prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.

Report 1: Because of technological advances in digitization and data processing, electronic forms of payment have become increasingly available, convenient, and cost efficient  Established technologies, such as credit and debit cards, have long been a popular payment option  In addition, new payment methods (e g , PayPal's Venmo app and Square's point-of-sale hardware, among others) use underlying traditional banking and payments systems to make electronic payments less expensive and more available to individuals and small businesses  Newer digital currencies, such as cryptocurrencies, offer alternative (though not yet widely adopted) options that have a high degree of independence from traditional systems  Although cash remains an important method of payment in the United States (see Figure 1 ), anecdotal reporting suggests that various electronic payment systems have become so effective and inexpensive relative to cash payments that some U S  businesses—even those at which sales generally have a low dollar value—are increasingly choosing not to accept cash  In some developed countries, such as Sweden, cash payments are becoming relatively scarce  In addition, a number of central banks worldwide are examining the possibility of issuing government-backed digital currencies that exist only electronically  These trends suggest that due to buyer or seller preference or government policy, the role of cash in the payment system may continue to decline, perhaps significantly, in coming years  Some observers have examined the consequences of an evolution away from cash  Proponents of reducing the use of physical currency (or even eliminating it all together and becoming a cashless society ) argue that it will generate important benefits, including potentially improved efficiency of the payment system, a reduction of crime, and less constrained monetary policy  Proponents of maintaining cash as a payment option argue that significant reductions in cash usage and acceptance would further marginalize people with limited access to the financial system, increase the financial system's vulnerability to cyberattack, and reduce personal privacy  Given developments and debate in this area, Congress may consider policy issues related to the declining use of cash relative to electronic forms of payment  This report is divided into two parts  The first part analyzes cash and noncash payment systems, and the second analyzes potential outcomes if cash were to be significantly displaced as a commonly accepted form of payment  Part I describes the characteristics of cash and the various electronic payment systems that could potentially supplant cash  The noncash payment systems include traditional electronic payment systems (such as credit cards or payment apps) and alternative electronic payment systems, focusing on private systems using distributed ledger technology (such as cryptocurrencies) and central bank digital currencies (which are only under consideration by central banks at this time)  Part I also examines the advantages and costs specific to each payment system and the potential obstacles to the adoption of alternative electronic payment systems  Part II of this report analyzes the potential implications of a reduced role of cash payments in the economy, including potential benefits, costs, and risks  The report also includes an Appendix that presents two international case studies of economies in which noncash payment systems rapidly expanded  This section provides analysis of cash, traditional noncash payment systems, and potential alternative payment systems  It describes the characteristics, presents usage data, and analyzes the advantages and costs of each system  It also includes a discussion on the potential decline in cash usage and a short inset on the legality of businesses' refusing to accept cash  How well something serves as money in a payment system depends on how well it serves as (1) a medium of exchange, (2) a unit of account, and (3) a store of value  To function as a medium of exchange , the thing must be tradable and agreed to have value  To function as a unit of account , the thing must act as a good measurement system  To function as a store of value , the thing must be able to purchase approximately the same value of goods and services at some future date as it can purchase now  Currently, cash continues to serve the three functions of money well as part of a robust, physical payment system  Physical currency can be carried easily in a pocket and thus is tradeable  Each unit of currency (e g , a dollar) is identical and can be divided into fractions (e g , cents) of the whole, making dollars effective units of account  A bill or coin, when well cared for, will not degrade substantively for years, meaning it can function as a store of value  In the United States, paper currency and coins are produced by the Bureau of Engraving and Printing (BEP) and the United States Mint, respectively, both of which are units within the Department of the Treasury (Treasury)  The Federal Reserve (the Fed) distributes the currency and coin to banks, savings associations, and credit unions upon request, and the banks in turn make the cash available to their customers  When a bank orders cash, the Fed deducts the amount from the bank's Fed account  The revenues and costs to the government from this system are examined in the " Cash Effects on Government " section below  Data suggests that the demand for cash in the United States has continued to grow despite the introduction of new payment services and systems  Fed data indicates that the amount of currency in circulation has increased steadily over at least the past 20 years (see Figure 2 )  As of December 31, 2018, there were more than 43 billion notes (more commonly called bills ) worth over $1 67 trillion in circulation  The Fed determines how many new notes "are needed to meet the public's demand [, which]…reflects the Board's assessment of the expected growth rates for payments of currency to and receipts of currency from circulation " This growth in demand is not wholly surprising, because demand for cash would be expected to grow as does the economy, the population, and price levels  In addition, the demand for cash is growing because certain people may be increasingly using it solely as a store of value or safe investment (imagine the proverbial risk-averse saver keeping money under the mattress), rather than to make purchases  In addition, there remains a high demand for U S  currency abroad, both as a store of value and medium of exchange  Some evidence suggests people are using cash for payments less often  For example, according to preliminary findings of a Fed survey, cash transactions in the United States fell from 40 7% of all transactions in 2012 to 32 5% in 2015  Taken together with data from the triennial Federal Reserve Payment S tudy , these survey results suggest the number of cash transactions during that time fell from roughly 84 8 billion per year to 69 4 billion  However, Fed economists have subsequently noted that significant changes in the survey methodology and unaccounted for effects from economic conditions means the eight-point decline in the share of transactions "almost surely does not accurately reflect actual changes in consumer preferences for cash " After making adjustments to account for these factors, those economists estimated the decline in the percentage of transactions that were in cash was roughly half of the initially estimated decline in the share of cash transactions  The most recent data indicates that Americans used cash for 31% of their transactions in 2016, with stronger cash preference for small, in-person transactions (60% of in-person transactions under $10)  One of the main benefits of cash is that it is a simple, easy, robust payment mechanism that requires no ancillary technologies  Payers and payees validate and settle transactions simply by physically exchanging the currency; the consumer needs no magnetic-stripe card or mobile device, and the seller does not need a card-reading machine or other payment-receiving device  Relatedly, some observers assert cash provides a security against potential disruptions to electronic payment systems  For example, in the event of a significant cyberattack or extended power outage, cash could continue to serve the functions of money while electronic payment systems could not  Cash also acts as a safe asset in which to invest savings and its usage can involve a high degree of privacy, features that will be examined in more detail in the " Potential Costs and Risks of a Reduced Role for Cash " section below  In addition, holding cash might impart other psychological benefits to a consumer, such as feelings of greater control over budgeting and associations with wealth  Using and accepting cash involves certain costs to consumers and businesses  For example, consumers may have to pay fees to withdraw cash from automatic teller machines (ATMs)  Banks with more than $1 billion in assets are required to report their revenue from ATM fees, and a Congressional Research Service (CRS) analysis indicates those banks collected at least $1 9 billion in ATM fees in 2018  Other costs—including consumer losses through theft, misplacement, or accidental destruction of cash—are more difficult to estimate  Businesses must pay for cash management services, such as cash delivery with armored trucks (an industry with estimated annual U S  revenues of $2 8 billion) and security systems to dissuade thieves or robbers from attempting to steal cash kept on the retailer's premises  Despite these efforts, U S  businesses lose about $40 billion in employee cash thefts per year  Similar to consumer's costs, quantifying all the costs of cash to businesses presents challenges, as certain costs are not straightforward and easily measurable  For example, some portion of retail staff and managers' paid time is spent counting cash and reconciling tills  In addition to its impacts on consumers and businesses, cash directly affects government revenues through three main mechanisms: (1) seigniorage (i e , the "profit" the government makes by producing cash), (2) Federal Reserve remittances to the Treasury, and (3) tax evasion  Two of these mechanisms—seigniorage and remittances—increase government revenues  The third mechanism—tax evasion, facilitated by the anonymous and difficult-to-trace nature of cash transactions—decreases government revenue  Revenue Generating: Seignoriage   In general, the value of the physical currency produced by the government exceeds the cost incurred to produce it  For example, a $100 bill costs about 14 cents to print, generating revenues $99 86 greater than cost  The profit generated by this difference is called seigniorage, and this income would decrease if demand for cash were to fall  In FY2017, the U S  Mint generated $391 5 million in net income from circulating coins and the U S  Bureau of Engraving and Printing generated revenues $693 million greater than expenses  Revenue Generating: Fed Remittances   The second source of cash-generating revenue is remittances, which are transferred from the Fed to the U S  Treasury  Any income the Fed earns after expenses and dividends paid to member banks, it remits to the Treasury (in 2017, the amount was $80 6 billion), and hence becomes a source of revenue for the federal government  A significant expense for the Fed is the interest it pays on depository institutions' deposits held in their Fed accounts  Such payments accounted for $28 9 billion of the Fed's $35 4 billion total expenses in 2017  However, currency is a Fed liability on which it pays no interest  Recall that when a bank orders cash from the Fed, the Fed deducts the amount from the bank's account  Thus, the more cash that is in circulation, the less interest the Fed must pay, and the greater its remittances to Treasury  In January 2019, there was approximately $1 7 trillion of currency in circulation, and the Fed (as of this publication) paid an annual interest rate of 2 4% on reserve balances  By these measures, if all currency were instead bank reserve balances held at the Fed, it could increase Fed expenses (and thus reduce government revenues) by more than $40 billion a year  If interest rates on reserves (which change when the Fed alters monetary policy) rose or fell, then expenses would increase or decrease, respectively, in this scenario  Revenue Reducing: Tax Evasion   Because cash leaves no electronic record, wage earners and businesses are able to underreport (in general, illegally) how much cash they receive in order to reduce their tax payments  Thus, cash contributes to the tax gap —the difference between what the government is owed and what is actually paid  The most recent Internal Revenue Service estimate released in 2016 examined the tax gap for the years 2008-2010, and found that the gap due to underreporting averaged $387 billion a year  This estimate does not directly measure how much underreporting is facilitated by cash payments, and the figure for recent years is likely to be different  However, it provides a general context for how much tax revenue the government does not collect due to underreporting that is at least in part made possible by cash transactions  Businesses have long set conditions under which they would not accept cash  For example, certain businesses refuse to accept high-denomination bills  However, according to anecdotal reporting, retail businesses are increasingly deciding that the costs of transacting in cash are high enough that they would rather not accept it at all  Notably, this is occurring at businesses at which transactions are typically in-person for small dollar amounts—traditionally viewed as the type of transactions for which cash is the least costly option  If these stories are in fact indicative of a sustained trend, widespread non-acceptance of cash could have a variety of effects on consumers, businesses, as well as society and the economy at large  One particular effect that has drawn significant attention, as well as litigation, is that non-acceptance of cash could potentially marginalize those that have limited access to the financial system or mobile technological devices  This issue is examined in the " Lack of Financial Access for Certain Groups " section later in the report  Were cash to decline as a payment system, the most likely replacement—at least at the current time—would appear to be traditional noncash, electronic payment systems, such as debit cards, credit cards, or payment mobile apps  In traditional noncash payment systems like those that are prevalent today, participants hold their money in an account at a bank or other financial intermediary that maintains accurate ledgers of how much money each customer has available  To make a payment, the payer instructs (using a physical check or an electronic message) the intermediary to transfer money to the recipient's account  If the recipient holds an account at a different intermediary, those intermediaries will send messages to each other via messaging networks connecting them, instructing each to make the necessary changes to their ledgers  The intermediaries validate the transaction, ensure the payer has sufficient funds for the payment, deduct the appropriate amount from the payer's account, and add that amount to the payee's account  For example, in the United States, a retail consumer may initiate an electronic payment by swiping a debit card, at which time an electronic message is sent over a network instructing the purchaser's bank to send payment to the seller's bank  Those banks then make the appropriate changes to their account ledgers (possibly using the Fed's payment system) reflecting that value has been transferred from the purchaser's account to the seller's account  As with physical currency, digital entries in account ledgers can serve the three functions of money well for use in payments  Instructions to change entries in a ledger can easily be sent, making the values in the ledger easily tradable  Numerical entries can be denominated in identical and divisible units, making them good units of account  Because numbers in a ledger can remain unchanged during periods when no transactions are made, they can serve as a store of value  According to the most recent complete Federal Reserve Payment S tudy on noncash payments, the number of traditional noncash payments made in the U S  totaled more than 144 billion transactions with a value of almost $178 trillion in 2015  These included payments via debit cards (69 5 billion transactions worth $2 56 trillion), credit cards (33 8 billion transactions worth $3 16 trillion), automated clearing house payments (ACH; 23 5 billion transactions worth $26 83 trillion), and check payments (17 3 billion payments worth $26 83 trillion)  Between 2012 and 2015, the number of transactions of the three electronic systems, debit, credit, and ACH, grew at annual rates of 7 1%, 8 0%, and 4 9%, respectively  Their values grew by 6 8%, 7 4%, and 4 0%, respectively  Check payments declined by an annual rate of 4 4% by number and 0 5% by value  According to a recent supplement to that study, both the growth of electronic payments and the decline of check payments accelerated in 2017  Payment based on physically exchanging currency has some notable shortcomings that can be addressed by a payment system based on maintaining account ledgers  One is that physical currency requires both the payer and the payee to either (1) be physically near each other, allowing the physical currency to pass from the possession of the former into the possession of the latter; or (2) have a sufficient trust in each other that the payee believes an assurance that he or she will receive the currency later  Another shortcoming is that holders of physical currency may have little recourse if it is lost, stolen, or accidentally destroyed  If, instead, money is exchanged by making valid changes in ledgers maintained by trusted intermediaries, the exchange can be accomplished without the risk of lost, stolen, or damaged currency  In addition, noncash systems can make payments fast, easy, and convenient  Using them decreases the need for people to make regular estimations of how much cash they need to have on a particular day, the frequency of trips to the bank or ATM to get cash, and the amount of time waiting for cashiers to make change  Instead, a plastic card or an app on a mobile device can replace those activities with a card swipe or button push  As information technology has progressed, the convenience has increased and the option to use electronic payments has become nearly ubiquitous  Until fairly recently, it was not uncommon for a retail establishment to reject card payments  Now, services such as Venmo, Apple Pay, and Google Pay, and card-reading devices, such as those made by Square, have made electronic payment options increasingly available, even for individuals to accept electronic payments from other individuals  The previously mentioned anecdotal reporting suggests there is a growing number of establishments that only accept electronic payments  For these systems to work well, participants must trust that banks and other intermediaries are keeping accurate ledgers that are changed only for valid transfers  Otherwise, an individual's money could be lost or stolen if a bank records the account as having an inaccurately low amount or transfers value without his or her permission  Another advantage of systems using traditional intermediaries is that they have a number of features that generate a high degree of trust and accuracy  Banks and other intermediaries have both a market and governmental incentive to be accurate  A bank or financial intermediary that does not have a good reputation for protecting a customer's money and processing transactions accurately would likely lose customers  In addition, governments typically subject banks to laws and regulations designed in part to ensure that banks are well run and that the money they hold is safe  As such, banks take substantial measures to ensure security and accuracy  In addition, intermediaries generally are required to provide certain protections to consumers involved in electronic transactions, in part to protect them from losses resulting from unauthorized transfers  For example, the Electronic Fund Transfer Act ( P L  95-630 ) limits consumers' liability for unauthorized transfers made using their accounts  Similarly, the Fair Credit Billing Act ( P L  93-495 ) requires credit card companies to take certain steps to correct billing errors, including when the goods or services a consumer purchased are not delivered as agreed  Both laws also require financial institutions to make certain disclosures to consumers related to the costs and terms of using an institution's services  Significant costs and physical infrastructure underlie systems for electronic money transfers to ensure the systems' integrity, performance, and availability  For example, payment system providers operate and maintain robust digital networks to connect retail locations with banks  The Fed operates and maintains electronics networks to connect banks to itself and each other  These intermediaries store and protect huge amounts of data  Because these intermediaries are generally highly regulated, they incur regulatory compliance costs  Intermediaries recoup the costs associated with these systems and regulations and earn profits by charging fees directly when the system is used (such as the fees a merchant pays to have a card reading machine and "swipe fees" on each card transaction) or by charging fees for related services (such as checking account fees)  It is difficult to quantify how much traditional noncash payment systems cost and what portion of those costs is passed on to consumers and businesses  Performing a quantitative analysis is beyond the scope of this report  What bears mentioning here is that certain costs of traditional payment systems—and, in particular, the fees intermediaries in those systems charge—have at times been high enough to raise policymakers' concern and elicit policy responses  For example, in response to businesses' assertions that Visa and MasterCard had exercised market power in setting debit card swipe fees at unfairly high levels, Congress included Section 1075 in the Dodd-Frank Consumer Protection and Wall Street Reform Act (Dodd-Frank Act; P L  111-203 )—sometimes called the Durbin Amendment  Section 1075 directs the Fed to limit debit card swipe fees charged by banks with assets of more than $10 billion  In addition, studies on unbanked and underbanked populations cite the fees associated with traditional bank accounts, a portion of which may be the result of providing payment services, as a possible cause for those populations' limited interaction with the traditional banking system  Although electronic payment systems protect customers from physical theft and are subject to a complex and sometimes overlapping array of state and federal laws, regulators, and regulations related to cybersecurity, they could nevertheless expose individuals to cyber-theft and identity theft  In addition, the systems themselves could be susceptible to disruption from cyberattacks  The occurrence of successful hacks of banks and other financial institutions, wherein huge amounts of individuals' personal information are stolen or compromised, illustrates cyber-related risks  For example, in 2014, JPMorgan Chase, the largest U S  bank, experienced a data breach that exposed financial records of 76 million households  However, no consensus exists on how best to reduce the occurrence of such incidents, and whether current cybersecurity measures and regulatory frameworks are effective and efficient in mitigating cybersecurity risk is an open question  For a more detailed examination of cybersecurity at financial institutions, see CRS Report R44429, Financial