climate-financial-risk-white-paper dec2024 final
The white paper evaluates how climate change creates fiscal risks and opportunities for the U.S. Federal Government across three objectives: (1) identifying and quantifying climate‑related financial risks to federal programs and assets, (2) reviewing agency‑level climate adaptation planning and implementation, and (3) accounting for the climate benefits of federal investments. It presents detailed case studies for multiple agencies, quantifies exposure, and proposes decision‑support tools. Key sections include: - Risk Management and Climate Adaptation – highlights gaps and opportunities for linking technical expertise, enterprise risk management, scope planning, and action planning to improve fiscal‑risk management. - EPA Facility Resilience – analysis of heat, tornado, hail, lightning, wildfire, and precipitation exposure at EPA labs, with proposed roof‑replacement and building‑envelope grouting actions and an ongoing correlation study. - HHS Climate‑Related Financial Risk Framework – three‑category risk taxonomy (physical‑asset, mission‑operational, program‑expenditure) with health‑sector case studies and OMB FrEDI cost projections for Medicare/Medicaid. - EPA Superfund Climate‑Resilience Integration – climate‑risk workflow, site‑specific hazard profiles, and a preliminary liability model for pump‑and‑treat systems under flood scenarios. - DOT Climate Hazard Exposure Tools – RDR suite, VAST, CHER, ARAF tools, projected climate‑related damages to transportation infrastructure, and the PROTECT grant program. - Interior SHIRA Decision‑Support Platform – value‑of‑information framework and a visitor‑center siting pilot quantifying sea‑level‑rise exposure. - Monetizing Climate Benefits – description of the Social Cost of Greenhouse Gases (SC‑GHG), EPA’s 2023 SC‑GHG tables, limitations, and use in policy analysis. - Inflation Reduction Act (IRA) Climate Benefits – projected CO₂ emission reductions from IRA provisions, sector‑level monetized benefits (economy‑wide $536 bn–$2.36 tn, median $1.11 tn, 2024‑2035), and longer‑term 2025‑2050 benefits ($3.5 tn–$5.34 tn). - HUD Mortgage Portfolio Climate Risk Modeling – analysis of natural‑disaster impacts on mortgage delinquencies, adverse selection, and three modeling approaches (FEMA NRI static losses, transition‑scenario macro‑economic impacts, and catastrophic disaster forecasts under RCP 4.5/8.5), with maps and zip‑code loss tables. - Conclusions – agencies have made progress in exposure identification, data integration, and linking adaptation to budgeting, but need more quantitative modeling, coordinated enterprise risk management, and robust decision‑support to protect taxpayer dollars. Overall, the paper combines qualitative case studies, quantitative projections, and policy frameworks to illustrate the magnitude of climate‑related financial risk across the Federal enterprise and to propose pathways for more data‑driven, resilient investment decisions.
Topics
EPA Climate Resilience: Facility and Superfund Asset Risk and Liability
Evaluates climate‑hazard exposure (heat, tornado, hail, lightning, wildfire, precipitation) at EPA laboratory campuses and Superfund sites, proposes mitigation actions such as roof replacement and building‑envelope grouting, and presents a preliminary financial liability model for pump‑and‑treat systems under flood scenarios, linking asset condition, hazard exposure, and operational costs.
HHS Climate‑Related Financial Risk Framework
Introduces a three‑category risk taxonomy—physical‑asset, mission‑operational, and program‑expenditure—applied to health‑sector case studies (NIH, IHS, CDC, CMS, SAMHSA) and incorporates OMB FrEDI cost projections for Medicare and Medicaid climate impacts.
DOT Climate Hazard Exposure Tools and Resilience Funding
Surveys DOT’s climate‑risk analysis suite (RDR, VAST, CHER, ARAF), quantifies projected damages to roads, rail, bridges, and airports (e.g., $20 bn/yr to paved roads by 2090 under RCP 8.5), and outlines the PROTECT grant program and emergency‑relief mechanisms for infrastructure resilience.
Monetizing Climate Benefits: SC‑GHG, Inflation Reduction Act Projections, and HUD Mortgage Climate Risk Modeling
Explains the Social Cost of Greenhouse Gases (SC‑GHG) and EPA’s 2023 tables, projects CO₂ emission reductions and monetized benefits from the Inflation Reduction Act (economy‑wide $536 bn–$2.36 tn, median $1.11 tn for 2024‑2035; $3.5 tn–$5.34 tn for 2025‑2050), and details HUD’s climate‑risk modeling for its mortgage portfolio using FEMA NRI, macro‑economic transition scenarios, and catastrophic disaster forecasts under RCP 4.5/8.5.