CLIMATE CHANGE

Information on 

Potential Economic 

Effects Could Help 

Guide Federal Efforts 

to Reduce Fiscal 

Exposure 

Report to Congressional Requesters

September 2017

GAO-17-720

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-17-720, a report to 

congressional requesters

September 2017

CLIMATE CHANGE

Information on Potential Economic Effects Could 

Help Guide Federal Efforts to Reduce Fiscal Exposure

What GAO Found

Methods used to estimate the potential economic effects of climate change in the 

United States—using linked climate science and economics models—are based 

on developing research. The methods and the studies that use them produce 

imprecise results because of modeling and other limitations but can convey 

insight into potential climate damages across sectors in the United States.

The two available national-scale studies that examine the economic effects of 

climate change across U.S. sectors suggested that potential economic effects 

could be significant and unevenly distributed across sectors and regions. For 

example, for 2020 through 2039, one study estimated between $4 billion and $6 

billion in annual coastal property damages from sea level rise and more frequent 

and intense storms. Also, under this study, the Southeast likely faces greater 

effects than other regions because of coastal property damages (see figure).

Examples of Potential Economic Effects of Climate Change by 2100

Information about the potential economic effects of climate change could inform 

decision makers about significant potential damages in different U.S. sectors or 

regions. According to several experts and prior GAO work, this information could 

help federal decision makers identify significant climate risks as an initial step 

toward managing such risks. This is consistent with, for example, National 

Academies leading practices, which call for climate change risk management 

efforts that focus on where immediate attention is needed. The federal 

government has not undertaken strategic government-wide planning to manage 

climate risks by using information on the potential economic effects of climate 

change to identify significant risks and craft appropriate federal responses. By 

using such information, the federal government could take an initial step in 

establishing government-wide priorities to manage such risks.

View GAO-17-720. For more information, 

contact Alfredo Gómez at (202) 512-3841 or 

gomezj@gao.gov, or Oliver Richard at (202) 

512-2700 or richardo@gao.gov

Why GAO Did This Study

Over the last decade, extreme weather 

and fire events have cost the federal 

government over $350 billion, 

according to the Office of Management 

and Budget. These costs will likely rise 

as the climate changes, according to 

the U.S. Global Change Research 

Program. In February 2013, GAO 

included Limiting the Federal 

Government’s Fiscal Exposure by 

Better Managing Climate Change 

Risks on its High-Risk List.

GAO was asked to review the potential 

economic effects of climate change 

and risks to the federal government. 

This report examines (1) methods used 

to estimate the potential economic 

effects of climate change in the United 

States, (2) what is known about these 

effects, and (3) the extent to which 

information about these effects could 

inform efforts to manage climate risks 

across the federal government. GAO 

reviewed 2 national-scale studies 

available and 28 other studies; 

interviewed 26 experts knowledgeable 

about the strengths and limitations of 

the studies; compared federal efforts to 

manage climate risks with leading 

practices for risk management and 

economic analysis; and obtained 

expert views.