Services and Cybersecurity: The Federal Role , by N  Eric Weiss and M  Maureen Murphy  In addition, although the traditional electronic payment system is sufficiently fast and convenient to complete many transactions, other transactions can involve problematic delays  One such delay that can be particularly costly for consumers is the lag between when a payment (such as a paycheck) is deposited and when the full amount of the funds are available to the individual  Depending on factors related to which networks the payer's and payee's bank uses to process payments, it can take up to two business days (or more under certain circumstances) after a deposit is made for banks to fully validate, process, and settle the deposit  Settlement delays can create a situation in which an individual has made a deposit that would give sufficient funds to pay a bill that is due, but nevertheless may overdraw the account because the deposit is awaiting processing  In such a situation, the individual faces a choice between costly outcomes—a late payment penalty on the bill, an overdraft fee on the bank account, or a fee from a check cashing or payday lending service  These costs are likely disproportionately borne by low- or moderate-income individuals who typically have low balances in their bank accounts  Faster or immediate payment processing could potentially reduce or eliminate costs incurred by individuals facing this situation  While delays in the payment system may seem anachronistic at a time when digital messages can be sent and data processed nearly instantaneously, the fact remains that aspects of the systems, networks, and infrastructures used today (including those operated by the Fed) were developed and deployed decades ago  Both the Fed and private institutions are working to increase system speed and efforts are underway to make real-time payments in the United States the norm  However, payment system operators arguably have little incentive to achieve faster or real-time payments because (1) they are in compliance with the current requirement facing banks pursuant to the Expedited Funds Availability Act of 1987 ( P L  108-100 ) to generally make most types of deposits available by the second business day, (2) updating legacy systems is costly for the institutions that operate them, and (3) banks are generating revenue through overdraft fees  Currently, it appears that the traditional noncash payment systems described above likely would replace cash payments should cash usage significantly decline  However some observers, citing the various costs and disadvantages associated with those systems—including delays in processing as well as reliance on traditional financial intermediaries—point to alternative electronic payment systems as potential dominant payment systems of the future  Cryptocurrenc y , such as Bitcoin , is the most well-known of these alternatives  Described in more detail below, cryptocurrencies use blockchain technology and public or "distributed" ledgers to achieve validated transfers of digital representations of value  The use of these systems to make payments is quite rare relative to cash and traditional systems, and the role they will play in the future is speculative  Nevertheless, their potential to significantly affect the usage of cash and traditional systems for payments has drawn the attention of central banks  Some central banks are examining whether they should create a comparable payment system of digital currencies to offer the advantages of those systems themselves and to avoid being bypassed in the future  This section briefly describes (1) existing private alternative electronic payment systems and (2) possible future central bank-run systems  With respect to alternative electronic payment systems, the section examines their potential advantages, costs, and obstacles to their widespread adoption  With respect to a potential central bank-run system, which is more speculative at this time, the section examines potential advantages and obstacles to their widespread adoption and uncertainties they present  In general, private electronic payment systems using distributed ledgers allow individuals to establish an account identified by a string of numbers and characters (often called an address or public key ) that is paired with a password or private key known only to the account holder  A transaction occurs when two parties agree to transfer digital currency (perhaps in payment for a good or service) from one account to another  The buying party will "unlock" the currency used as payment with her private key, allowing some amount to be transferred from her account to the seller's  The seller then "locks" the currency in her account using her own private key  From the perspective of the individuals using the system, the mechanics are similar to authorizing payment on any website that requires an individual to enter a username and password  In addition, companies offer applications or interfaces that users can download onto a device to make transacting in cryptocurrencies more user-friendly  Many digital currency platforms use blockchain technology to validate changes to the ledgers  In a blockchain-enabled system, payments are validated on a public or "distributed" ledger by a decentralized network of system users and cryptographic protocols  In these systems, parties that otherwise do not know each other can exchange something of value (i e , a digital currency) not because they trust each other but because they trust the platform and its protocols to prevent invalid changes to the ledger  A notable feature of transfers using blockchain is that they require no centralized, trusted intermediary such as a bank, government central bank, or other financial or government institution  Proponents envision these systems could achieve instantaneous transfers, although they currently require minutes or hours to finalize transfers  The decentralized nature of digital currencies and their recent proliferation poses challenges to performing industry-wide analysis of their use in payments  For example, as of August 27, 2018, one industry group purported to track trading prices of 1,890 cryptocurrencies alone  For brevity and clarity, this report uses statistics on Bitcoin—the first and most well-known cryptocurrency, the total value of which accounts for more than half of the industry as a whole —as an illustrative example of a digital currency's use in payments  In January 2017, the price of a Bitcoin on an exchange was about $993  The price surged during the year, peaking at about $19,650 in December 2017, an almost 1,880% increase  However, the price then dramatically declined  Overall, the price of Bitcoin has experienced a high degree of volatility  On March 12, 2018, the price of Bitcoin was $3,860, down 80% from its peak  More recently, the price rebounded and was $5,948 on May 8, 2019  Although price data on Bitcoin illustrates the public interest in and overall demand for this cryptocurrency, it is a poor indicator of how often it is being exchanged for goods and services (i e , how often it is being used as money)  Certain analyses appear to show that digital currencies are not being widely used and accepted as payment for goods and services, but rather as investment vehicles  The number of Bitcoin transactions may serve as a better indicator—though a flawed one—of the use of Bitcoin as a payment system  This number reveals how many times Bitcoins are transferred between accounts each day, and data indicates the number of transactions is miniscule compared with those of traditional systems  For example, in 2019 through March 12, the Bitcoin system averaged about 310,000 transactions per day globally, a pace that would result in about 113 million transactions per year  Recall that in the United States alone, more than 144 billion traditional (nearly 1,275 times as many) noncash payments were made in 2015  Moreover, one problem with this measure it that it is a count of how many times two parties have exchanged Bitcoin, not a count of how many times Bitcoin has been used to buy something  Some portion of those exchanges, possibly a significantly large portion, is driven by investors giving fiat currency to an exchange to buy and hold the Bitcoin as an investment  In those transfers, Bitcoin is not acting as money (i e , not being exchanged for a good or service)  Advantages of Private Payment Systems Using Distributed Ledgers   As discussed in an earlier section, traditional electronic payment systems involve a number of intermediaries, such as government central banks and private financial institutions  To carry out transactions, these institutions operate and maintain extensive electronic networks and other infrastructure, employ workers, and require time to finalize transactions  To meet costs and earn profits, these institutions charge various user fees  Cryptocurrency advocates anticipate that a decentralized payment system operated through the internet could be less costly than traditional payment systems and existing infrastructures  However, whether such efficiencies can or will be achieved remains an open question  In addition, opening a bank account or otherwise using traditional electronic payment systems generally requires an individual to divulge to a financial institution certain basic personal information, such as name, Social Security number, and birthdate  Financial institutions store and may analyze or share this information  In some instances hackers have stolen personal information from financial institutions, causing concerns over how well these institutions can protect sensitive data  Individuals seeking a higher degree of privacy or control over their personal data than that afforded by traditional systems may choose to use an alternative digital currency system that provides a degree of pseudonymity or anonymity  Although inflation in the United States and other developed economies has been low in recent decades, some individuals may nevertheless believe that nontraditional digital money may maintain its value better than government-backed money in traditional systems  The dollar and most modern currencies are fiat money—that is, money that derives value based solely on government decree  Historically, incidents of hyperinflation in certain countries have seen government-backed currencies lose most or nearly all of their value  Thus, some individuals may judge the probability of their fiat money losing a significant portion of its value to be undesirably high  These individuals may place greater trust in the ability of a decentralized network using cryptographic protocols that limit the creation of new money to maintain stable value of money than in the ability of government institutions to do so  Obstacles to Widespread Adoption of Private Payment Systems Using Distributed Ledgers   Several characteristics of cryptocurrency undermine its ability to serve the functions of money in a payment system  Currently, a relatively small number of businesses and individuals use or accept cryptocurrency for payment  As discussed above, Bitcoin transactions have averaged about 310,000 per day globally  Cryptocurrency may be used as a medium of exchange less frequently than traditional money for several reasons  Unlike the dollar and most other government-backed currencies, cryptocurrencies are not legal tender, meaning creditors are not legally required to accept them to settle debts  Consumers and businesses also may be hesitant to place their trust in these systems because they have limited understanding of them  Relatedly, consumers and businesses may have sufficient trust in and be generally satisfied with traditional payment systems  The recent high volatility in the price of many cryptocurrencies undermines their ability to serve as a unit of account and a store of value  Cryptocurrencies can have significant value fluctuations within short periods of time; as a result, pricing goods and services in units of cryptocurrency would require frequent repricing and likely would cause confusion among buyers and sellers  Whether cryptocurrency systems are scalable —meaning their capacity can be increased in a cost-effective way without loss of functionality—is uncertain  At present, the systems underlying cryptocurrencies do not appear capable of processing the number of transactions that would be required of a widely adopted, global payment system  One concern involves the significant energy consumption required to run and cool the computers that validate the transactions on these platforms  Costs of Private Payment Systems Using Distributed Ledgers   As the energy consumption of a digital currency system demonstrates, these systems are not costless  In addition to energy, they require computer hardware and facilities  Often making payments on these platforms involves paying fees  Whether these direct economic costs of using the system are fixed or—as they develop and mature—become less than existing systems is an open question  Digital currency systems, at least as currently designed and regulated, also might impose other costs on society  Some critics of these systems fear their pseudonymous, decentralized nature may provide a new avenue for criminals to launder money, evade taxes, or sidestep financial sanctions  For example, Bitcoin was the currency used on the internet-based, illegal drug marketplace and Bitcoin escrow service called Silk Road  This marketplace facilitated more than 100,000 illegal drug sales from approximately January 2011 to October 2013, at which time the government shut down the website and arrested the individuals running the site  Consumer groups and other observers are also concerned that digital currency users are inadequately protected against unfair, deceptive, and abusive acts and practices  The way cryptocurrencies are sold, exchanged, or marketed can subject cryptocurrency exchanges or other cryptocurrency-related businesses to generally applicable consumer protection laws, and certain state laws and regulations are being applied to cryptocurrency-related businesses  However, other laws and regulations aimed at protecting consumers engaged in electronic financial transactions may not apply  For example, the Electronic Fund Transfer Act of 1978 (EFTA; P L  95-630 ) requires traditional financial institutions engaging in electronic fund transfers to make certain disclosures about fees, correct errors when identified by the consumer, and limit consumer liability in the event of unauthorized transfers  Because no bank or other centralized financial institution is involved in digital currency transactions, EFTA generally has not been applied to these transactions  In addition, the laws and regulations that do apply generally have not been implemented specifically to address digital currencies or related businesses  Whether the current regulatory regime applied to digital currency transactions, but originally implemented for different financial activities (e g , traditional money transmission), is effective and efficient is a debated issue  Finally, some central bankers and other experts and observers have speculated that the widespread adoption of cryptocurrencies could affect the ability of the Fed and other central banks to implement and transmit monetary policy  The Fed conducts monetary policy with the goals of achieving price stability and low unemployment  Like other central banks it achieves its goals by, putting it simply, controlling the amount of money in circulation in the economy  If one or more additional currencies that the government did not control the supply of were also prevalent and viable payment options, it could limit central banks' ability to transmit monetary policy to financial markets and the real economy  In this scenario, central banks likely would have to make larger adjustments to the fiat currency they do control to have the same effect as previous adjustments  Another possibility is that they would have to start buying and selling the digital currencies themselves in an effort to affect the availability of these currencies  These risks have led some central banks and other observers to suggest that perhaps central banks could issue their own digital currencies  The risks and challenges posed by private digital currencies have led some observers to suggest that perhaps central banks should offer their own central bank digital currencies (CBDCs) to realize certain hoped-for efficiencies in the payment system in a way that would be "safe, robust, and convenient " To date, no country has successfully created a CBDC for payment use by the general public  The extent to which a central bank could or would want to create a new, digital-only payment system likely would be weighed against the consideration that these government institutions already have trusted digital payment systems in place  Because of such considerations, the exact form that CBDCs would take could vary across a number of features and characteristics  Nevertheless, some central banks are examining the idea of CBDCs and the possible benefits and issues they may present  For the purposes of this discussion, this report examines a CBDC that would be available to consumers for retail payments  Some proposals would limit CBDCs to wholesale payments between banks and other financial institutions  Potential Advantages of CBDCs   Proponents of CBDCs generally argue they could provide efficiency gains over traditional legacy systems and contend that central banks could use the technologies underlying digital currencies to deploy a faster, less costly government-supported payment system  Observers have speculated that a CBDC could take the form of a central bank allowing individuals to hold accounts directly at the central bank  Advocates argue that a CBDC created in this way could increase systemic stability by imposing additional discipline on commercial banks  Because consumers would have the alternative of safe deposits made directly with the central bank, commercial banks likely would have to offer interest rates and limit risks at levels necessary to attract deposits above any deposit insurance limit  In addition, CBDCs could increase government revenue through a seignoriage-like mechanism  A more expansive definition of seignoriage is the income government obtains from having government liabilities act as money  Physical money—because it is liquid and low-risk—earns no interest rate and carries a cost to produce  Money—both physical and electronic in the traditional system—is also a balance sheet liability to the issuing authority, such as the Fed or other central banks  If the Fed allowed individuals to hold accounts directly with the Fed, the Fed would issue low- or no-interest liabilities to individuals (as electronic entries in a ledger produced at less cost than physical currency)  Then, as happens now, the Fed would use those liabilities to fund purchases of assets that earn a higher interest rate than what the Fed pays on liabilities  This would produce income, perhaps greater income than is earned through traditional seignoriage  Potential Obstacles to Creation of CBDCs   One of the main arguments critics—including various central bank officials—make against CBDCs is that there is no "compelling demonstrated need" for such a currency, because central banks and private banks already operate trusted electronic payment systems that generally offer fast, easy, and inexpensive transfers of value  Opponents also argue that a CBDC in the form of individual direct accounts at the central bank would reduce the role of private banks in financial intermediation and potentially expand the role of government central banks inappropriately  A portion of consumers likely would shift their deposits away from private banks toward central bank digital money, which would be a safe, government-backed liquid asset  Deprived of this funding, private banks likely would have to reduce their lending, leaving central banks to decide whether or how they should support lending markets to avoid a reduction in credit availability  In addition, skeptics of CBDCs object to the assertion that these currencies would increase systemic stability, arguing that CBDCs would create a less-stable system because they would facilitate runs on private banks  These critics argue that at the first signs of distress at an individual institution or the bank industry, depositors would transfer their funds to this alternative liquid, government-backed asset  Uncertaint y : CBDCs' Potential Effects on Monetary Policy   Observers also disagree over whether CBDCs would have a desirable effect on central banks' role and abilities in carrying out monetary policy  Proponents argue that, if individuals held a CBDC on which the central bank set interest rates, the central bank could directly transmit a policy rate to the macroeconomy, rather than achieving transmission through the rates the central bank charges banks and the indirect influence of rates in particular markets  In addition, if holding cash (which in effect has a 0% interest rate) were not an option for consumers, central banks potentially would be less constrained by the zero lower bound   The zero lower bound is the idea that the ability of individuals and businesses to hold cash and thus avoid negative interest rates limits central banks' ability to transmit negative interest rates to the economy  Critics argue that taking on such a direct and influential role in private financial markets is an inappropriately expansive role for a central bank  They assert that if CBDCs were to displace cash and private bank deposits, central banks would have to increase asset holdings, support lending markets, and otherwise provide a number of credit intermediation activities that private institutions currently perform in response to market conditions  As discussed above, although cash remains a frequently used payment system, other payment systems continue to develop that offer their own advantages and costs  Various trends suggest that due to market preference or government policy, the role of cash in the payment system has begun to decline and may continue to decline, perhaps significantly, in coming years  If the relative benefits and costs of cash and the various other payment methods evolve in such a way that cash is significantly displaced as a commonly accepted form of payment, that evolution could have a number of effects, both positive and negative, on the economy and society  This section of the report describes a number of potential benefits of a reduced role for cash in the U S  economy and the various risks and costs that may occur  Many of the factors discussed below may not occur wholly as a benefit, risk, or cost; rather, a potential benefit may bring with it a risk, and vice versa  Some observers argue that reducing or eliminating cash payments in the U S  economy will produce certain beneficial outcomes, including improved efficiency in payments, reduced criminality, and improved ability for the Fed to implement certain monetary policy  As discussed below, although these outcomes generally may be beneficial, that does not mean that there are not certain costs, or drawbacks, that may counterbalance these positive effects  Proponents of noncash payment systems assert that net economic benefits from the use and maintenance of a cash payment system are (or will become as technology advances) less than the net benefits of using and maintaining noncash systems  Put another way, they argue that the resources, labor, and capital that go into the cash system—for example, producing currency; stocking and maintaining ATMs; safely transporting cash; protecting businesses from theft and robbery—make it less efficient than noncash systems  If true—and absent policy interventions—market forces likely will result in the displacement of cash by other payment methods as businesses increasingly choose not to accept cash and consumers increasingly prefer not to use it  Under this scenario, although