to its effects.

Many homeowners in various states across the country are facing rising premiums from insurers due to mounting losses resulting from natural disasters.

Besides the evident expenses such as reconstruction or relocation following a natural calamity, which are becoming increasingly frequent and severe, there are other costs to consider.

A recent study by ICF, a consulting firm, predicts that an American born in 2024 will likely pay approximately $500,000 in their lifetime due to the financial consequences of climate change.

Gernot Wagner, a climate economist at Columbia Business School, stated that climate change is already affecting people and will intensify in the future.

He stated that there are numerous ways to experience negative financial consequences.

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In 2024, only 55% of Americans believe global warming will negatively impact them, according to a report by Stanford University and Resources for the Future.

The study found that the percentage has decreased by 8 points from its all-time high of 63% in 2010.

According to Jon Krosnick, a co-author of the report and director of Stanford's Political Psychology Research Group, it appears that survey respondents were more focused on the physical rather than financial impact when answering the survey question.

Krosnick said, "When it comes to financial impact, I believe the correct answer for [people] is, 'It's already hurting me.'"

Economic effects 'increasingly adverse'

The Fifth National Climate Assessment, published in 2023, reports that weather-related disasters cost the U.S. at least $150 billion annually in "direct" damage.

The economic consequences of global warming will become increasingly severe as temperatures continue to rise, with the impact of an additional 2°F of warming being more than twice as severe as an increase of 1°F, according to a report.

Financial accounting is limited to direct rather than indirect effects.

Extreme heat reduces worker productivity

Many of the impacts can be somewhat unpredictable, Wagner added.

A 2022 study by economists at the University of Illinois at Urbana-Champaign and the University of Oregon found that wildfire smoke not only has negative effects on human health but also reduces earnings for workers in various sectors such as manufacturing, crop production, utilities, health care, real estate, administration, and transportation. Some of this impact may be due to missed days of work.

Between 2007 and 2019, economists discovered that workers' lost earnings totaled $125 billion annually on average.

In unexpected places like New York City, workers faced air pollution challenges last year due to wildfire smoke from Canada that created an orange haze over the city. On at least one day during that time, the city had the world's worst air pollution.

Wagner stated that five years ago, nobody's climate-effect bingo card contained that specific entry.

Wagner's research indicates that extreme heat negatively impacts labor productivity, leading to decreased earnings.

According to the research, workers lose approximately 2% of their weekly paychecks for each day over 90 degrees Fahrenheit. This translates to a $30 pay cut for the average person for each day over 90 degrees, which can have a significant impact on individuals living in places like Phoenix.

June 2024 was the 13th consecutive month of record-breaking global temperatures.

How global warming and inflation intersect

Studies reveal that climate change contributes to inflation, resulting in a phenomenon known as "climate-flation."

A recent study by researchers at the European Central Bank and Potsdam Institute for Climate Impact predicts that warming will increase global inflation by 0.3 to 1.2 percentage points per year, on average, by 2035.

Wagner remarked that approximately half of the U.S. annual inflation target (around 2% a year) could potentially be attributed to climate impact, he stated.

The increase in climate-flation can be attributed to the impact on grocery prices, such as when extreme weather disrupts crop production, leading to a rise in global prices for items like avocados, corn, rice, maize, and wheat.