What GAO Recommends

GAO recommends that the appropriate 

entities within the Executive Office of 

the President (EOP), including the 

Office of Science and Technology 

Policy, use information on potential 

economic effects to help identify 

significant climate risks and craft 

appropriate federal responses. EOP 

entities and the Environmental 

Protection Agency did not provide 

official comments on the report.
Page i GAO-17-720 Climate Change

Letter 1

Background 4

Methods Used to Estimate the Potential Economic Effects of 

Climate Change in the United States Are Based on Developing 

Research, Are Complex, Produce Imprecise Results, and Can 

Convey Useful Insight 6

National-Scale Studies and Experts Suggested That Potential 

Economic Effects of Climate Change in the United States Could 

Be Significant and Unevenly Distributed 19

According to Leading Practices and Experts, Information on the 

Potential Economic Effects of Climate Change Could Help 

Decision Makers Better Manage Climate Risks 27

Conclusions 34

Recommendation for Executive Action 35

Agency Comments 35

Appendix I Objectives, Scope, and Methodology 37

Appendix II GAO Contacts and Staff Acknowledgments 40

Tables

Table 1: Economic Effects of Climate Change in the United States 

Reported by the American Climate Prospectus Study 20

Table 2: Economic Effects of Significant Global Emissions 

Reductions in the United States Reported by the Climate 

Change Impacts and Risk Analysis Study 22

Figures

Figure 1: Example of Linked Models Used to Estimate Economic 

Effects of Climate Change 11

Figure 2: Examples of Potential Economic Effects from Climate 

Change by 2100 26

Contents
Page ii GAO-17-720 Climate Change

Abbreviations

CGE Computable General Equilibrium 

DOD Department of Defense

EOP Executive Office of the President

EPA Environmental Protection Agency

IPCC Intergovernmental Panel on Climate Change

OMB Office of Management and Budget

SCC social cost of carbon

USGCRP U.S. Global Change Research Program

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

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necessary if you wish to reproduce this material separately.
Page 1 GAO-17-720 Climate Change

441 G St. N.W.

Washington, DC 20548

September 28, 2017

The Honorable Maria Cantwell

Ranking Member

Committee on Energy and Natural Resources

United States Senate

The Honorable Susan Collins

United States Senate

According to the President’s budget proposal for fiscal year 2017, over 

the last decade, the federal government has incurred direct costs of more 

than $350 billion because of extreme weather and fire events, including 

$205 billion for domestic disaster response and relief; $90 billion for crop 

and flood insurance; $34 billion for wildland fire management; and $28 

billion for maintenance and repairs to federal facilities and federally 

managed lands, infrastructure, and waterways.1 According to a May 2014 

assessment by the U.S. Global Change Research Program (USGCRP), 

the impacts and costs of extreme events—such as floods, drought, and 

other events—will increase in significance as what are considered rare 

events become more common and intense because of climate change.2 A 

November 2016 assessment by the Office of Management and Budget 

(OMB) and the Council of Economic Advisers found that recurring costs 

that the federal government incurred as a result of climate change could 

increase by $12 billion to $35 billion per year by mid-century and by $34 

billion to $112 billion per year by late-century, the equivalent of $9 billion 

to $28 billion per year in today’s economy.3 For example, according to 

 1

Office of Management and Budget, Budget of the U.S. Government, Fiscal Year 2017 

(Washington, D.C.: Feb. 9, 2016) and Analytical Perspectives, Budget of the United States 

Government, Fiscal Year 2017 (Washington, D.C.: 2016).

2

Jerry M. Melillo, Terese (T.C.) Richmond, and Gary W. Yohe, eds., Climate Change 

Impacts in the United States: The Third National Climate Assessment, (Washington, D.C.: 

U.S. Global Change Research Program, May 2014). USGCRP coordinates and integrates 

the activities of 13 federal agencies that research changes in the global environment and 

their implications for society. The Office of Science and Technology Policy within the 

Executive Office of the President oversees USGCRP.

3

According to this assessment, these ranges are projections of costs that the federal 

government would incur across four program areas—wildland fire suppression, crop 

insurance, air quality-health care, and coastal disaster relief—given a set of assumptions 

that form the scenarios modeled. Office of Management and Budget, Climate Change: 

The Fiscal Risks Facing the Federal Government (Washington, D.C.: November 2016).

Letter
Page 2 GAO-17-720 Climate Change

this assessment, wildland fire suppression costs have increased as fire 

seasons have grown longer and the size and severity of wildland fires 

have increased, in part because of climate change.4

Reflecting such observed and projected climate-related costs to the 

federal government, in February 2013 we placed Limiting the Federal 

Government’s Fiscal Exposure by Better Managing Climate Change 

Risks on our list of agencies and program areas that are high risk 

because of their vulnerabilities to fraud, waste, abuse, and 

mismanagement or are in most need of transformation.5 In that report, we 

identified a number of areas in which the federal government faces fiscal 

exposure from climate change risks, including its role as (1) the owner 

and operator of extensive infrastructure and federal property vulnerable to 

climate impacts, (2) the insurer of property and crops vulnerable to 

climate impacts, and (3) the provider of aid in response to disasters.6 As 

an example illustrating the government’s fiscal exposure because of its 

ownership of infrastructure, in May 2014, we reported that the 

Department of Defense’s (DOD) 2010 and 2014 Quadrennial Defense 

Reviews stated that climate change poses risks to defense infrastructure, 

particularly on the coasts.7 This defense infrastructure consists of more 

than 555,000 defense facilities and 28 million acres of land, with a 

replacement value of close to $850 billion.