the payment system on net may be more efficient, it would not necessarily be true that all people would benefit, as is discussed in the " Potential Costs and Risks of a Reduced Role for Cash " section  Proponents of cashless societies assert that the elimination of cash would reduce crime by making operating an illegal enterprise more difficult and certain crimes, such as robbery and burglary, less remunerative  These proponents argue that criminals are more likely to conduct business in cash and to hold cash as an asset, in large part because cash is anonymous and allows them to avoid establishing relationships with and generating records at financial institutions that may be subject to anti-money laundering reporting and compliance requirements  Accordingly, they assert that the elimination of cash would be beneficial on net, because operating a criminal enterprise would become more difficult  Certain studies have shown that the prevalence of cash is correlated with the incidence of crime  In addition, the amount of "strong" currencies (i e , highly valuable and highly stable currencies) in circulation exceeds what many people would consider a reasonable amount needed for typical consumer transactions  For example, with the U S  population at approximately 329 million, the $1 6 trillion of currency in circulation equates to about $4,900 per person  Proponents of a cashless society assert that this number is inflated due in part to the cash demand of criminals (although part is also due to demand for the U S  dollar from abroad)  Although a robust analysis of this question is beyond the scope of this report, arguments that cash facilitates crime and even that reducing cash may reduce crime appear in certain cases to be well founded  However, when analyzing the net benefit to society of going cashless, reduced crime should be weighed against any cost that a reduction in cash would impose on legitimate cash users  One such legitimate group is examined in more detail in the " Lack of Financial Access for Certain Groups " section below  The effect a reduction in cash payments would have on crime should not be overstated, as criminals likely would seek other ways to commit and hide their crimes  For example, the prevalence of cybercrime may increase  Another benefit (from a macroeconomic perspective) of a cashless society cited by economists would be the potential elimination of the practical inability of central banks, such as the Fed, to implement negative interest rates  When an economy is in recession or otherwise performing poorly, one monetary policy response is to lower interest rates  Lower interest rates can spur companies to borrow in order to invest and spur consumers to borrow in order to make additional purchases, thus boosting economic activity and mitigating the impact of recessions  However, many economists believe that policymakers are constrained by a zero lower bound—that whatever policy rate they may set, interest rates in many markets will not fall below zero  The reason is that holding cash offers a zero interest rate  Thus, if the Fed attempted to implement negative interest rates, individuals could avoid those rates by transferring their funds into cash  If holding cash was not an available option, it would be easier for negative interest rates to be transmitted to more financial markets  However, any benefit provided by increasing policymakers' ability to affect the macroeconomy with negative interest rates should be weighed against the cost it would impose on the individual savers whose account balances would decrease in value during a period of negative interest rates  Skeptics of reducing or eliminating the role of cash in the economy assert that cash serves a number of beneficial purposes, and argue that eliminating it would have adverse effects on certain financially vulnerable groups, eliminate an asset that provides safety against cyber vulnerabilities and financial crises, and reduce individuals' privacy  As with potential benefits to a reduction in cash, many of the factors discussed below may not occur wholly as a risk or cost, and they must be weighed against potential benefits when considering their overall impact  If the United States were to move toward becoming a cashless society that required consumers to use noncash, electronic payment services, it could present difficulties for those segments of the population who lack access to the financial system or to an electronic network  Access to electronic payments typically requires an account with some financial institution, usually a bank  Often—and increasingly—it also involves using or accessing a device connected to the internet  However, these factors can present hardships and obstacles for certain vulnerable groups  The Federal Deposit Insurance Corporation reported that in the United States in 2015, 9 million households were unbanked, meaning that no member had a bank account  Of these, 37 8% reported that the main reason was that they do not have enough money to keep in an account, 9 4% reported that fees were too high, and 1 9% reported fees were unpredictable  In total, this indicates almost half of the total unbanked, or roughly 4 5 million households, do not access banking services due to economic obstacles  Sweden has been at the forefront of the move away from cash (see Appendix ), and observers there, including Stefan Ingves, governor of Sweden's central bank, have voiced some of these concerns about going cashless  In addition, anecdotal reporting indicates that retirees in Sweden are finding the change difficult and costly  In the United States, many assert that it would be beneficial to bring the unbanked into the banking system  Nevertheless, if the unbanked engaged with the banking system at a relatively high cost only because cash (which was a less expensive option for them) was no longer available, it would likely be a detrimental outcome for this group  Conversely, if the move to a cashless system led to less costly financial access for this group, they may stand to benefit  Proponents of cash often cite the robustness of physical currency as a payment system  Once in an individual's possession, cash does not rely on financial institutions or information technology (IT) based payment networks  These proponents argue that if payments became entirely electronic, events such as power outages, hacker attacks, or (in the event of future cyber war) a state-sponsored attack would be capable of shutting down the most simple financial transaction—the exchange of money for goods and services  The financial system is already exposed to these threats to varying degrees, but the argument is that the elimination of cash amplifies those risks  Because it functions well as a store of value, cash is a relatively safe asset in which to invest savings with no risk of losses resulting from a decline in a securities value or the failure of financial institutions or other entities  The perceived safety of cash and its non-reliance on financial institutions also makes it desirable in times of financial turmoil or distress, when confidence in such institutions decreases  During these periods, many people prefer assets that are free from credit risk  For some of these individuals, deposit insurance guarantees may not wholly eliminate their fear of losses, whereas the safety of physical currency would  Holding cash, then, could also provide a sense of security to risk-adverse people that may mistrust the financial system  Opening a bank account or otherwise using traditional noncash payment systems generally requires an individual to divulge certain basic personal information, such as name, Social Security number, and birthdate, to a financial institution  Financial institutions store this information and information about the transactions linked to this identity  Under certain circumstances, they may analyze or share this information, such as with a credit-reporting agency  In some instances hackers have stolen personal information from financial institutions, causing concerns over how well these institutions can protect sensitive data  Finally, provided it follows proper legal procedures, the government also can access this information under certain circumstances  Similarly, although new alternative payment systems may offer a degree of anonymity or pseudonymity, these systems still generate an unalterable record of transactions between parties  Cash, by contrast, can be used anonymously, and people may wish to use cash for legitimate purposes to ensure their privacy  Certain consumers who are uncomfortable divulging and generating private information—even basic information that a transaction occurred—may prefer cash to any electronic payment methods  Cash has a number of advantageous features that has made it a simple and robust payment system throughout most of human history  It is difficult to imagine conditions under which cash would be replaced entirely, and disappear from the economy, at least in the near future  Nevertheless, its hegemony as a payment system appears to have come to an end, as electronic payment systems have gained popularity, and the ubiquity of cash acceptance for in-person purchases also seems precarious  If noncash payment systems significantly displace cash and cash usage and acceptance significantly declines, there would be a number of effects (both positive and negative) on the economy and society  Now or in the near future, policymakers may face decisions about whether to impede or hasten the decline of cash and consider the implications of doing so  Two countries provide interesting case studies of market forces drastically changing the way a society makes payments  Sweden In recent years, the use of cash in Sweden has quickly and substantially declined, dropping from 40% to 13% of transactions between 2010 and 2018  In many cases, businesses no longer accept cash, and one survey indicated that two-thirds of small businesses planned to stop accepting cash  Anecdotal reporting indicates that about 5% of bank branches accept cash deposits or offer cash withdrawals  Furthermore, Sweden's central bank is examining the possibility of creating registered accounts for the purpose of issuing currency electronically  Reportedly, many Swedes are generally in favor of the trend (the displacement of cash is due largely to consumer preference), though some have voiced concerns about financial access issues that the change causes for certain groups, such as the elderly  Observers have put forward a number of explanations for the Sweden's growing preference for electronic payment methods such as cards and mobile app enabled payments  One argument asserts that Sweden is an especially technology savvy country  As such, Swedes are comfortable using electronic payment systems, and Swedish companies have developed fast and easy payment technologies, such as iZettle and Swish  Some observers also have suggested that Swedes are especially trusting of institutions and thus have fewer privacy concerns  Some have noted that the timing of the start of the decline in cash use among Swedes coincided with the start of a transition to new Swedish banknotes and coins  They suggest that this spurred people and businesses to make a switch not to the new bills and coins but instead to electronic payment methods  Kenya In 2007, a company named Safaricom—Kenya's largest mobile phone network operator—introduced a "mobile money" service called M-Pesa ("M" stands for "mobile" and "pesa" is the Swahili word for money)  Users of the service download a phone application and deposit cash with M-Pesa employees called "agents " They can then transfer money into any other M-Pesa account using their phone  Originally intended as a service for Kenyans who had moved to a city to earn money to send back home to rural areas, the service became tremendously popular as a general use payment system  By 2016, there were approximately 31 6 million mobile money accounts in Kenya, which had a total population of 47 6 million in 2017  Many observers identify the combination of lack of access to traditional banking services and the proliferation of mobile phones in Kenya as a driving factor for the expansion of M-Pesa and subsequent mobile money services  These observers argue that in Kenya, as with many developing and largely rural nations, both consumers and banks view financial and bank services as a business need of the rich  In 2006, before the introduction of M-Pesa, just 19% of Kenyans had bank accounts and there was 1 5 bank branches for every 100,000 people  However, 54% of Kenyans had their own mobile phone or access to one  Another explanation for the rise of mobile money is that Safaricom successfully identified a large, profitable, and previously untapped market in Kenya  Available mobile technology and its proliferation among the population meant low-cost money transfers could be profitably offered to lower-income consumers  Certain observers assert that the success of M-Pesa has caused Kenyan financial institutions to reevaluate their business models, shifting their focus to offering services to lower-income groups than they previously targeted, and cite the increase in bank accounts and the decline of the average account balances as evidence of this change  As a result, the portion of the Kenyan population with access to some type of formal financial services has grown from 27% in 2006 to 75% in 2017  Although mobile money appears to have filled a market need, the degree to which it has displaced cash should not be overstated  An official at Safaricom estimated in February 2018 that as many as 8 out of 10 transactions are still cash transactions, as Kenyans still reportedly prefer cash for small, in-person purchases because of convenience and using M-Pesa generally involves fees  In addition, workers are still generally paid in cash 


Report 2: According to international and U S  government sources, climate change poses serious risks to many of the physical and ecological systems upon which society depends, although the exact details of these impacts are uncertain  Climate change may intensify slow-onset disasters, such as drought, crop failure, and sea level rise  Climate change is also increasing the frequency and intensity of extreme weather events, including sudden- onset disasters, such as floods, according to key scientific assessments  These effects of climate change may alter existing migration trends across the globe, according to IOM  (See appendix II for further discussion of climate change as a driver of migration in seven geographic regions ) For example, sea level rise, a slow-onset disaster, may result in the salinization of soil and drinking water, thereby undermining a country or community’s ability to sustain livelihoods and maintain critical services, which could cause some people to migrate  Sudden-onset disasters may also contribute to migration as people flee natural disasters, in most cases leading to temporary displacement  For example, people may either voluntarily migrate, or be forced to migrate, to earn money needed to rebuild damaged homes after flooding, especially as extreme weather events increase in intensity and number  If unable or unwilling to migrate, people may find themselves trapped or choosing to stay in deteriorating conditions  Sources agree that the effects of climate change generally impact internal migration, while migration across international borders due to climate change is less common  In deciding whether to migrate, people weigh multiple factors including economic and political factors, social or personal motives, or demographic pressures  The effects of climate change add another layer of complexity to this decision, but there is debate about the role climate change plays in migration  Figure 1 depicts how climate change may influence other factors that drive the decision to migrate or stay  There are limitations to reliably estimating the number of people displaced by climate change because there are no reliable global estimates for those migrating due to slow-onset disasters, and estimates for those migrating due to sudden-onset disasters are based on limited data, according to IOM  The lack of reliable data is due in part to the multi- causal nature of migration  Further, IOM notes that forecasts for the number of environmental migrants by 2050 vary from 25 million to 1 billion  They and others have questioned the methodologies used to arrive at even these broad estimates  Migration, potentially driven by climate change, may contribute to instability and result in national security challenges, according to some international organizations and national governments  For example, an influx of migrants to a city may put pressure on existing resources, resulting in tensions between new migrants and residents, or between the population and its government  The U S  Global Change Research Program has also stated that migration, such as displacement resulting from extreme weather events, is a potential national security issue  At different times, the United Nations General Assembly and, in 2014, DOD have deemed climate change to be a threat multiplier, as the effects of climate change could increase competition for resources, reduce government capacity, and threaten livelihoods, thereby causing instability and migration  Further, the U S  intelligence community considers climate change to increase the risks of humanitarian disasters, conflict, and migration  Identifying the cause of a conflict, however, is complicated, and experts debate the connections linking climate, migration, and national security  For example, IOM has reported that existing evidence on climate migration and instability must be considered with caution  Further, some studies stress that other factors can mitigate the effects of climate change on migration and stability, including governance and community resilience, as the World Bank has reported  State, USAID, and DOD are among the U S  government agencies with a role in responding to issues related to climate change, including as a driver of migration  State interacts with foreign governments and international organizations focused on climate change and migration primarily through the Bureau of Oceans and International Environmental and Scientific Affairs (State/OES) and the Bureau of Population, Refugees, and Migration (State/PRM)  USAID supports a range of development programs that help to mitigate the effects of climate change through the Bureaus for Economic Growth, Education and Environment; Democracy, Conflict and Humanitarian Assistance; Food Security; Asia; and Africa; and individual USAID missions  Additionally, USAID’s Offices of U S  Foreign Disaster Assistance (USAID/OFDA) and Food for Peace (USAID/FFP) lead and coordinate the U S  government’s emergency responses to sudden- and slow-onset disasters, and complex emergencies overseas  DOD assists in the United States’ humanitarian response to sudden- onset disasters abroad through its six geographic combatant commands, with support from the Assistant Secretary of Defense for Special Operations and Low Intensity Conflict and the Joint Staff’s Office of Humanitarian Engagement  Climate change as a driver of migration was not a focus of the policy documents we reviewed for either the current or previous administrations during fiscal years 2014 through 2018  Our review of executive actions, budget requests, and executive branch strategies that affected State, USAID, and DOD found only brief mentions of climate change as a driver of migration  None of the documents we reviewed reflected a priority for assessing or addressing climate change as a driver of migration, although these documents reflect a shift in administrations’ climate change priorities more generally  The previous administration issued two executive orders and a presidential memorandum related to climate change  These executive actions had a policy of improving climate preparedness and resilience, factoring climate-resilience considerations into agencies’ international development decisions, and creating forums for interagency coordination  In March 2017, the current administration issued a subsequent executive order revoking some of the previous executive actions related to climate change  See figure 2 for a timeline of these executive actions  The previous administration issued three executive actions related to climate change, which included requirements focused on agencies’ considerations of the impacts of climate change and established forums for interagency coordination  The current administration issued an executive action related to energy independence and climate change  Executive Order 13653: Preparing the United States for the Impacts of Climate Change  Executive Order 13653 stated that agencies—including State, USAID, and DOD—shall, among other things, develop, implement, and update comprehensive Agency Adaptation Plans that integrate consideration of climate change into agency operations and overall mission objectives  Executive Order 13653 also established the Council on Climate Preparedness and Resilience  Executive Order 13677: Climate-Resilient International Development  Executive Order 13677 requires State, USAID, and other U S  government agencies with direct international development programs and investments to incorporate climate-resilience considerations into decision making by assessing climate-related risks to agency strategies, and to adjust relevant strategies as appropriate, among other things  Executive Order 13677 also established the Working Group on Climate-Resilient International Development as part of the Council on Climate Preparedness and Resilience  2016 Presidential Memorandum on Climate Change and National Security  The 2016 presidential memorandum required, among other things, that agencies, including State, USAID, and DOD, develop an agency-specific approach to address climate-related threats to national security  It also required agencies to develop implementation plans that would describe how they would identify the potential impact of climate change on human mobility, including migration and displacement, and the resulting impacts on national security, among other requirements, and stated that the effects of climate change can lead to population migration within and across international borders, spur crises, and amplify or accelerate conflict in countries or regions already facing instability  The 2016 memorandum also established the Climate and National Security Working Group  Executive Order 13783, Promoting Energy Independence and Economic Growth  Executive Order 13783 revoked Executive Order 13653 and the 2016 presidential memorandum, among other things, as seen in figure 2  Priorities related to climate change shifted between the past two administrations as reflected in a recent budget request that reduced some climate change funding affecting U S  foreign assistance  2017 Presidential Budget Request  The previous administration stated in its fiscal year 2017 budget request that “the challenge of climate change will define the contours of this century more dramatically than any other” and that “it is imperative for the United States to couple action on climate change at home with leadership internationally ” The fiscal year 2017 budget request sought $1 3 billion in discretionary funding to advance the goals of the Global Climate Change Initiative, which was established in 2010 and aimed to promote resilient, low-emission development, and integrate climate change considerations into U S  foreign assistance  The $1 3 billion in requested funding included $750 million in U S  funding for the Green Climate Fund, a multilateral trust fund designed to foster resilient low-emission development in developing countries  2018 Presidential Budget Request  The current administration, in its fiscal year 2018 budget request, did not include any funding for the Global Climate Change Initiative  In addition, the current administration’s budget request stated that it “Eliminate the Global Climate Change Initiative and fulfill the President’s pledge to cease payments to United Nations’ (UN) climate change programs by eliminating U S  funding related to the Green Climate Fund     ” Some strategies from the current and previous administrations that affect State, USAID, and DOD, among other agencies, reflect a shift in priorities related to climate change  For example, the previous administration cited climate change as a “top strategic risk” in its 2015 National Security Strategy and stated that climate change is an urgent and growing threat to U S  national security, contributing to increased natural disasters, refugee flows, and conflicts over basic resources like food and water  The current administration does not discuss climate change in its 2017 National Security Strategy  Additionally, State and USAID have a Joint Strategic Plan to help the agencies achieve the objectives of the National Security Strategy  The previous State-USAID Joint Strategic Plan included a strategic goal on “promoting the transition to a low-emission, climate-resilient world” that proposed leading international actions to combat climate change  The current State-USAID Joint Strategic Plan does not have a climate change goal  State, USAID, and DOD were required by executive orders to assess climate change-related risks to their missions and, for State and USAID, to their strategies, among other things  In response to Executive Order 13653, which has since been revoked, the agencies completed adaptation plans that integrated considerations of climate change into agency operations and overall mission objectives  In response to Executive Order 13677, which has not been revoked, State and USAID developed processes for climate change risk assessments for their country and regional planning documents  Although these executive orders did not require a specific assessment of climate change as a driver of migration, all three agencies have discussed the effects of climate change on migration in their adaptation plans and risk assessments  However, State lacks clear guidance on its process for assessing climate change-related risks to its integrated country strategies  State, USAID, and DOD each completed adaptation plans in 2014 that included limited discussions of migration as one potential effect of climate change  Executive Order 13653 directed the agencies to develop or continue to develop, implement, and update comprehensive Agency Adaptation Plans that integrate consideration of climate change into agency operations and overall mission objectives  Each adaptation plan was to include, among other things, a description of how the agency would consider the need to improve climate adaptation and resilience  State  In its 2014 adaptation plan, State included a brief discussion of climate change as one of multiple factors that potentially will drive migration and impact its mission  State reported that the specific impacts of climate change on the ability of the department to promote peace and stability in regions of vital interest to the United States were unknown  For example, according to the plan, an increase in heavy precipitation events around the world could damage the electric grid and transportation and energy water infrastructure, upon which State depends, making it difficult to maintain operations and diplomatic relations  In its plan, State reported that climate change impacts may threaten international peace, civil stability, and economic growth through aggravating existing problems related to poverty and environmental degradation  Further, environmental and poverty- related issues and regional instability could stress relationships with some foreign governments  However, the plan noted that specific impacts of climate change on conflict, migration, terrorism, and complex disasters were still unknown  USAID  In its 2014 adaptation plan, USAID included a brief discussion of migration as one potential effect of climate change that could also impact security  USAID stated that the impact of climate change on its programs and operations, if left unaddressed, could compromise the agency’s ability to achieve its mission  Further, USAID’s plan referred to increased migration as a potential risk of climate change  Flooding and other extreme climate events can result in increased migration, among other impacts, that could affect existing and planned USAID programming  In particular, programs in areas like agriculture and food security, global health, water and sanitation, infrastructure, and disaster readiness and humanitarian response are vulnerable to climate change, according to USAID  In the infrastructure area, climate change may necessitate new protective measures for coastal homes and infrastructure, and in some cases even mass evacuations or permanent migration  USAID stated that climate change could further reduce or alter the distribution of already limited resources like food and water, or force temporary or permanent migration of communities  According to the plan, in areas with high risk factors for conflict, climate change stresses can aggravate tensions and contribute to conflict  DOD  In its 2014 adaptation roadmap, DOD included a brief discussion of migration as one of multiple potential effects of climate change that could impact national security  DOD referred to climate change as a threat multiplier that can aggravate other risks around the world, with migration being one effect that could increase requests for DOD to provide assistance  The roadmap stated that as climate change affects the availability of food and water, human migration, and competition for natural resources, the department’s unique capability to provide logistical, material, and security assistance on a massive scale or in rapid fashion may be called upon with increasing frequency  Furthermore, DOD stated that the impacts of climate change may cause instability in other countries by, among other things, impairing access to food and water, damaging infrastructure, uprooting and displacing large numbers of people, and compelling mass migration  These developments, according to the department, could undermine already fragile governments that are unable to respond effectively, or challenge currently stable governments, as well as increase competition and tension between countries vying for limited resources  In response to Executive Order 13677, State and USAID developed processes for climate change risk assessments for their country and regional planning documents  Though these assessments are not specific to migration, a few of the assessments identified the nexus of climate change and migration  State  State required climate change risk assessments for all new integrated country strategies drafted in 2016 or later  We reviewed 10 integrated country strategies from the two regions that were the first to implement the climate change risk assessment requirement— Africa, and East Asia and the Pacific  All 10 of the strategies included climate change risk assessments, one of which—Cambodia— identified migration as a risk for the country  The Cambodia strategy states that internal migration due to climate change hinders access to health care and the prevention of infectious diseases like malaria  We also reviewed 10 strategies from State’s functional and regional bureaus for assessments of climate-related risks, including 3 functional bureau strategies (State/PRM, State/OES, and State’s Bureau of International Organization Affairs) and 7 regional bureau strategies  All of the functional bureau strategies we reviewed identified climate change as a risk and State/PRM cited the impact of climate change on migration  Of the regional bureau strategies we reviewed, we found that one, the Bureau for East Asian and Pacific Affairs, identified climate change as a driver of migration as a challenge or risk in its region  For example, the strategy states that climate change is becoming increasingly disruptive, potentially increasing migration due to rising sea levels  None of the other six regional bureau strategies we reviewed identified the nexus of climate change and migration as a risk or challenge  However, five regional bureaus identified climate change as a risk or challenge and one identified migration as a risk or challenge  USAID  USAID also requires the integration of climate risk management into all country or regional development cooperation strategies drafted since October 1, 2015  Missions must document in a climate change appendix to the strategy any climate risks they identified and how they considered climate change in their strategy  As of August 2018, USAID had completed five country or regional development cooperation strategy updates initiated since October 1, 2015—Uganda, Tunisia, East Africa, Sri Lanka, and Zimbabwe—and all five included the required appendix  Of the five updated strategies, three—Uganda, Tunisia, and East Africa—discuss the indirect effect of climate change on migration, among other issues  For example, Uganda’s 2016-2021 country strategy states that increased frequency and duration of droughts is likely to be the most significant climate‐related change in Uganda  The strategy also notes that droughts have affected, and will continue to affect, water resources, hydroelectricity production, and agriculture, among other sectors  As agriculture, forestry, and fisheries decline in Uganda, the strategy asserts that people will migrate to urban areas, leading to the formation of slums  We also reviewed USAID’s nine regional development cooperation strategies, one of which—East Africa—had been updated since the requirement to include climate risk management  Of the other eight strategies that have yet to be updated, seven identified climate change as a challenge or risk and three identified climate change as a driver of migration as a challenge or risk  For example, the Southern Africa regional development cooperation strategy states that water scarcity, natural disasters, and other climate change related events will most likely increase migration throughout the region  Additionally, the Asia regional development cooperation strategy discusses the risks of climate change in urban areas  In Asia, the number of migrants seeking economic opportunities in urban centers is likely to increase  According to the strategy, migrants are moving into hazard-prone areas located along coastlines, flood plains, and other low-lying areas in many Asian primary and secondary cities—areas that experts predict will experience more frequent and intense storm surges, floods, and coastal erosion as a result of climate change  The requirement in Executive Order 13677 to assess climate change- related risks to agency strategies remains unchanged; however, State now lacks clear guidance on its process for assessing climate change- related risks to its integrated country strategies  Specifically, State’s 2016 guidance for developing integrated country strategies stated that all missions should assess the risk of climate change on their strategies’ goals and objectives and included reference to the climate risk screening tool—a method that missions could use to assess climate change risks  State issued new guidance to its missions in 2018, but this guidance does not include information on the process for assessing climate change-related risks to agency strategies  According to State officials, the 2018 guidance for integrated country strategies does not reference climate change risk assessments because, in September 2017, State decided that the strategies should not single out climate change risks in a separate appendix  State officials said this decision resulted, in part, from the new administration’s shift in priorities on climate change  Officials also said that this decision reflects a new approach to risk management by State and that the missions could choose to include climate change and other potential risks in the general risk discussion section of their strategies  Officials from State’s Office of U S  Foreign Assistance Resources said that it is now up to each mission to decide whether a strategic objective may have a climate challenge  However, those missions that choose to include an assessment of climate change risks are not provided guidance on the process for doing so and there is no reference to the climate risk screening tool—or to climate change at all—in the 2018 guidance  Executive Order 13677 directed State to incorporate climate-resilience considerations into decision making by assessing climate-related risks to agency strategies, among other things  Subsequently, a State cable from September 2016 further explained that State would implement the executive order’s requirement by screening for climate risks as part of the process for drafting all new integrated country strategies  Additionally, the Standards for Internal Control in the Federal Government state that documentation is a necessary part of an effective internal control system  If management determines that a principle is not relevant, management must support that determination with documentation that includes the rationale of how, in the absence of that principle, the associated component could be designed, implemented, and operated effectively  Because State lacks clear guidance on its process for assessing climate change-related risks to its integrated country strategies, it is less likely that the current round of strategies will include the assessment of climate- related risks  It is also possible that those missions that choose to conduct climate change risk assessments will not do so in a consistent manner  Such assessments might identify climate change as a driver of migration, as at least one previous assessment did under the 2016 guidance  Thus, without clear guidance, missions may not examine climate change as a risk to their strategic objectives and could miss opportunities to improve the climate resilience of foreign assistance activities  For fiscal years 2014 through 2017, State, USAID, and DOD had some activities that could potentially address climate change as a driver of migration, although none of these activities specifically focused on the issue  For example, USAID has climate change adaptation activities, but to date migration has not been a focus of this programming  With the shift in priorities related to climate change in fiscal year 2017, agencies have reduced some of these activities  State’s offices that are focused on the issues of climate change (State/OES) and migration (State/PRM) have participated in multilateral activities related to climate change as a driver of migration and funded adaptation and other activities related to the issue  State officials said that the agency does not, however, have any activities that specifically address migration due to climate change or environmental factors  State has participated in multilateral activities related to climate change and migration  With the shift in priorities related to climate change in fiscal year 2017, the United States has disengaged from some of these multilateral activities (see table 1)  In addition to State’s participation in the multilateral activities described in table 2, State has provided funding for activities related to climate change and capacity building that address natural disasters  These activities may involve efforts potentially related to migration  For example, according to State: State provided about $2 million per year, between fiscal years 2014 and 2016, to the Intergovernmental Panel on Climate Change, which analyzed the impacts of climate change on migration in its most recent assessment report  State/PRM provided about $4 million, between fiscal years 2014 through 2018, for IOM’s Migrants in Countries in Crisis Initiative, which provides guidelines to protect migrants in countries experiencing conflict or natural disasters  IOM provides training to countries on these guidelines  State/PRM officials said that this initiative is not specifically related to climate change and does not focus on specific types of disasters but does mention sudden-onset disasters  Officials also said that IOM tries to promote a climate change perspective in its trainings  State/OES provided about $78 million in adaptation funding from the Global Climate Change Initiative to eight projects during fiscal years 2014 through 2017  (See appendix III for a description of all eight projects ) State/OES officials said that these projects help countries prepare for the impacts of climate change, potentially reducing the pressure to migrate  However, to these officials’ knowledge, none of these projects directly supported activities related to migration  For example, State/OES provided a $4 million grant to the National Adaptation Plans Global Network  This network focuses on increasing the capacity of governments to identify and assess climate risks, integrate these risks in planning, develop a pipeline of projects to address these risks, identify and secure funding for projects, and track progress toward resilience targets  Adaptation activities occurred in over 35 countries  With the shift in priorities related to climate change in fiscal year 2017, State discontinued some of these efforts  For example, funding for the Global Climate Change Initiative was not included in the President’s budget request for fiscal year 2018  State/OES officials said that the agency does not plan to fund additional adaptation activities and has not requested additional funding for the activities  According to a State official, PRM had been in discussion with IOM to develop a project proposal that would have assisted the governments of Small Island Developing States in adapting their migration policies to account for challenges and opportunities associated with environmental degradation, ecosystem loss, climate change impacts, and natural disasters  State/PRM stopped further development of the proposal following the change in administrations  Additionally, according to a State official, the department made some efforts at the end of the previous administration to develop a formal position on the topic of climate change as a driver of migration  For example, State drafted an internal document to help clarify its role in responding to the humanitarian aspects of sudden-onset and slow-onset climate events  This initial work stopped under the current administration  USAID officials said that, with respect to the agency’s climate-related programming, its climate change adaptation programming was the most likely to include activities related to migration or displacement, although a broad swath of USAID development programming has the potential to build host country resilience  Officials stated that, to date, migration has not been a primary motivation for the agency’s climate-related or disaster assistance programming  However, officials said that, in a humanitarian crisis or under some economic conditions, development programming can reduce displacement or the pressure to migrate—such as by fostering greater resilience to drought or other adverse conditions—and that this is also true of climate-related programming  USAID also provides humanitarian assistance in response to natural disasters that displace people  Officials said that USAID recognizes the links between displacement and natural disasters, but that the agency does not have specific programs linking disaster assistance, migration, and climate change  USAID identified about 250 activities that received adaptation funding from the Global Climate Change Initiative during fiscal years 2014 through 2016  Our analysis of the descriptions of these activities determined that none directly mentioned any efforts specifically related to migration  Officials emphasized that the connection between climate change and migration tends to be indirect and shaped by other more immediate factors  USAID’s data on activities that received adaptation funding identified 38 beneficiary countries, as well as activities described generally as implemented at the regional or global level  For activities where USAID’s data identified a specific region, most activities were located in Africa followed by Asia and Latin America and the Caribbean  Examples of the types of activities that received adaptation funding from the Global Climate Change Initiative during fiscal years 2014 through 2016 include: The Mali Climate Change Adaptation Activity, which aims to build resilience to current climate variability and increase resilience to longer-term climate change effects  This activity is also working to strengthen the capacity of Mali’s meteorological agency to provide improved climate information as well as to incorporate climate considerations into local-level planning  The total estimated cost is about $13 million over 5 years  The activity for Climate-Resilient Ecosystems and Livelihoods, which ended in September 2018, aimed to increase Bangladesh’s resilience to natural hazards by working with community-based organizations, government ministries, and technical agencies  This activity provided technical assistance to the Government of Bangladesh and local communities to improve ecosystem conservation and resilience capacity  The total estimated cost was about $33 million in funding over 6 years  The activity for Pastoralist Areas Resilience Improvement through Market Expansion, which aims to support pastoralists in Ethiopia via expansion of markets and long-term behavior change (see fig  3)  USAID officials cited this activity as an example of adaptation efforts that indirectly address the issue of climate change as a driver of migration  The activity has three interrelated objectives: increasing household incomes, enhancing resilience, and bolstering adaptive capacity to climate change among pastoral people in Ethiopia  An evaluation of the activity found that migration is a coping strategy for dealing with climate shocks, although participants said that drought is becoming more frequent, placing a severe strain on traditional coping mechanisms, such as migration and selling cattle, and that permanent migration is not a preferred strategy  The total estimated cost is about $60 million in funding over 6 years  With the shift in priorities related to climate change, funding for USAID’s climate change adaptation activities has decreased  Missions may continue to fund their adaptation activities with discretionary funds or other earmarked, sector funding, provided the activities further the funding source’s objective, according to USAID  For example, in some cases, missions are using Water sector funding to continue some of their adaptation work  USAID also said that among the agency’s goals are to increase the resilience of USAID partner countries to recurrent crises, including climate variability and change  In addition to USAID’s climate change adaptation programming, USAID/OFDA and USAID/FFP provide emergency humanitarian assistance to people affected by sudden-onset disasters—such as hurricanes and floods—and slow-onset and extended disasters, including droughts and conflicts  Some of this assistance helps people who have been displaced by disaster  USAID officials stated that although disasters cause mainly temporary displacement, the relationship among humanitarian assistance, climate change, and migration is very complex and depends on both climatic and non-climatic factors  USAID/OFDA responded to 267 disasters from fiscal year 2014 through June 2018, according to agency data  For example, USAID/OFDA responded to the effects of Hurricane Matthew in Haiti in October 2016, as seen in figure 4, including helping temporarily displaced people  DOD assists in the U S  government response to overseas disasters, including helping people displaced by such disasters, regardless of the cause of the disaster  These efforts are not specific to climate change as a driver of migration  For example, officials from DOD’s geographic combatant commands said that, to the extent they