As reported in our 2015 High-Risk update, climate change adaptation—

defined as adjusting natural or human systems in response to actual or 

expected climate change—is one way for the federal government to 

manage climate risks.8 Adaptation can help protect vulnerable sectors 

and communities that might be affected by changes in the climate. 

Adaptation measures to protect infrastructure, for example, include 

raising river or coastal dikes to protect infrastructure from sea level rise, 

 4

Office of Management and Budget, Climate Change: The Fiscal Risks Facing the Federal 

Government.

5

GAO, High-Risk Series: An Update, GAO-13-283 (Washington, D.C.: Feb. 14, 2013).

6

For a discussion of the concept of fiscal exposures and sources of risks that create such 

exposures, click here. 

7

GAO, 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). 

8

GAO, High-Risk Series: An Update, GAO-15-290 (Washington, D.C.: Feb. 11, 2015).
Page 3 GAO-17-720 Climate Change

building higher bridges, and increasing the capacity of storm water 

systems. According to a 2010 National Academies report, choices 

regarding how and when to adapt vary greatly, and priorities for 

addressing climate risks through adaptation need to be set relative to

other important priorities. Setting such priorities for the federal 

government would require an understanding of relative risks across 

economic sectors, such as agriculture, health, and energy.9 To more 

effectively understand such risks and the range of options for managing 

them, the National Academies, in its 2016 review of USGCRP’s strategic 

plan update, reported that social science research, including economic 

research, is needed to support effective decision-making processes.10

You asked us to review the potential economic effects of climate change 

impacts and resulting risks to the federal government. This report 

examines (1) what is known about methods used to estimate the potential 

economic effects of climate change in the United States, (2) what is 

known about the potential economic effects of climate change in the 

United States, and (3) to what extent have leading practices and experts 

found that information about the potential economic effects of climate 

change could inform efforts to manage climate risks across the federal 

government.

To address these objectives, we reviewed reports and studies and 

interviewed experts and knowledgeable stakeholders. First, we conducted 

a literature review to determine what has been reported about methods 

used to estimate the economic effects of climate change in the United 

States and what estimates have been produced.11 As a part of this work, 

we reviewed 30 studies published in 2005 or later and identified the only 

 9

National Research Council of the National Academies, America’s Climate Choices: Panel 

on Adapting to the Impacts of Climate Change, Adapting to the Impacts of Climate 

Change (Washington, D.C.: 2010).

10National Academies, Committee to Advise the U.S. Global Change Research Program, 

Board on Atmospheric Sciences and Climate; Division on Earth and Life Studies; Board 

on Environmental Change and Society; Division of Behavioral and Social Sciences and 

Education, Review of the U.S. Global Change Research Program’s Update to the 

Strategic Plan Document (Washington, D.C.: 2016).

11This report focuses on adaptation to climate change and does not include the economic 

costs of emissions reduction policies. The social cost of carbon (SCC), an economic 

metric quantifying the marginal global benefit of reducing one ton of carbon dioxide, is 

beyond the scope of this report. We have examined SCC in prior work: GAO, Regulatory 

Impact Analysis: Development of Social Cost of Carbon Estimates, GAO-14-663 

(Washington, D.C.: July 24, 2014).
Page 4 GAO-17-720 Climate Change

2 available studies that provide national-scale information about the 

economic effects of climate change across multiple sectors and regions in 

the United States. We then reviewed these studies using standard 

economic principles, including a review of objective and scope, 

methodology, analysis of effects, sensitivity analysis, and 

documentation.12 Second, we interviewed 26 selected experts, including 

agency officials, researchers, and consultants. We identified these 

experts through our literature search and snowball sampling based on, 

among other things, their expertise related to our objectives, such as 

knowledge of the strengths and limitations of methods used to estimate 

the economic effects of climate change.13 Finally, we compared 

government-wide efforts to manage climate risks with leading practices 

for risk management and economic analysis and the views of experts. For 

additional details on our scope and methodology, see appendix I.