address climate change, migration is not a focus of those efforts and they view migration as caused by security and economic issues  Between fiscal years 2014 and 2018, Congress has appropriated to DOD between $103 and $130 million per year for Overseas Humanitarian, Disaster, and Civic Aid  Officials said that the geographic combatant commands use most of this funding for steady state humanitarian assistance related to health, education, basic infrastructure, and disaster preparedness with a smaller amount set aside for immediate disaster assistance although that varies based on emergency requirements  DOD officials said that they have not seen any changes to this funding or associated activities with the change of administrations in fiscal year 2017  DOD officials we spoke with also emphasized that USAID/OFDA is the lead agency for the U S  government’s response to disasters overseas  USAID/OFDA formally requested DOD support on about 10 percent of the foreign disaster assistance provided by USAID/OFDA, according to USAID data for fiscal year 2014 through June 2018 and DOD officials  DOD assistance is typically provided for the largest, most complex disasters, according to agency officials  According to a July 2015 assessment conducted by the geographic combatant commands, while their activities vary, each command works with partner nations to increase their abilities to reduce the risks and effects from environmental impacts and climate-related events, including severe weather and other hazards  For example, in the report, U S  Southern Command stated that it had requested funding to pre-position assets for when a severe storm threatens Haiti to be able to respond immediately to a potential disaster  U S  Southern Command officials said that they work with partner nations to encourage residents experiencing extreme weather to remain where they are because it is easier to provide help to people who stay in one place  Officials from U S  Southern Command and U S  Africa Command also said that the major factors driving migration in their regions are security and economic issues  State, USAID, and DOD have participated in interagency forums regarding climate change, which may have addressed its effects on migration  With changes to priorities regarding climate change in fiscal year 2017, these forums have been disbanded or are not meeting  The Council on Climate Preparedness and Resilience  The Council on Climate Preparedness and Resilience, of which State, USAID, and DOD were members, was established to facilitate the integration of climate science in policies and planning of government agencies, including by promoting the development of climate change related information, data, and tools, among other things  Additionally, the council was to develop, recommend, and coordinate interagency efforts on priority federal government actions related to climate preparedness and resilience  According to State officials, the council began working with the National Security Council and other agencies to facilitate greater interagency cooperation on adaptation  In addition, a task force on the council was discussing the federal role in addressing displacement related to climate change  The council was disbanded when Executive Order 13783 revoked Executive Order 13653, which had established the council  The Working Group on Climate-Resilient International Development  The Working Group on Climate-Resilient International Development, of which State and USAID were members, was established by Executive Order 13677 and placed under the Council on Climate Preparedness and Resilience  The working group’s mission includes developing guidelines for integrating considerations of climate-change risks and climate resilience into agency strategies, plans, programs, projects, investments, and related funding decisions, among other things  Additionally, the working group was tasked with facilitating the exchange of knowledge and lessons learned in assessing climate risks to agency strategies, among other things  USAID officials said that the working group had not discussed climate change as a driver of migration  While the working group has not been formally disbanded, it has not met since at least November 2017 according to USAID  The Climate and National Security Working Group  The Climate and National Security Working Group, of which State, USAID, and DOD were members, was established by the 2016 presidential memorandum  The chairs of the working group were to coordinate the development of a strategic approach to identify, assess, and share information on current and projected climate-related impacts on national security interests and to inform the development of national security doctrine, policies, and plans, among other things  According to the memorandum, the working group was to provide a venue for enhancing the understanding of the links between climate change- related impacts and national security interests and for discussing opportunities for climate mitigation and adaptation activities to address national security issues  This working group was disbanded when Executive Order 13783 revoked the 2016 presidential memorandum, which had established the working group  State, USAID, and DOD assessments and activities have not focused specifically on the nexus of climate change and migration  State did identify migration as a risk of climate change in at least one of its climate change risk assessments for the department’s country strategies  However, State now lacks clear guidance on its process for assessing climate change-related risks to its integrated country strategies  State’s current guidance for these country strategies no longer mentions a climate change risk assessment and does not provide missions with information about the climate risk screening tool that can be used to conduct such an assessment  As such, missions are less likely to examine climate change as a risk to their strategic objectives, or to do so in a consistent manner, and thus may not have the information they would need to identify migration as a risk of climate change  By clearly documenting and providing guidance on how to assess the risk of climate change, State would ensure that the department examines the potential risks of climate change on its foreign assistance activities  We are making the following recommendation to State: The Secretary of State should ensure that the Director of the Office of U S  Foreign Assistance Resources provides missions with guidance that clearly documents the department’s process for climate change risk assessments for integrated country strategies  (Recommendation 1) We provided a draft of this product to State, USAID, and DOD for review and comment  State provided written comments, which we have reprinted in appendix IV  In its comments, State did not oppose the recommendation and noted that the agency will update its integrated country strategy guidance by June 30, 2019 to inform missions that they have the option to include an annex on climate resilience, as well as other topics  However, State also indicated that the agency will begin working with stakeholders to consider whether to recommend that the Secretary of State ask the President to rescind Executive Order 13677: Climate- Resilient International Development  USAID also provided written comments, which we have reprinted in appendix V  In its letter, USAID provided some additional information about its programs and its proposed transformation effort  USAID and DOD provided technical comments, which we incorporated as appropriate  We are sending copies of this report to the appropriate congressional requesters, Secretary of State, the Administrator of USAID, and the Secretary of Defense  In addition, the report is available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact David Gootnick at (202) 512-3149 or gootnickd@gao gov, or Brian J  Lepore at (202) 512-4523 or leporeb@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix VI  This report (1) describes executive branch actions related to climate change and migration from fiscal years 2014 through 2018; (2) examines the extent to which the Department of State (State), the U S  Agency for International Development (USAID), and the Department of Defense (DOD) have discussed the potential effects of climate change on migration in their plans and risk assessments; and (3) describes State, USAID, and DOD activities, if any, that are related to climate change and global migration  We chose fiscal years 2014 through 2018 as our time frame based on our review of recent executive orders related to climate change  We selected State, USAID, and DOD because the agencies’ missions of diplomacy, development, and defense provide the foundation for promoting and protecting U S  interests abroad  To describe executive branch actions related to climate change and migration from fiscal years 2014 through 2018, we reviewed documents that reflect priorities of the previous and current administrations  Specifically, we reviewed budget requests and enacted appropriations between fiscal years 2014 through 2018 for funding priorities related to climate change and U S  foreign assistance  In addition, we reviewed executive actions and executive branch strategies that applied to State, USAID, and DOD between fiscal years 2014 through 2018 for executive and national security priorities related to climate change  For example, we reviewed the current and previous national security strategies  strategies and seven regional bureau strategies  For USAID, we examined the five country and regional strategies that were required to include a climate risk assessment at the time of our review: Uganda, Tunisia, East Africa, Sri Lanka, and Zimbabwe  We also reviewed all nine USAID regional strategies  For both State and USAID, we reviewed the selected strategies by searching for information related to migration and climate change  To determine whether State clearly documents the department’s current climate risk assessment process for integrated country strategies, we compared State’s 2018 guidance for developing integrated country strategies with standards related to documentation in Standards for Internal Control in the Federal Government and previous State guidance issued in 2016, which was created in response to Executive Order 13677’s requirements to assess climate change risks to strategies, among other things  to these issues  The agency then provided us with data for about 250 activities from its annual operational plans for fiscal years 2014 through 2016, the 3 years during the period we reviewed in which it received adaptation funding  USAID identified these activities based on whether the agency had tagged them in its plans as having an “adaptation key issue ” USAID excluded projects that had planned attributions to the adaptation key issue of less than $250,000 in a given fiscal year, as well as certain other activities such as those that focused on project support  We then conducted an automated review of the activity description fields provided by USAID for terms related to migration and other descriptive information such as locations of activities  Because no USAID adaptation activities specifically mentioned migration, for the purposes of this report we chose illustrative examples to provide context for the types of activities the agency has funded  DOD officials we met with did not identify any specific activities related to climate change as a driver of migration  DOD officials from the Assistant Secretary of Defense for Special Operations and Low Intensity Conflict and the geographic combatant commands generally discussed DOD activities related to humanitarian assistance and disaster response as most relevant to our inquiry  Because DOD works in coordination with USAID’s Office of U S  Foreign Disaster Assistance on disaster assistance we also reviewed USAID data on its disaster response activities during this period  We determined that the USAID and State adaptation project data and USAID disaster assistance data were sufficiently reliable for the purposes of describing these efforts  State, USAID, and DOD to obtain information on whether changes in government priorities related to climate change affected their activities  We conducted this performance audit from October 2017 to January 2019 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  This appendix provides a review by region of observed and projected climate change effects, migration trends, and challenges in stability and security  Multiple sources we used for this overview make a connection between climate change and such events as rising sea levels, higher temperatures, and an increase in the number and severity of extreme weather events  The following regions are discussed: Asia, South America, the Arctic, Sub-Saharan Africa, the Middle East and North Africa, Oceania, and Central America and the Caribbean  We have provided an overview for each region and a focus on one country or territory in the region  international and regional organizations, including a variety of organizations within the United Nations, the World Bank, regional development banks, the European Union, and others  Third, we reviewed relevant public documents from U S  government agencies, including the Department of Defense, the U S  Agency for International Development (USAID), and the United States Institute of Peace (USIP)  Fourth, we reviewed academic sources, research institutions, and documents from the relevant country’s national government  population  Economic conditions may be a factor for people deciding whether to migrate or stay in their country of origin  Remittances as Percent of GDP: The money international migrants transfer to recipients in their country of origin, expressed as a percentage of the origin country’s GDP  Sources agree that remittances support resilience in origin countries  Agriculture, Fishing, Forestry as Percent of GDP: A measure of the value added to an economy from the agricultural sector, which includes forestry, hunting, fishing, and the cultivation of crops and livestock, expressed as a percentage of the country’s GDP  Countries that depend on the agricultural sector may be vulnerable to the effects of climate change, according to the World Bank  Percent of Population in Cities: The population living in areas classified as urban according to criteria each country uses  Today, more than half of the global population lives in cities  Migration, in some cases due to climate change, is an important driver of urban growth, according to IOM  Cities are also expected to face increasing risks from rising sea levels, flooding, storms, and other climate change effects  Net Migration Rate: A measure of the number of people leaving a country compared to the number of people entering a country, expressed as a number per 1,000 people  The effects of climate change in Asia may impact migration and stability according to the Intergovernmental Panel on Climate Change (IPCC) and the Asian Development Bank (ADB)  In coastal areas, effects of climate change include rising sea levels, storm surges, and others  Receding glaciers in mountanous areas may also cause flooding, and monsoons in a warmer climate may be more severe  Heat extremes and more rainfall are a particular concern in Southeast Asia  Changes in precipitation and drought in Asia may exacerbate food security challenges, and contribute to people deciding to migrate  Increases in migration, partly stemming from the effects of climate change in surrounding rural areas, may put pressure on existing urban infrastructure  Rural migrants may settle in informal communities on the outskirts of cities, areas that have little resilience to natural disasters  Although the World Bank and others agree that climate change largely causes internal migration, some evidence shows that the impact of climate change contributes to cross-border migration in Asia  Large numbers of migrants, along with other destabilizing factors, may contribute to instability and conflict, according to the IPCC  The effects of climate change on livelihoods, for example, could increase migration, strain governance, and contribute to conflict as a result  Bangladesh is one example where decreased yields from agriculture and fisheries have contributed to migration to the country’s coastal cities, which face their own climate change challenges  Bangladesh’s high population density and geography make the country susceptible to the effects of climate change, according to the World Bank, and others  Bangladesh’s coasts and river banks are vulnerable to sudden-onset events such as tropical cyclones and flooding  Cyclone Aila in 2009, for example, caused widespread flooding in the southern coastal areas of Bangladesh and impacted millions of people  The storm washed away embankments that protected coastlines and caused severe damage to crops and livelihoods  Tropical Cyclone Mora in 2017 damaged thousands of homes and displaced an estimated 200,000 people  Increases in the number and intensity of tropical cyclones, which some predict will occur in a warmer climate, could have severe impacts on homes, livelihoods, and food security  Bangladesh also experiences many slow-onset climate change events, such as rising sea levels and increasingly severe droughts, which are projected to intensify with climate change  Bangladesh would lose an estimated 17 5 percent of its land if the sea level rose 1 meter, as the International Organization for Migration (IOM) has reported  Projected changes in precipitation levels could cause drought and food insecurity in the northwest and salt-water intrusion could reduce crop yields in the southwest  Migration is a common adaptation strategy to climate change in Bangladesh, according to the ADB  For example, some farmers have adapted to salt water intrusion and destroyed crops by switching to salt- tolerant rice production or shrimp cultivation  Others have migrated, often to Bangladesh’s cities to find work less dependent on agriculture  Many new migrants to Bangladesh’s cities live in informal settlements that lack the resilience to withstand sudden-onset climate events  The capital city, Dhaka, is a common destination for migrants displaced by salt-water intrusion, flooding, and river erosion, according to IOM  Dhaka, like many coastal cities in South Asia, is located on a low-lying riverbank and faces increasing risks of extreme flooding  For example, past floods in Dhaka have destroyed homes and contaminated drinking water, creating significant health hazards  In some cases, individuals migrate to cities temporarily for work and return home after the agricultural off season ends  Bangladeshis also provide a significant number of labor migrants to the Gulf States and Malaysia  Remittances from international migrants represent 5 4 percent of the country’s GDP, and may help to support resilience to climate change, according to IOM, and others  These migration trends may intensify in the future  One study estimates 9

ground_truth: Electronic forms of payment have become increasingly available, convenient, and cost efficient due to technological advances in digitization and data processing. Anecdotal reporting and certain analyses suggest that businesses and consumers are increasingly eschewing cash payments in favor of electronic payment methods. Such trends have led analysts and policymakers to examine the possibility that the use and acceptance of cash will significantly decline in coming years and to consider the effects of such an evolution. Cash is still a common and widely accepted payment system in the United States. Cash's advantages include its simplicity and robustness as a payment system that requires no ancillary technologies. In addition, it provides privacy in transactions and protection from cyber threats or financial institution failures. However, using cash involves costs to businesses and consumers who pay fees to obtain, manage, and protect cash and exposes its users to loss through misplacement, theft, or accidental destruction of physical currency. Cash also concurrently generates government revenues through "profits" earned by producing it and by acting as interest-free liabilities to the Federal Reserve (in contrast to reserve balances on which the Federal Reserve pays interest), while reducing government revenues by facilitating some tax avoidance. The relative advantages and costs of various payment methods will largely determine whether and to what degree electronic payment systems will displace cash. Traditional noncash payment systems (such as credit and debit cards and interbank clearing systems) involving intermediaries such as banks and central banks address some of the shortcomings of cash payments. These systems can execute payments over physical distance, allow businesses and consumers to avoid some of the costs and risks of using cash, and are run by generally trusted and closely regulated intermediaries. However, the maintenance and operation of legacy noncash systems involve their own costs, and the intermediaries charge fees to recoup those costs and earn profits. The time it takes to finalize certain transactions—including crediting customer accounts for check or electronic deposits—can lead to consumers incurring additional costs. In addition, these systems involve cybersecurity risks and generally require customers to divulge their private personal information to gain system access, which raises privacy concerns. To date, the migration away from cash has largely been in favor of traditional noncash payment systems; however, some observers predict new alternative systems will play a larger role in the future. Such alternative systems aim to address some of the inefficiencies and risks of traditional noncash systems, but face obstacles to achieving that aim and involve costs of their own. Private systems using distributed ledger technology, such as cryptocurrencies, may not serve the main functions of money well and face challenges to widespread acceptance and technological scalability. These systems also raise concerns among certain observers related to whether these systems could facilitate crime, provide inadequate protections to consumers, and may adversely affect governments' ability to implement or transmit monetary policy. The potential for increased payment efficiency from these systems is promising enough that certain central banks have investigated the possibility of issuing government-backed, electronic-only currencies—called central bank digital currencies (CBDCs)—in such a way that the benefits of certain alternative payment systems could be realized with appropriately mitigated risk. How CBDCs would be created and function are still matters of speculation at this time, and the possibility of their introduction raises questions about the appropriate role of a central bank in the financial system and the economy. If the relative benefits and costs of cash and the various other payment methods evolve in such a way that cash is significantly displaced as a commonly accepted form of payment, that evolution could have a number of effects, both positive and negative, on the economy and society. Proponents of reducing cash usage (or even eliminating it all together and becoming a cashless society) argue that doing so will generate important benefits, including potentially improved efficiency of the payment system, a reduction of crime, and less constrained monetary policy. Proponents of maintaining cash as a payment option argue that significant reductions in cash usage and acceptance would further marginalize people with limited access to the financial system, increase the financial system's vulnerability to cyberattack, and reduce personal privacy. Based on their assessment of the magnitude of these benefits and costs and the likelihood that market forces will displace cash as a payment system, policymakers may choose to encourage or discourage this trend.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.