We conducted this performance audit from December 2015 to September 

2017 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.

Agencies across the federal government, such as the National Oceanic 

and Atmospheric Administration and the National Aeronautics and Space 

Administration, collect and manage many types of climate information, 

including observational records from satellites and weather monitoring 

stations on temperature and precipitation; projections from complex 

climate models; and other tools to make this information more meaningful 

to decision makers. Such information includes the following:

• Information and analysis about observed climate conditions. This 

includes information on, for example, temperature, precipitation, 

 12We used standard economic principles similar to those embodied in federal and agency 

guidance. See app. I for more details on our scope and methodology.

13To quantify the number of experts, of the 26 interviewed, who expressed particular 

views, we use the following modifiers throughout the report: “some” represents 2 to 3 

experts, “several” represents 4 to 7 experts, “many” represents 8 to 13 experts, and “most” 

represents 14 or more experts. The specific areas of expertise varied among the experts 

we interviewed, so not all of the experts commented on all of the interview questions.

Background
Page 5 GAO-17-720 Climate Change

drought, storms, and sea level rise and how they may be changing in 

the local area. This type of information can be most easily conveyed 

by graphs and maps with some statistics on trends, variability, and 

data reliability.

• Information about observed climate impacts and vulnerabilities.

This includes site-specific and relevant baselines of environmental, 

social, and economic impacts and vulnerabilities, resulting from 

observed changes in the climate against which past and current 

decisions can be monitored, evaluated, and modified over time.

• Projections of what climate change may mean for the local area.

This includes, for example, projections based on easily 

understandable best- and worst-case scenarios with confidence 

intervals and probability estimates and examples of potential climate 

impacts. The projections may need to be downscaled from complex 

global-scale climate models to provide climate information at a 

geographic scale relevant to decision makers.14 Then, the information 

would need to be translated into impacts at the local level, such as 

how increased streamflow for a particular river may increase flooding.

• Information on the economic and health impacts of climate 

change. Observed and projected local impacts must be translated 

into costs and benefits, as this information is needed for many 

decision-making processes.

Entities within the Executive Office of the President, such as the Council 

on Environmental Quality and the Office of Science and Technology 

Policy,15 have led specific government-wide climate information efforts, 

such as USGCRP’s May 2014 Third National Climate Assessment, which 

 14According to a 2012 National Research Council report on climate models, the 

fundamental science of greenhouse gas-induced climate change is simple and 

compelling. However, genuine and important uncertainties remain, such as how clouds 

affect the climate system, and these uncertainties need to be considered in developing 

scientifically based strategies for societal response to climate change—especially those 

related to “downscaled” climate information. For more information, see National Research 

Council of the National Academies, A National Strategy for Advancing Climate Modeling

(Washington, D.C.: 2012). 

15The Council on Environmental Quality coordinates federal environmental efforts and the 

development of environmental initiatives. The council was established within the Executive 

Office of the President by the National Environmental Policy Act of 1969, and additional 

responsibilities were provided by the Environmental Quality Improvement Act of 1970. The 