Report 2: 6 million people will migrate from 2011 to 2050 due to the effects of climate change  Challenges in Stability and Security Migration due to climate change is cited as a potential destabilizing factor in Bangladesh by ADB, and others  The low-income population in Bangladesh is dependent on agriculture, making the effects of climate change—including impacts on food security—a particular concern  By 2030, these effects on livelihoods and food security could increase the poverty rate in Bangladesh by 15 percent, as the IPCC has reported  Given the proximity of Bangladesh to India, some individuals may also choose to cross the border  Increased migration to India is a potential concern, according to some sources, as India may not have the resources to absorb large numbers of Bangladeshi migrants  The CNA Corporation, National Security and the Threat of Climate Change (Alexandria, VA: 2007); and Population Council, “Effects of Future Climate Change on Cross-Border Migration in North Africa and India,” Population and Development Review, Vol  36, No  2 (2010)  The effects of climate change in South America vary by region, according to the the Intergovernmental Panel on Climate Change (IPCC) and International Organization for Migration (IOM), as well as potentially impacting migration and stability  On the coast, risks include sea level rise, depletion of fisheries, and coral reef bleaching, according to IOM  Coastal cities with growing populations are particularly vulnerable  Melting glaciers in the Andean mountain region, and increased rainfall are expected to change the distribution of water resources, and impact food production as global demand for food is growing  Desertification and land degradation, complicated by the effects of climate change, are contributing to migration from rural areas to cities in South America, as IOM has reported  An estimated 77 percent of people living in high risk areas in South America are located in cities, according to IOM  IOM predicts that as these people feel the effects of sea level rise and water scarcity, they will migrate from the large coastal cities to smaller urban areas  While South America has experienced economic growth in the last decade, poverty rates remain high, and the effects of climate change, including possible migration, may exacerbate inequalities, putting further pressure on cities to meet the needs of their populations  Water security in particular is expected to disproportionaly impact low-income communities, according to the IPCC  For example, in Brazil, drought in the northeast may increase migration to southern cities that are facing rising sea levels and landslides, with consequences for food, water, and energy security  Observed and Projected Effects of Climate Change Brazil’s cities and rural regions may encounter a range of climate change effects, according to the IPCC and IOM  Rural areas, particularly in the northeast, could experience significant impacts from climate change partly due to poverty rates, and historical vulnerability to drought  Higher temperatures are expected to affect crop yields and household incomes, especially for low-income communities  In northeastern Brazil, temperatures are expected to increase and rainfall to decrease  The northeast could see a 22 percent reduction in precipitation by 2100, according to IPCC projections  Brazil’s coastal areas, including cities, are also vulnerable to rising sea levels, heavy precipitation, flooding, and landslides  The vast majority of Brazil’s population, about 86 percent, lives in cities, many in coastal areas, according to the United Nations Development Program  As their populations have grown, urban areas have extended out  This urban growth in Brazil’s megacities has caused further increases in temperature, rainfall, and landslides  For example, current levels of urbanization in the metropolitan area of Sao Paulo may already be responsible for the 2°C warming observed in the city over the last 50 years, as well as the rise in extreme rainfall, according to the IPCC  The metropolitan area is expected to extend its area 38 percent by 2030  Multiple studies of the effects of urbanization on Sao Paulo’s climate suggest higher temperatures affect convective rainfall, which occurs when warm air rises, condenses to form clouds, and produces extreme rain  Other concerns are the depletion of coral reefs and mangrove forests on Brazil’s coastlines, and decreases in biodiversity  Migration from drought in northeastern Brazil to cities has increased urban populations, putting more people at risk of displacement from flooding and landslides  Migration from the northeast is a historical trend in Brazil, as economic migrants have sought seasonal jobs in more productive agricultural regions, or moved permanently to southern cities  Projected declines in rainfall have led some to predict further increases in migration in northeastern Brazil, as the IPCC has reported  However, remittances from family members who leave Brazil’s northeast support resilience for those who remain and may help to reduce migration  Already environmental factors contribute to migration to cities, including to favelas, informal settlements often constructed in hilly areas and floodplains outside of Brazilian cities  A significant number of the favela residents in Rio de Janeiro are migrants from northeastern Brazil, according to IOM  These new migrants may be at risk of further displacement if heavy rainfall, flooding, and other climate change effects destroy their vulnerable homes  For example, heavy rainfall in April 2010 resulted in landslides across Rio de Janeiro, displacing an estimated 5,000 people, according to a report from the World Bank  Brazil is also a destination for migrants from other countries in the region  Migrants from Venezuela searching for jobs and improved food security have come in growing numbers in recent years, as have migrants from Haiti fleeing a series of natural disasters, as IOM has reported  Challenges in Stability and Security Although Brazil ranks 106th out of 178 countries on the Fragile States Index, the effects of climate change may contribute to challenges with water, food, and energy access according to the IPCC  Decreased rainfall could decrease agricultural productivity, with potential health impacts for poor populations  These conditions are of particular concern in northeastern Brazil, as extreme weather and low crop yields are associated with more violence, according to the IPCC  Brazil also receives about 70 percent of its electricity from hydroelectric power, according the United Nations Environment Programme, and recent droughts caused power cuts across many major cities  Although not linked to the effects of climate change, absorbing a growing number of migrants fleeing political and economic instability in Venezuela may impact the broader region, according to the U S  Department of Defense and the National Intelligence Council  Neighboring countries, including Brazil, may struggle to absorb the influx of migrants  On average, 800 Venezuelans are crossing the border to Brazil every day in need of urgent humanitarian assistance, according to the UNHCR, the UN Refugee Agency  The effects of climate change in the Arctic, including higher temperatures and melting ice, have contributed to shifts in migration across the Arctic, and may have security implications  Increasing temperatures may have a variety of impacts in the Arctic, according to the Intergovernmental Panel on Climate Change (IPCC)  The effects of rising temperatures are disrupting livelihoods and food security, especially for indigenous communities, and opening up untapped natural resources to extraction  Both trends have impacted migration flows in the Arctic  Rising temperatures and melting ice have opened up previously inaccessible waterways in the Arctic, with implications for national security, according to the Department of Defense and others  Greenland, located in the Arctic and considered part of Kingdom of Denmark, exhibits many of these trends  Greenland is experiencing the effects of climate change, including glacial and ice melt, shifts in wildlife distribution, and newly available oil and mineral deposits, among others  The Greenland Ice Sheet covers approximately 80 percent of Greenland’s land mass  The ice sheet’s melting rate is slow, but uncertain  Increases in temperature greater than 1°C may result in the near loss of the entire ice sheet over a millennium and significant sea level rise, according to the IPCC  In the short term, predicting the ice sheet’s melting rate is a challenge as predictions vary in the scientific community  Accurate predictions would support mitigation and adaptation efforts in vulnerable areas  Rising temperatures and shrinking ice cover have shifted the distribution and migration patterns of marine mammals and fish, and impacted food security according to the IPCC and the Arctic Council, an intergovernmental forum for Arctic states  For example, the economy in Paamiut, Greenland, depended primarily on cod fisheries until changing climate conditions caused cod to disappear, and the town was slow to adapt to newly available shrimp  Similarly, fisheries in Disko Bay, Greenland, have struggled to adapt to new conditions  Rising temperatures and the resulting reduction in ice cover have required a shift to fishing from boats in open water instead of hunting and fishing over ice cover  Lastly, warming and ice melt may make significant oil and mineral deposits accessible for extraction in the future  The potential expansion of extraction industries makes environmental sustainability another possible concern  For example, an estimated 31 billion barrels of oil and gas may exist off the coast of Northeast Greenland, according to the Kingdom of Denmark’s 2011-2020 Arctic Strategy  The strategy stresses the importance of assessing and reducing risks to the environment resulting from the exploration and extraction of oil and gas  The effects of climate change are predicted to contribute to internal and external migration in Greenland  For example, young people are increasingly leaving indigenous communities in rural areas for cities in Greenland in search of work, as traditional livelihoods become unsustainable  Greenland is home to a majority indigenous population, primarily Inuit, whose traditional hunting and fishing practices require travel across ice  In the past, people adapted to seasonal changes to support livelihoods by migrating, and the practice was embedded into indigenous social structures  With reduced ice cover, however, migrating to hunt, fish, and maintain connections to community is more dangerous or restricted  Government policies promoting centralized services, such as health care and education, have also played a role in the shift away from migration as a way of life  As a result, indigenous livelihoods are more difficult to maintain, and young people often migrate to towns and cities in Greenland, or to Denmark, for education  At the same time, warmer temperatures have made mineral extraction feasible  As the extraction industry grows, new jobs may draw migrants from outside the Arctic region  In 2011 companies spent $100 million on the exploration of minerals in the Artic, and the estimated number of new mines is expected to require more workers than now live in the region 17 79Currently, more people leave than migrate to Greenland  The local Inuit population in Uummannaq, Greenland relies heavily on ice coverage for fishing and travel by traditional dog-sled  Brookings-LSE Project on Internal Displacement, A Complex Constellation: Displacement, Climate Change and Arctic Peoples (January 30, 2013)  Brookings-LSE Project on Internal Displacement  The effects of climate change on Sub-Saharan Africa vary depending on the region and have impacts on migration and security, according to the International Organization for Migration (IOM)  Coastal areas, for example, in West and East Africa are at risk from sea level rise that could affect major cities  Drought and the risk of desertification in the Sahel is cited as a concern, as is increased rainfall in parts of Central Africa accompanied by lower agricultural yields  As desertification threatens the livelihoods of farmers and herders, and drought makes fishing more challenging, rural dwellers may be more likely to migrate to cities, according to the United Nations Environment Programme (UNEP)  Urbanization and population growth across Sub-Saharan Africa is already making densely populated cities vulnerable to flooding, storms, and erosion, increasing the number of people at risk of displacement by sudden-onset disasters  Climate change effects and changing migration flows across Sub-Saharan Africa may impact access to natural resources and contribute to existing tensions and conflicts, according to UNEP and the Intergovernmental Panel on Climate Change (IPCC)  In Nigeria, the effects of climate change may effect a variety of livelihoods and increase migration south, while also exacerbating existing conflicts  The effects of climate change on Nigeria may impact the country’s agriculture and economy, according to the United States Institute of Peace (USIP)  Higher temperatures and decreased rainfall have contributed to drought in northern Nigeria  Desertification is also a concern  Some regions in northern Nigeria have less than 10 inches of rain a year, an amount that has decreased by 25 percent since the 1980’s, according to USIP  In other areas across Nigeria flooding has resulted in major crop losses, according to UNEP  Rising sea level, water inundation, and erosion are concerns in Nigeria’s coastal areas  Rising sea level is predicted to pose medium to very high risks to Africa’s coastal areas by 2100, according to the IPCC  Future sea level rise could result in the inundation of over 70 percent of the Nigerian coast  A rise of 0 2 meters in sea level could risk billions of dollars in assets, including oil wells near the coast  Even without a rapid rise in sea level, Nigeria’s coastal areas could experience erosion and significant land loss by 2100, as the IPCC has reported  The effects of climate change on livelihoods in northern Nigeria may contribute to migration to the south according to UNEP, while conflict in the north drives separate migration trends  As the effects of climate change make farming and fishing more challenging elsewhere in Nigeria, migration to southern coastal cities may increase  Traditionally, farmers, herders, and fishery workers migrated for temporary employment during the off season, including migration to Nigeria’s cities to work in the oil industry  Permanent migration south as well as to cities may become more common if land suitable for farming decreases  As fish habitats like Lake Chad dry up, fishery workers may also migrate  Larger urban populations on the coast will put more people at risk of sea level rise, water inundation, and erosion, according to the IPCC  A rise in sea level of 1 meter could put over 3 million people at risk of displacement as the IPCC has reported  Herders have also moved further south due to increased drought in northern Nigeria, as UNEP and USIP have reported  A 2010 survey of herdsmen in Nigeria, for example, found that nearly one-third of them had migrated southeast as a result of changes in the natural environment, according to the UNEP  The ongoing conflict with Boko Haram, while not caused by climate change, has further resulted in millions of displaced people across the Lake Chad region, including many Nigerians who have fled to Cameroon, Chad, and Niger  Nigerian refugees at the Minawao camp in Cameroon  Challenges in Stability and Security The effects of climate change, migration, and conflict are interconnected in Nigeria, as USIP has reported  The country is ranked 14th of 178 countries on the Fragile States Index  Events in northwest Africa, including Boko Haram’s attacks in Nigeria, have underscored concerns about the region’s vulnerability to the spread of violent extremism  The effects of climate change may exacerbate these concerns, according to USIP  Nigerians fleeing attacks from Boko Haram in the north have gone to communities in neighboring Chad, Cameroon, and Niger that are already experiencing food shortages due in part to climate change  These neighboring countries as a result have fewer resources to support both their own residents and the newer refugees  Non-state actors may also take advantage of government inaction on the effects of climate change  Boko Haram, for example, has justified its acts of violence by pointing to government failures, according to the USIP  Separately, increased drought in the north may aggravate historic tensions over land and water use between farmers in the south and herders migrating from the north, according to UNEP  Nigeria’s oil fields on the coast, which represent a significant part of the economy, are also at risk from sea level rise  Potential losses in oil revenue could impact Nigeria’s ability to respond to humanitarian crises and conflict at home  Increased violence within its borders could also affect Nigeria’s ability to support regional peacekeeping missions, such as the United Nations Mission in Liberia from 2003 to 2018, where Nigerian troops worked to restore security after a civil war  The effects of climate change in the Middle East and North Africa, including on its desert regions, may impact water access and compound migration and stability challenges, according to the United Nations Environmental Programme (UNEP)  Over 60 percent of the population already experiences high or very high water stress, according to the World Bank  Coupled with unsustainable water use, climate change may further exacerbate challenges with water security  The region continues to experience rising temperatures and declining annual rainfall, trends that contribute to the severity and length of drought, land degradation, and desertification  Decreased water security affects the livelihood and quality of life of farmers in the region, contributing to an increase in their migration to the cities and more urbanization, according to the World Bank  In contrast, many people are expected to migrate away from coastal cities as a result of sea level rise, according to UNEP  These potential migrations would be taking place in a region that already hosts large numbers of migrants such as those displaced by conflict and violence, including 18 percent of the world’s refugees, according to the International Organization for Migration  Challenges in water security may put greater pressure on unstable governments in the region, by intensifying existing tensions and conflicts between populations and their governments as well as between countries that share sources of water  The conflict in Syria illustrates the complex nature of climate change, migration, and conflict in the region, and the challenges to accurately assessing the links among the three, as noted in a technical paper commissioned by the U S  Agency for International Development (USAID)  Rising temperatures and declining rainfall have contributed to recent droughts in Syria, a trend that may continue  The country underwent an extended drought from about 2006 until 2011  During the drought an estimated 60 percent of Syria experienced severe crop failure, and accompanying impacts on food security  Some studies have linked the length and severity of the drought in Syria to climate change, as USAID has reported  Others, however, have pointed to government land and water use policies, combined with the effects of climate change, as responsible for the severity of the drought  Agricultural policies, for example, encouraged farmers to grow water intensive crops like wheat, and supported inefficient irrigation practices, policies which further depleted ground water and made the region more vulnerable to decreases in rainfall linked to climate change  Across the Middle East, the rising temperatures and declining rainfalls of recent decades may worsen, according to the World Bank  If these trends continue, countries in the Middle East, including Syria, could continue to experience periods of severe drought and reduced crop yields  Migration Trends The ongoing conflict in Syria, in which migration due to climate change may have been a contributing factor, has caused large-scale migration to neighboring countries in the Middle East and to Europe  Leading up to the civil war, prolonged drought, among other factors, had increased migration to Syrian cities  Because of the drought, in 2009, over 800,000 Syrians lost their livelihoods in the agricultural sector, while nearly 1 million experienced food insecurity  In 2010, an estimated 200,000 people migrated from farms in rural areas to cities, according to a UN report  The conflict in Syria, which began in 2011, has further displaced large numbers of people within the country and across the Middle East, as we have previously reported At the beginning of the conflict, Syrians, as well as Iraqi and Palestinian refugees who had been residing in Syria, fled mainly to Jordan, Lebanon, and Turkey  As the conflict persisted, refugees fled in larger numbers to Turkey, with the UNHCR reporting that nearly 1 million Syrians sought protection in that country in 2015  Starting that year, a growing number of Syrians risked dangerous sea voyages to reach countries in Europe, such as Greece, Germany, and Sweden  As of June 2017, more than 5 million registered Syrian refugees were living in neighboring countries, including more than 3 million in Turkey, and more than 1 million in Lebanon  Challenges in Stability and Security Sources agree that the Syrian conflict is a significant security challenge that has resulted in large scale migration across the Middle East and to Europe  Yet the link between prolonged drought, rural to urban migration, and the current conflict in Syria is uncertain  Some academic sources argue that the increased strain on urban infrastructure and resources due to the rural to urban migration played a role in Syria’s growing instability  Others highlight the complex nature of the Syrian conflict, pointing to broader political factors that exacerbated resource scarcity and inequality  For example, as the drought intensified, the Syrian government downplayed the severity of the humanitarian crisis, as described in research cited in a technical report commissioned by USAID result, appeals to the international community for emergency aid received minimal support  Combined with existing sectarian divisions, ongoing revolutions across the Middle East, and other factors, the government’s response to the drought may have contributed to the current conflict  Migration and displacement are a concern in the region, according to the Department of Defense and others  The U S  government has provided significant humanitarian assistance for Syrian refugees in the Middle East, including in Lebanon and Jordan, as we have previously reported However, a technical report commissioned by USAID has cautioned that the ongoing conflict in Syria makes it difficult to conduct research and draw conclusions related to climate, migration and conflict  As a The effects of climate change on Oceania, particularly rising seas, may significantly impact coastal populations and increase migration in the future, as the Asian Development Bank (ADB) and the Intergovernmental Panel on Climate Change (IPCC) have reported  Rising temperatures and declining rainfall may also contribute to lower yields from fisheries and agriculture, and a significant decrease in coral reef cover  Extreme weather events, including higher temperatures, wind, and rainfall, have already increased in number and intensity across the region  In the majority of Pacific island nations, of those who migrate, more people leave than come, according to the African, Caribbean, and Pacific Observatory on Migration  The majority of migration in the region is economically driven  In the future, climate change may further impact these migration patterns across the region, according to the IPCC  Climate change has already exacerbated challenges that aid-dependent nations in the region face, restricting livelihoods and resources and contributing to pressures to migrate  The costs of climate change, including a decline in crop yields, a rise in energy demands, and a loss of coastal land, are predicted to be significant  The ADB estimates these costs will reach 12 7 percent of the Pacific regions’ GDP by 2100  Increased migration may also impact political stability and play a role in geopolitical rivalries within the region, according to the IPCC  The effects of climate change, especially rising sea levels, may result in forced migration from the Republic of the Marshall Islands (the Marshall Islands) and have additional impacts on the U S  defense infrastructure on the islands  Observed and Projected Effects of Climate Change Rising sea levels are a grave threat to the Marshall Islands The country consists of islands, low-lying atolls—coral caps sitting on top of submerged volcanoes—making it particularly vulnerable to rising sea levels  On average, the Marshall Islands are 2 meters above sea level  In Majuro, the country’s most populous atoll, observed rates of sea level rise are already twice as fast as the global average  Population centers experience significant flooding, with damage to roads, houses, and infrastructure, especially during La Niña years, which are significantly wetter and more prone to extreme rainfall  Flooding is expected to worsen with rising sea levels, with consequences for the availabity of drinking water  On Roi-Namur island, for example, a 0 4 meter rise in sea level combined with wave-driven flooding is predicted to make groundwater undrinkable year round as early as 2055  This salt water inundation may contaminate already limited groundwater across the Marshall Islands  Lastly, during the 1940s and 1950s, the Marshall Islands was the site of 67 U S  nuclear weapons tests on or near Bikini and Enewetak Atolls  Projected increases in frequency of flooding may negatively impact efforts to contain radioactive material stored on Runit Island  A number of factors have increased migration from the Marshall Islands, including to the United States  In 1986, the United States entered into a compact of free association with the country that allowed its citizens to migrate to the United States, as we have previously reported  As a result, more than 20,000 Marshallese now live in the United States People are more likely to migrate abroad as the effects of climate change on the Marshall Islands—including rising sea levels—increasingly impact livelihoods The threat of mass displacement and forced migration is also a concern, as the International Organization for Migration has reported  However, Marshallese culture has a strong connection to the land, which means that many view migration as a last resort  For people still living in the Marshall Islands, they face overpopulation in urban centers and displacement by sudden-onset disasters like cyclones and flooding  Factors influencing people deciding to move abroad include displacement, lack of economic opportunity—sometimes exacerbated by climate change—and limited access to health care  Climate change is likely to increase risks to public health in the country Increased rainfall, for instance, may expand mosquito breeding grounds, raising the risk of diseases like dengue fever  The country’s limited health care system may further contribute to migration from the islands  Challenges in Stability and Security In the future, the Marshall Islands may become uninhabitable  This prospect threatens the existence of the Marshall Islands as a sovereign state, as well as the United States defense facilities located on the islands  The total loss of land could result in the Marshall Islands being uninhabitable, which raises problems of migration, resettlement, cultural survival, and sovereignty  Relocation of the population of the Marshall Islands, and of other Pacific Island nations at risk of rising seas, could cause significant geopolitical challenges The Marshall Islands are also of strategic importance for the United States  Under the Compact of Free Association, the United States has permission to use several islands— including Kwajalein Atoll, the location of the Ronald Reagan Ballistic Missile Defense Test Range—until 2066  The country’s proximity to the equator makes the Marshall Islands ideal for missile defense and space work  Yet the island’s defense infrastructure and operations are at significant risk due to rising sea levels, flooding, and diminishing supplies of potable water  As the Department of Defense has noted, climate change will have serious implications for the department’s ability to maintain its infrastructure and ensure military readiness in the future  DOD, 2014 Climate Change Adaptation Roadmap (Alexandria, VA: June 2014)  The effects of climate change on Central America and the Caribbean may increase migration and exacerbate poverty rates, as the National Intelligence Council has reported  The climate in Central America and the Caribbean is predicted to be warmer and dryer  The Caribbean’s extensive coastlines and low-lying areas are vulnerable to sea level rise and an increase in sudden-onset disasters, including hurricanes and storm surges  Drought is a particular concern in Central America, where declines in rainfall have reduced crop yields and threatened livelihoods in recent years  Some evidence shows that drought in parts of Central America has contributed to migration north, including to the United States  Population growth, especially in coastal cities, has increased the number of people at risk during hurricane season, and the number and intensity of hurricanes have grown in recent years  Some attribute the increase in intensity to higher sea surface temperatures caused by climate change  However, there remains debate about long term hurricane trends  Recent hurricanes have caused displacement, and significant losses and damages—including to infrastructure—across the region  The depletion of coral reefs and mangrove trees, natural barriers to coastal erosion and flooding, has exacerbated vulnerability to storms in coastal areas  Climate change is likely to have negative impacts on tourism in the Caribbean, where the industry is an important part of the economy, according to Inter-American Development Bank  Climate change impacts on the economy may make it increasingly difficult for governments to reduce poverty and move towards environmental sustainability  Haiti’s geography, location, and high poverty rates make the country especially vulnerable  Haiti is highly vulnerable to climate change effects, partly due to its long coastline Hurricanes routinely make landfall in the country, and increases in rainfall and wind speeds associated with hurricanes are likely  Severe hurricanes, including Hurricane Matthew in September 2016, have hit Haiti in recent years  Hurricane Matthew was the first category 4 storm in Haiti since 1964  Damage from severe flooding and severe winds during the hurricane affected over 2 million people and created significant food security and public health challenges  Significant deforestation has further exacerbated Haiti’s vulnerability to hurricanes, as trees previously provided a natural barrier to the erosion that strong winds and more rainfall can cause  Rising temperature and highly variable rainfall have led to extreme drought and flash flooding, according to the U S  Agency for International Development (USAID) 32 2 These trends decrease crop yields, affecting the livelihoods of farmers, and threaten water access  Projected increase in temperature and decreases in rainfall are likely to intensify drought in Haiti’s interior  USAID, Haiti: Environment and Climate Change Fact Sheet (January 2016)  Migration Trends Slow-onset climate events, such as drought, and rising sea levels, and sudden-onset events, including earthquakes, affect Haiti, according to the International Organization for Migration (IOM)  Haiti is also particularly exposed to extreme weather events, such as hurricanes, which can lead to displacement  In January 2010, a catastrophic earthquake in Haiti killed an estimated 230,000 people and left close to 1 5 million people homeless  According to IOM, the recurrence of environmental disruptions increases risks and vulnerabilities  When Hurricane Sandy struck Haiti in October 2012, the country had still not recovered from the 2010 earthquake  The worsening of climate change effects around the world, particularly in low-income countries, may increase the number of people wanting to immigrate to the United States, where approximately 700,000 Haitians live today Remittances from family members living outside Haiti make up a significant portion of the economy, at 24 7 percent of GDP  The majority of these remittances come from the United States, as we have previously reported 34 4Remittances may support resilience to climate change effects as migrants send money home for disaster recovery and adaptation  Challenges in Stability and Security Haiti, the poorest country in the western hemisphere, has experienced political instability for most of its history, and ranks 12th of 178 on the Fragile States Index  The government has a low capacity to respond to additional challenges like those related to climate change, according to USAID  The Ministry of Environment, for example, is a relatively new organization within the Haitian government, and local and regional governments have a limited ability to enforce environmental laws and regulations  The United States has provided substantial aid to Haiti, both in disaster response and broader development projects  Official development assistance for Haiti in 2015, for instance, totaled slightly more than $1 billion  According to a January 2018 UN report, 2 8 million people were still in need of humanitarian assistance  GAO, Remittances To Fragile Countries: Treasury Should Assess Risks from Shifts to Non-Banking Channels, GAO-18-313 (Washington, D C , March 8, 2018)  The Department of State’s Bureau of Oceans and International Environmental and Scientific Affairs (State/OES) provided about $78 million in adaptation funding from the Global Climate Change Initiative for eight projects for fiscal years 2014 through 2017 (see table 2)  The Global Climate Change Initiative was established in 2010 to promote resilient, low- emission development, and integrate climate change considerations into U S  foreign assistance and was divided into three main programmatic initiatives: (1) Adaptation assistance, (2) Clean Energy assistance, and (3) Sustainable Landscapes assistance  The primary purpose of these contributions to the LDCF was to address the adaptation needs of the least developed countries, which are especially vulnerable to the adverse impacts of climate change  The LDCF financed the preparation and implementation of National Adaptation Programs of Action, which identify a country’s priorities for adaptation actions  Initial grant to the National Adaptation Plans Global Network  The network is focused on increasing the capacity of national and subnational governments to identify and assess climate risks, integrate these risk considerations in sector planning, develop a pipeline of projects to address risks, identify and secure funding for projects, and track progress toward resilience targets  Colombia, East Caribbean (Guyana, Saint Lucia, Saint Vincent and the Grenadines), Ethiopia, Peru, South Africa, Uganda, West Africa (Côte d’Ivoire, Ghana, Guinea, Sierra Leone, Togo) and, under current consideration, East Caribbean (Dominica, Suriname), and Pacific (Fiji, Kiribati, Tuvalu) The cost amendment intensified the technical support on National Adaptation Plans to select countries dependent upon specific country adaption needs  In addition, the cost amendment continued the learning and progress from the initial grant  Implemented through the Department of Treasury, this funding supported a Treasury grant to the Pacific Catastrophe Risk Assessment and Financing Initiative Multi Donor Trust Fund at the World Bank  This activity established the Pacific Catastrophe Risk Insurance Foundation and the Pacific Catastrophe Risk Insurance Company, among other things  The goal of PIER is to increase private sector investment in resilience to climate change in eight developing countries  The first phase of the project will assess and identify opportunities for private investment in resilience, as well as build public and private capacity for climate risk assessment in all the countries  In the second phase, public and private sector partners will develop and pilot climate risk-reduction investment models in four of the countries  The third phase will publicize the piloted investment models and lessons learned among the eight countries  Implemented through the National Oceanic and Atmospheric Administration, this activity aims to implement a capacity-building partnership with India to promote effective climate resilient decision making at national, state, and local levels  In addition to the contacts named above, the following individuals made key contributions to this report: Miriam Carroll Fenton (Assistant Director), Kristy Williams (Assistant Director), Rachel Girshick (Analyst-in-Charge), Nancy Santucci, Miranda Cohen, Aldo Salerno, Neil Doherty, and Judith Williams  Alexander Welsh, Justin Fisher, and Joseph Thompson provided technical and other support  Climate Change Adaptation: DOD Needs to Better Incorporate Adaptation into Planning and Collaboration at Overseas Installations  GAO-18-206  Washington, D C : November 13, 2017  Compacts Of Free Association: Actions Needed to Prepare for The Transition of Micronesia and the Marshall Islands to Trust Fund Income  GAO-18-415  Washington, D C : May 17, 2018  Remittances to Fragile Countries: Treasury Should Assess Risks from Shifts to Non-Banking Channels  GAO-18-313  Washington, D C : March 8, 2018  Syrian Refugees: U S  Agencies Conduct Financial Oversight Activities for Humanitarian Assistance but Should Strengthen Monitoring  GAO-18-58  Washington, D C : October 31, 2017  International Food Assistance: Agencies Should Ensure Timely Documentation of Required Market Analyses and Assess Local Markets for Program Effects  GAO-17-640  Washington, D C : July 13, 2017  High-Risk Series: Progress on Many High-Risk Areas, While Substantial Efforts Needed on Others  GAO-17-317  Washington, D C : February 15, 2017  Federal Disaster Assistance: Federal Departments and Agencies Obligated at Least $277 6 Billion during Fiscal Years 2005 through 2014  GAO-16-797  Washington, D C : September 22, 2016  Coast Guard: Arctic Strategy Is Underway, but Agency Could Better Assess How Its Actions Mitigate Known Arctic Capability Gaps  GAO-16-453  Washington, D C : July 12, 2016  Climate Information: A National System Could Help Federal, State, Local, and Private Sector Decision Makers Use Climate Information  GAO-16-37  Washington, D C : November 23, 2015  Hurricane Sandy: An Investment Strategy Could Help the Federal Government Enhance National Resilience for Future Disasters  GAO-15-515  Washington, D C : July 30, 2015  High-Risk Series: An Update  GAO-15-290  Washington, D C : February 11, 2015  Standards for Internal Control in the Federal Government  GAO-14-704G  Washington, D C : September 10, 2014  Combating Terrorism: U S  Efforts in Northwest Africa Would Be Strengthened by Enhanced Program Management  GAO-14-518  Washington, D C : June 24, 2014  Climate Change Adaptation: DOD Can Improve Infrastructure Planning and Processes to Better Account for Potential Impacts  GAO-14-446  Washington, D C : May 30, 2014  Extreme Weather Events: Limiting Federal Fiscal Exposure and Increasing the Nation’s Resilience  GAO-14-364T  Washington, D C : February 12, 2014  Climate Change: State Should Further Improve Its Reporting on Financial Support to Developing Countries to Meet Future Requirements and Guidelines  GAO-13-829  Washington, D C : September 19, 2013  High-Risk Series: An Update  GAO-13-283  Washington, D C : February 14, 2013  International Climate Change Assessments: Federal Agencies Should Improve Reporting and Oversight of U S  Funding  GAO-12-43  Washington, D C : November 17, 2011  Climate Change Adaptation: Federal Efforts to Provide Information Could Help Government Decision Making  GAO-12-238T  Washington, D C : November 16, 2011  Foreign Relation: Kwajalein Atoll Is the Key U S  Defense Interest in Two Micronesian Nations, GAO-02-119  Washington D C : January 22, 2002 
Report 2: , support for general aviation airports)  But there are significant disagreements about the appropriate degree of federal participation in airport development and finance and about the specific types of expenditure that should be given priority within AIP  Airline and airport operators tend to view the fully authorized funding of the program as a good thing  An alternative view, however, is that too much has been spent on AIP, particularly at smaller airports that do not play a significant role in commercial aviation  The assessment of airport capital needs is fundamental to determining the appropriate federal support needed to foster a safe and efficient national airport system  The federal government's interest goes beyond capacity issues to include implementation of federal safety and noise policies  Both FAA and the Airports Council International-North America (ACI-NA) have issued projections of airports' long-term financial needs  In its most recent NPIAS report, FAA estimated that the national system's capital needs for FY2019-FY2023 will total $35 1 billion (an annual average of approximately $7 billion)  The ACI-NA infrastructure needs survey resulted in an estimate of $128 1 billion over the same years (an annual average of approximately $25 6 billion)  The main reason for the widely differing estimates was disparate views on what kinds of airport projects to include  The NPIAS report was based on information taken from airport master plans and state system plans, but FAA planners screened out planned projects not justified by aviation activity forecasts or not eligible for AIP grants  Only designated NPIAS airports were included in the FAA study  Implicit in this methodology is that the planning has been carried through to the point where financing is identified  Not all projects used to develop the NPIAS estimates are actually completed, or in some cases even begun, within the range of years covered in the NPIAS estimates  ACI-NA argues that the NPIAS underestimates AIP eligible needs because not all such needs will be in the current airport plans  The ACI-NA study reflects the broader business view of major airport operators and casts a substantially wider net  It includes projects funded by PFCs, bonds, or state or local funding; airport-funded air traffic control facilities; airport- or TSA-funded security projects; "necessary" AIP-ineligible projects such as parking facilities, hangars, revenue portions of terminals, and off-airport roads/transit facilities; and AIP-eligible projects not reported to FAA in the belief that there would be a low probability of receiving additional AIP funding  Its 2019-2023 infrastructure needs survey, for example, included major airport terminal projects that are ineligible for AIP grants  The ACI-NA study also includes projects without identified funding sources  The ACI-NA estimate is higher than the FAA estimate because of the wider net it casts and because it is adjusted for projected inflation  The estimates are important because the primary AIP reauthorization issue is the program's appropriate level of funding  Because the ACI-NA airport needs projection includes much that is not eligible for AIP grants, its accuracy may not be as critical in evaluating appropriate AIP funding levels as that of the NPIAS projections  On the other hand, the broader ACI-NA estimate may be more significant for policy choices related to bond issuance and PFCs, since these sources fund a broader range of projects than AIP  In 2004, then-FAA Administrator Marion C  Blakey stated that the agency's goal was to increase total capacity at the top 35 U S  airports by 30% over a 10-year period  FAA's Operational Evolution Plan (OEP) is intended to increase the capacity and efficiency of the National Airspace System (NAS) over a 10-year period to keep up with the expected growth in demand for air travel and air cargo  In support of that goal, FAA released a study focused on the 35 busiest airports, Capacity Needs in the National Airspace System: An Analysis of Airport and Metropolitan Area Demand and Operational Capacity in the Future (also referred to as FACT1)  The study projected 18 airports would need additional capacity by 2020  In 2007, FACT1 was updated by a second study, FACT2  FACT2 expanded the study to include 21 non-OEP airports that were identified as having the potential to be capacity constrained or were in capacity-constrained metropolitan areas  The study examined airports that would need capacity increases and also projected which airports would need capacity increases in 2015 and 2025  It identified four airports plus the New York metropolitan area that needed additional capacity in 2007  It further identified 14 hub airports as likely to be capacity-constrained in 2025  FACT2 found that, in comparison to FACT1, many non-OEP airports "    have higher capacities than originally presumed and thus less need for additional capacity " A further update, FACT3, was released in January 2015  FACT3 forecasted that the 2007-2009 recession, volatile fuel costs, airline consolidation, and replacement of many 50-seat regional jets with larger aircraft would result in 32% fewer operations and about 23% fewer enplanements in 2025 at the 30 core airports than forecast in FACT2  It projected that airport delays would remain concentrated at a few major hub airports, notably the three New York City-area airports, Philadelphia International Airport, and Hartsfield-Jackson Atlanta International Airport  This study may have implications for the reauthorization of AIP  The large runway projects that are the focus of the OEP can require long lead times—10 or more years from concept to initial construction is not unusual  At large and medium hub airports, runway projects are usually paid for, in part, by AIP funds  Therefore, some projects needed by 2025 may require AIP funding in earlier years  Because large and medium airports that levy PFCs must forgo either 50% or 75% of their AIP formula entitlement funds, most federal funding for their runway projects would probably need to take the form of AIP discretionary funds  The pool of discretionary funds is primarily the remainder of annual funding after the entitlement formula requirements are satisfied  Of the forgone PFC funds, 87 5% are reserved for the small airport fund and are also not available for OEP airports  If the AIP budget is constrained in the future, either under a reauthorization bill or during the annual appropriations process, and the entitlement formulas remain as they are, the discretionary portion of the AIP budget may be squeezed, limiting large airports' ability to draw on AIP funds for major capacity expansion projects  Many of the attributes of AIP's programmatic structure are similar to those of the 1982 act that created the program  Over the years these attributes have been modified based on perceived needs and on the practical politics of passing the periodic FAA reauthorization bills that contain the AIP provisions  These considerations make a major overhaul of the AIP structure unlikely, but may leave room for programmatic adjustments in the distribution of apportionments  One such adjustment might shift AIP funds to enhancing capacity at large and medium hub airports  There are several ways Congress might accomplish this  One would be to eliminate the requirement that large and medium hub airports that impose the maximum PFCs forgo 75% of their entitlements  This change would give larger airports a greater share of entitlement funding, but at the cost of reducing AIP grants to small airports  Alternatively, changes in the statutory set-asides of discretionary funds could give FAA more flexibility to use that money for capacity enhancement, but might reduce funding for noise mitigation and other purposes  Changes in the last several FAA authorization acts increased entitlements and broadened the range of landside projects eligible for AIP grants  These changes generally benefitted airports smaller than medium hub size  In particular, the increased amount of apportioned funds has limited the availability of funds for discretionary grants at major airports  Further changes giving airports increased flexibility in the use of their entitlements might benefit smaller airports not served by commercial aviation, in line with the national goal of having an "extensive" national airport system, but this use of funds might conflict with the goal of reducing congestion at major commercial airports  The current apportionment system relies on a $3 2 billion funding level trigger mechanism to lift most of the apportionments to twice their formula level  This has been in place for two