Office of Science and Technology Policy was established by statute in 1976 to serve as a 

source of scientific and technological analysis and judgment for the President with respect 

to major policies, plans, and programs of the federal government, among other things.
Page 6 GAO-17-720 Climate Change

summarizes the impacts of climate change on the United States, now and 

in the future.16

Methods used to estimate the potential economic effects of climate 

change in the United States are based on developing research from a 

small but growing number of researchers. These methods are complex 

because they link different types of complicated climate and economic 

models to assess how projected changes in the climate could affect 

different sectors and regions. They produce imprecise results because of 

information and modeling limitations associated with (1) climate modeling 

uncertainty; (2) limited information on which to base models for specific 

economic sectors; (3) incomplete coverage of sectors, interactions among 

sectors, and climate change impacts; and (4) challenges of modeling over 

long time frames. Nonetheless, according to several experts we 

interviewed, the methods can convey useful insight into broad themes 

about potential climate damages across sectors in the United States.17

Methods used to estimate the potential economic effects of climate 

change in the United States are based on developing research being 

undertaken by a small but growing number of researchers, according to 

the literature we reviewed and several experts we interviewed. 

Researchers began developing methods to understand the economics of 

climate change starting in the early 1990s. These original methods—

primarily designed to analyze the economic benefits and costs of 

reducing greenhouse gas emissions—typically assess the economic 

effects of climate change at a global or multinational scale, with little 

 16A team of several hundred experts guided by a 60-member federal advisory committee 

produced the report, which was extensively reviewed by the public and experts, including 

federal agencies and a panel of the National Academy of Sciences. In addition, a large 

stakeholder network was developed in support of the May 2014 National Climate 

Assessment.

17According to the National Academies, damages from climate change are the monetized 

value of the net impacts associated with climate change. See National Academies of 

Sciences, Engineering, and Medicine, Valuing Climate Damages: Updating Estimation of 

the Social Cost of Carbon Dioxide (Washington, D.C.: 2017). 

Methods Used to 

Estimate the Potential 

Economic Effects of 

Climate Change in 

the United States Are 

Based on Developing 

Research, Are 

Complex, Produce 

Imprecise Results, 

and Can Convey 

Useful Insight

Methods Are Based on 

Developing Research
Page 7 GAO-17-720 Climate Change

detailed information about specific regions or sectors within a country.18

As a result, some experts said that these original methods produce 

limited information about the economic effects of climate change within 

different sectors in the United States.

Since the early 2000s, researchers have developed new methods that 

provide more detailed information about the economic effects of climate 

change in the United States. Advances in knowledge about the historical 

relationships between changes in temperature, precipitation, and other 

climatic variables and the economy; access to data and information about 

the physical impacts of climate change; and a growth in computing power, 

among other things, have enabled the development of methods to assess 

economic effects in specific sectors and regions of the United States, 

according to literature we reviewed. To date, the new methods have been 

used primarily to quantify the economic effects of climate change on 

certain economic sectors, such as agriculture, health, and energy, but the 

research has been expanding to include additional sectors, such as 

infrastructure and water resources.

Only recently have studies analyzed the economic effects of climate 

change using frameworks that can compare effects across different 

sectors and regions within the United States on a national scale. 

According to many experts we interviewed, the following are the only two 

such national-scale research studies:19

• American Climate Prospectus: This study was published in October 

2014 by the Rhodium Group and assessed the economic effects of 

potential changes in temperature, precipitation, sea level, and 

extreme weather events on six sectors of the U.S. economy—coastal 

property, health, agriculture, energy, labor productivity, and crime—

 18According to literature we reviewed, these methods use an aggregated class of 

integrated assessment models, which quantify climate change economic effects through 

“damage functions” that estimate the economic impacts of climate change—typically as a 

percentage of gross domestic product—associated with different increases in global 

average temperatures. Some aggregated integrated assessment models can produce 

national-level estimates as well as global or multinational estimates. 