reauthorization cycles  Should that trigger be breached, entitlements for all airports would be reduced drastically  The entitlement formulas may not be sustainable, without depleting discretionary funds, in the absence of additional funding for AIP  One way to reduce the amount of trust fund revenue needed for AIP would be to allow large and medium hub airports to opt out of AIP and rely exclusively on PFCs to finance capital projects  This would require raising or eliminating the federal cap on PFCs  These "defederalized" airports could then be released from some or all of the AIP grant assurances under which they now operate, such as land use requirements and airport revenue use restrictions  If airports exit the program, AIP spending could be reduced or could be redirected to other NPIAS airports  Airport privatization denotes a change in ownership from a public entity (such as a local government or an airport authority established by a state government) to a private one  In a number of countries, such as Great Britain, government-owned airports have been privatized by sale to private owners  In the United States, some airports have allowed private ownership of certain on-airport facilities or management functions, but the ownership of all major airports remains in the hands of government entities  The Airport Privatization Pilot Program (49 U S C  §47134; Section 149 of the Federal Aviation Reauthorization Act of 1996, P L  104-264 , as amended) authorizes FAA to exempt up to 10 airports from certain federal restrictions on the use of airport revenue off-airport  Participating airports may be also exempted from certain requirements on the repayment of federal grants  Privatized airports may still participate in the AIP, but at a lower federal share (70%)  The pilot program was renamed the Airport Investment Partnership Program (AIPP) in the 2018 FAA reauthorization act and expanded to admit more than 10 airports  The AIPP provides that at primary airports, the airport sponsor may only recover from the sale or lease an amount approved by at least 65% of the scheduled air carriers serving the airport, as well as by both scheduled and unscheduled air carriers that together account for 65% of the total landed weight at the airport for the year  The requirement that air carriers approve the use of airport revenue for nonairport purposes, such as profit distribution, may have served to limit interest in the program  To date, only two airports have completed the privatization process established under the provisions of the AIPP  One of those, Stewart International Airport in New York State, subsequently reverted to public ownership when it was purchased by the Port Authority of New York and New Jersey  Luis Muñoz Marín International Airport in San Juan, PR, is now the only commercial service airport operating under private management after privatization under the APPP  As of 2018, there are three applicants under active FAA consideration: Hendry County Airglades Airport in Clewiston, FL; Westchester Airport in White Plains, NY; and St  Louis Lambert International Airport in St  Louis, MO  There is no certainty that any AIP cost savings from privatization would be retained for use by the other AIP-eligible airports  AIP spending is determined by the authorization and appropriations process, and Congress could choose to use any savings to reduce the program size, to marginally assist in deficit reduction, to reduce general fund portions of FAA operations funding, or to make money available for spending elsewhere  Debate over FAA reauthorization generally brings forth proposals to alter the AIP grant assurances, such as ensuring that workers on airport construction projects receive prevailing wages set under the Davis-Bacon Act and pledging to use airport revenue solely for spending on airport operations and capital costs  If AIP spending remains constrained, critics are likely to argue that the grant assurances raise the cost of projects to increase airport capacity and complicate the closure and reuse of underutilized airports or airports that are locally unpopular due to noise or safety concerns  Historically, a basic funding issue is whether to change the existing discretionary fund set-aside for noise mitigation and abatement  The noise set-aside, however, has been increased in previous reauthorization acts and is now 35% of discretionary funding  Demand to use AIP funds for noise mitigation could increase if Congress grants FAA the flexibility to fund noise mitigation projects that are outside the DNL 65 decibel (dB) noise impact area, but this could divert resources from capacity and safety projects  A related issue is whether to make the planning for noise-mitigating air traffic control procedures at individual airports eligible for AIP funding  The central issue related to PFCs is whether to raise the $4 50 per enplaned passenger ceiling or to eliminate the ceiling altogether  In general, airports argue for increasing or eliminating the ceiling, whereas most air carriers and some passenger advocates oppose higher limits on the PFCs  A 2015 GAO study analyzed the effects by raising the PFC cap under three scenarios: setting the cap at $6 47, $8 00, or $8 50  The study found raising PFC would significantly increase airport funding, but could also marginally slow passenger growth and therefore the growth in revenues to the trust fund  PFC supporters feel that the PFC is more reliable than AIP funding, which is subject to the authorization and appropriations process  They also argue that PFCs are procompetitive, helping airports build gates and facilities that both encourage new entrant carriers and allow incumbent carriers to expand  Advocates of an increase in the cap also argue that over time, the value of the PFC has been eroded by inflation and an adjustment is therefore necessary  The permissible uses of revenues are an ongoing point of contention  Airport operators, in particular, would like more freedom to use PFC funds for off-airport projects, such as transportation access projects, and want the process of obtaining FAA approval to be streamlined  Carriers, on the other hand, often complain that airports use PFC funds to finance proposals of dubious value, especially outside airport boundaries, instead of high-priority projects that offer meaningful safety or capacity enhancements  The major air carriers are also unhappy with their limited influence over project decisions, as airports are required only to consult with resident air carriers instead of having to get their agreement on PFC-funded projects  Unlike interest income from governmental bonds, which is not subject to the alternative minimum tax (AMT), interest from private activity bonds is still subject to the AMT  ACI-NA has proposed broadening the definition of governmental airport bonds to, in effect, include either all airport bonds or at least those bonds issued for public-use projects that meet AIP or PFC eligibility requirements  Opponents of such changes express concerns that these changes would reduce U S  Treasury revenues  Some also argue it would make more sense to change the AMT as part of a tax bill rather than including a specific exemption for income on airport bonds in an FAA reauthorization bill  In either case, such a change would not be under the jurisdiction of the congressional committees that will have jurisdiction over most reauthorization provisions  Changes to the AMT would be under the jurisdiction of the congressional tax-writing committees, the House Committee on Ways and Means and the Senate Committee on Finance  Appendix A  Legislative History of Federal Grants-in-Aid to Airports Prior to World War II the federal government viewed airports as a local responsibility  During the 1930s, it spent about $150 million a year on airports through work relief agencies such as the Works Progress Administration (WPA)  The first federal support for airport construction was granted during World War II  After the war, the Federal Airport Act of 1946 (P L  79-377) created the Federal Aid to Airports Program, using funds appropriated annually from the general fund  Initially much of this spending supported conversion of military airports to civilian use  In the 1960s substantial funding went to upgrade and extend runways for use by commercial jets  By the end of the 1960s, congestion, both in the air and on the ground at U S  airports, was seen as evidence that airport capacity was inadequate  Airport and Airway Development and Revenue Acts of 1970 (P L  91-258) In 1970, Congress responded to the capacity concerns by passing two acts  The first, the Airport and Airway Development Act (Title I of P L  91-258), established the Airport Development Aid Program (ADAP) and the Planning Grant Program (PGP), and set forth the programs' grant criteria, distribution guidelines, and authorization of grant-in-aid funding for the first five years of the program  The second, the Airport and Airway Revenue Act of 1970 (Title II of P L  91-258), established the Airport and Airway Trust Fund  Revenues from levies on aviation users and fuel were dedicated to the fund  Under the 1970 acts the trust fund could pay capital costs and, when excess funds existed, could also help cover FAA's administrative and operations costs  Airport and Airway Development and Revenue Acts Amendments of 1971 (P L  92-174) The Nixon Administration's FAA budget requests for FY1971 and FY1972 under the new trust fund system brought it into immediate conflict with Congress over the budgetary treatment of trust fund revenues  The Administration treated the new financing system as a user-pay system, whereas many Members of Congress viewed the trust fund as primarily a capital fund  The 1971 Amendments Act made the trust fund a capital-only account (although only through FY1976), disallowing the use of trust fund revenues for FAA operations  Airport and Airway Development Amendments Act of 1976 ( P L  94-353 ) The 1976 act made a number of adjustments to the ADAP and reauthorized the Airport and Airway Trust Fund through FY1980  The act again allowed the use of trust fund resources for the costs of air navigation services (a part of operations and maintenance)  However, in an attempt to assure adequate funding of airport grants, the act included "cap and penalty" provisions which placed an annual cap on spending for costs of air navigation systems and a penalty that reduced these caps if airport grants were not funded each year at the airport program's authorized levels  This cap was altered multiple times in reauthorization acts in the following decades  ADAP grants totaled about $4 1 billion from 1971 through 1980  Congress did not pass authorizing legislation for ADAP during FY1981 and FY1982, during which the aviation trust fund lapsed, although spending for airport grants continued  Airport and Airway Improvement Act of 1982 ( P L  97-248 ) The 1982 act created the current AIP and reactivated the Airport and Airway Trust Fund  It altered the funding distribution among the newly defined categories of airports, extending aid eligibility to privately owned general aviation airports, increasing the federal share of eligible project costs, and earmarking 8% of total funding for noise abatement and compatibility planning  The act also required the Secretary of Transportation to publish a national plan for the development of public-use airports in the United States  This biannual publication, the National Plan of Integrated Airport Systems (NPIAS) , identifies airports that are considered important to the national aviation system  For an airport to receive AIP funds it must be listed in the NPIAS  Although the 1982 act was amended often in the 1980s and early 1990s, the general structure of AIP remained the same  The Airport and Airway Safety and Capacity Expansion Act of 1987 ( P L  100-223 ; 1987 act) authorized significant spending increases for AIP and added a cargo service apportionment  It also included provisions to encourage full funding of AIP at the authorized level  Title IX of P L  101-508 , the Omnibus Budget Reconciliation Act of 1990 (OBRA1990), included the Aviation and Airway Safety and Capacity Act of 1990, which allowed airports, under certain conditions, to levy a Passenger Facility Charge (PFC) to raise revenue and also established the Military Airport Program (MAP), which provided AIP funding for capacity and/or conversion-related projects at joint-use or former military airports  The Airport Noise and Capacity Act of 1990 (OBRA 1990, Title IX, Subtitle D) set a national aviation noise policy  OBRA1990 included the Revenue Reconciliation Act of 1990, which reauthorized the Aviation Trust Fund and adjusted some of the aviation taxes  The Federal Aviation Reauthorization Act of 1994 ( P L  103-305 ) reauthorized AIP for two more years and again made modifications in the cap and penalty provisions  Federal Aviation Reauthorization Act of 1996 ( P L  104-264 ) The 1996 reauthorization of the AIP made a number of adjustments to entitlement funding and discretionary set-aside provisions  It also included directives concerning intermodal planning, cost reimbursement rules, letters of intent, and the small airport fund  A demonstration airport privatization program and a demonstration program for innovative financing techniques were established  The demonstration status of the state block grant program was removed  The act did not reauthorize the taxes that supported the Airport and Airway Trust Fund  This was done by the Taxpayer Relief Act of 1997 ( P L  105-34 ), which extended, subject to a number of modifications, the existing aviation trust fund taxes through September 30, 2007  The Wendell H  Ford Aviation Investment and Reform Act for the 21 st Century of 2000 (AIR21; P L  106-181 ) The enactment of AIR21 was the culmination of two years of legislative effort to pass a multiyear FAA reauthorization bill  The initial debate focused on provisions to take the aviation trust fund off-budget or erect budgetary "firewalls" to assure that all trust fund revenues and interest would be spent each year for aviation purposes  These proposals, however, never emerged from the conference committee  Instead, the enacted legislation included a so-called "guarantee" that all of each year's receipts and interest credited to the trust fund would be made available annually for aviation purposes  AIR21 did not make major changes in the structure or functioning of AIP  It did, however, greatly increase the amount available for airport development projects  The AIP funding authorization rose from $1 9 billion in FY2000 to $3 4 billion in FY2003  The formula funding and minimums for primary airports were doubled starting in FY2001  The state apportionment for general aviation airports was increased from 18 5% to 20%  The noise set-aside was increased from 31% to 34% of discretionary funding and a reliever airport discretionary set-aside of 0 66% was established  AIR21 also increased the PFC maximum to $4 50 per boarding passenger  In return for imposing a PFC above the $3 level, large and medium hub airports would forgo 75% of their AIP formula funds  This had the effect of making a greater share of AIP funding available to smaller airports  Vision 100: Century of Aviation Reauthorization Act of 2003 ( P L  108-176 ; H Rept  108-334 ) Vision 100, signed by President George W  Bush on December 12, 2003, included significant changes to AIP  The law codified the AIR21 spending "guarantees" through FY2007  It increased the discretionary set-aside for noise compatibility projects from 34% to 35%  It increased the amount that an airport participating in the Military Airport Program (MAP) could receive to $10 million for FY2004 and FY2005, but in FY2006 and FY2007 it returned the maximum funding level to $7 million  The act allowed nonprimary airports to use their entitlements for revenue-generating aeronautical support facilities, including fuel farms and hangars, if the Secretary of Transportation determines that the sponsor has made adequate provisions for the airside needs of the airport  The law permitted AIP grants at small airports to be used to pay interest on bonds issued to finance airport projects  The act included a trial program to test procedures for authorizing small airports to impose PFCs  Vision 100 repealed the authority to use AIP or PFC funds for most airport security purposes  FAA Modernization and Reform Act of 2012 ( P L  112-95 ) The 2012 FAA reauthorization act funded AIP for four years from FY2012 to FY2015 at an annual level of $3 35 billion  A new provision, Section 138, permitted small airports reclassified as medium hubs due to increased passenger volumes to retain eligibility for up to a 90% federal share for a two-year transition period  This provision also allows certain economically distressed communities receiving subsidized air service to be eligible for up to a 95% federal share of project costs  The 2012 act maintained the $4 50 PFC cap, with a maximum charge of $18 per round-trip flight  It included a provision that instructed GAO to study alternative means for collecting PFCs  The act also expanded the number of airports that could participate in the airport privatization pilot program from 5 to 10  This law was extended through July 15, 2016  The FAA Extension, Safety, and Security Act of 2016 ( P L  114-190 ) The 2016 FAA extension act funded AIP through FY2017 at an annual level of $3 35 billion  A new provision, Section 2303, provided temporary relief to small airports that had 10,000 or more passenger boardings in 2012 but had fewer than 10,000 during the calendar year used to calculate the AIP apportionment for FY2017  This provision allowed such airports to receive apportionment for FY2017 an amount based on the number of passenger boardings at the airport during calendar year 2012  The FAA Reauthorization Act of 2018 ( P L  115-254 ) The 2018 FAA reauthorization act funded AIP for five years from FY2019 through FY2023 at an annual level of $3 35 billion  It also authorized supplemental annual funding from the general fund to the AIP discretionary funds—$1 02 billion in FY2019, $1 04 billion in FY2020, $1 06 billion in FY2021, $1 09 billion in FY2022, and $1 11 billion in FY2023—and required at least 50% of the additional discretionary funds to be available to nonhub and small hub airports  The act included a provision permitting eligible projects at small airports (including those in the State Block Grant Program) to receive 95% federal share of project costs (otherwise capped at 90%), if such projects are determined to be successive phases of a multiphase construction project that received a grant in FY2011  The 2018 reauthorization expanded the number of states that could participate in the State Block Grant Program from 10 to 20 and also expanded the existing airport privatization pilot program (now renamed the Airport Investment Partnership Program) to include more than 10 airports  The law included a provision that forbids states or local governments from levying or collecting taxes on a business on an airport that "is not generally imposed on sales or services by that State, political subdivision, or authority unless wholly utilized for airport or aeronautical purposes " Appendix B  Definitions of Airports Included in the NPIAS Commercial Service Airports Publicly owned airports that receive scheduled passenger service and board at least 2,500 passengers each year (506 airports)  Primary Airports   Airports that board more than 10,000 passengers each year  There are four subcategories: Large Hub Airports   Board 1% or more of system -wide boardings ( 30 airports, 72 % of all enplanements)Medium Hub Airports   Board 0 25% but less than 1% (31 airports, 16% of all enplanements) Small Hub Airports   Board 0 05% but less than 0 25% (72 airports, 8% of all enplanements) Non hub Primary Airports   Board more than 10,000 but less than 0 05% (247 airports, 3% of all enplanements) Non primary Commercial Service Airports   Board at least 2,500 but no more than 10,000 passengers each year (126 airports, 0 1% of all enplanements)  Other Airports General Aviation Airports   General aviation airports do not receive scheduled commercial or military service but typically do support business, personal, and instructional flying; agricultural spraying; air ambulances; on-demand air-taxies; and/or charter aircraft service (2,554 airports)  Reliever Airports   Airports designated by FAA to relieve congestion at commercial airports and provide improved general aviation access (261 airports)  Cargo Service Airports   Airports served by aircraft that transport cargo only and have a total annual landed weight of over 100 million pounds  An airport may be both a commercial service and a cargo service airport  New Airports Seven airports are anticipated to be built between 2019 and 2023  They include two primary airports, two nonprimary commercial service airports, and three general aviation airports 

ground_truth: The effects of climate change, combined with other factors, may alter human migration trends across the globe, according to the International Organization for Migration. For example, climate change can increase the frequency and intensity of natural disasters, causing populations to move from an area. Climate change can also intensify slow-onset disasters, such as drought, crop failure, or sea level rise, potentially altering longer-term migration trends. GAO was asked to review how U.S. agencies address climate change as a potential driver of global migration. For State, USAID, and DOD, this report (1) describes executive branch actions related to climate change and migration from fiscal years 2014 through 2018; (2) examines the extent to which the agencies discussed the potential effects of climate change on migration in their plans and risk assessments; and (3) describes agency activities on the issue. GAO analyzed documents on administration priorities; reviewed agency plans, risk assessments, and documentation of agency activities; and interviewed agency officials. From fiscal years 2014 through 2018, a variety of executive branch actions related to climate change—such as executive orders and strategies—affected the Department of State (State), the U.S. Agency for International Development (USAID), and the Department of Defense (DOD), including their activities that could potentially address the nexus of climate change and migration. For example, a fiscal year 2016 presidential memorandum—rescinded in 2017—required agencies to develop implementation plans to identify the potential impact of climate change on human mobility, among other things. In general, however, climate change as a driver of migration was not a focus of the executive branch actions. For example, a fiscal year 2014 executive order—also rescinded in 2017—requiring agencies to prepare for the impacts of climate change did not highlight migration as a particular concern. State, USAID, and DOD have discussed the potential effects of climate change on migration in agency plans and risk assessments. For example, State and USAID required climate change risk assessments when developing country and regional strategies, and a few of the strategies reviewed by GAO identified the nexus of climate change and migration as a risk. However, State changed its approach in 2017, no longer providing missions with guidance on whether and how to include climate change risks in their integrated country strategies. In doing so, State did not include in its 2018 guidance to the missions any information on how to include climate change risks, should the missions choose to do so. Without clear guidance, State may miss opportunities to identify and address issues related to climate change as a potential driver of migration. The three agencies have been involved in climate change related activities but none were specifically focused on the nexus with global migration. For example, USAID officials said that the agency's adaptation efforts, such as its Pastoralist Areas Resilience Improvement through Market Expansion project in Ethiopia, were the most likely to include activities, such as enhancing resilience, that can indirectly address the issue of climate change as a driver of migration. GAO recommends that State provide missions with guidance that clearly documents its process for climate change risk assessments for country strategies. In commenting on a draft of this report, State indicated that it would update its integrated country strategy guidance and will specifically note that missions have the option to provide additional information on climate resilience and related topics.