19These studies were developed for different purposes and use different analyses. Neither 

of the studies assesses the costs of reducing greenhouse gas emissions and therefore, 

neither provides a cost-benefit assessment of climate policies. 
Page 8 GAO-17-720 Climate Change

within different regions of the country.20 According to the study, its 

intent was to provide information on the probability, timing, and scope 

of a set of economically important climate change impacts 

comparable across sectors, rather than a conclusive answer about 

how much climate change will cost the United States. The study’s 

authors noted that they designed a research framework that could 

expand and improve as the climate science and economics fields 

continue to develop.21

• Climate Change Impacts and Risks Analysis: This is an ongoing 

research project coordinated by the Environmental Protection Agency 

(EPA), which published a summary study in 2015.22 The goal of the 

study was to assess the extent to which reducing global greenhouse 

gas emissions may help avoid or reduce climate change impacts and 

adverse economic effects on six U.S. sectors—health, infrastructure, 

electricity, water resources, agriculture and forestry, and 

ecosystems—and enabled the comparison of climate risks across 

these sectors. According to the authors of the Climate Change 

Impacts and Risk Analysis study, the study estimated the benefits to 

the United States of global action on climate change. As such, the 

analysis presented in the report did not inform on alternative actions 

and did not constitute a benefit-cost assessment of actions to address 

climate change. In addition, EPA officials stated that the report was 

meant to convey broad themes about climate damages across sectors 

 20Rhodium Group, LLC., American Climate Prospectus: Economic Risks in the United 

States (New York: October 2014). The American Climate Prospectus was funded by the 

Risky Business Project, a project funded by Bloomberg Philanthropies, the Paulsen 

Institute, and TomKat Charitable Trust; the Skoll Global Threats Fund; and the Rockefeller 

Family Fund. The Rhodium Group, LLC, a research consultancy and advisory company, 

coordinated the effort, which involved authors from universities and the private sector. 

This study was later published by the Columbia University Press in 2015: Trevor Houser 

et al., Economic Risks of Climate Change: An American Prospectus (New York: Columbia 

University Press, 2015). 

21An update to this analysis was published in Science in June 2017: Solomon Hsiang et al 

“Estimating Economic Damage from Climate Change in the United States,” Science, vol. 

356 (2017). 

22Environmental Protection Agency, Office of Atmospheric Programs, Climate Change in 

the United States: Benefits of Global Action, EPA 430-R-15-001 (Washington, D.C.: 

2015). The detailed methods and results of the project were published in a 2014 special 

issue of the peer-reviewed journal, Climatic Change entitled, “A Multi-Model Framework to 

Achieve Consistent Evaluation of Climate Change Impacts in the United States.” The 

project is coordinated by EPA’s Office of Atmospheric Programs – Climate Change 

Division, with contributions from national laboratories and the academic and private 

sectors. 
Page 9 GAO-17-720 Climate Change

of the United States based on peer-reviewed data and methods. Like 

the authors of the American Climate Prospectus study, the authors of 

the Climate Change Impacts and Risk Analysis study noted in the 

report that the breadth and depth of the project, including the number 

of sectors covered, will expand in future work as the fields of climate 

science and economics continue to develop. According to EPA 

officials, this expanded research will contribute physical and economic 

information to USGCRP’s next National Climate Assessment.23

Methods used to estimate the potential economic effects of climate 

change in the United States are complex because, according to literature 

we reviewed and many experts we interviewed, they use different types of 

complicated climate and economic models that are linked together in a 

sequential framework that uses the results of one model as input to 

another. The different types of climate and economic models include the 

following:

• Climate models: Climate models are mathematical representations 

of physical, chemical, and biological processes in Earth’s climate 

system, including the atmosphere, land surface, ocean, and sea ice. 

These models use scenarios of future greenhouse gas emissions as 

input, such as a scenario in which current trends in greenhouse gas 

emissions continue or a scenario in which future emissions are 

reduced. Based on these scenarios, the models simulate future 

changes in climate variables, such as changes in temperature and the 

amount of precipitation. In the United States, global-scale climate 

models are developed at federally funded institutions, such as the 

National Center for Atmospheric Research. The American Climate 

Prospectus and Climate Change Impacts and Risk Analysis studies 

both used climate models from the National Center for Atmospheric 

Research, including the Model for the Assessment of Greenhousegas Induced Climate Change and the Community Atmosphere Model.

• Economic models for individual sectors: These models estimate 

the direct economic effects in certain sectors from changes in climate 

 23The Global Change Research Act of 1990 requires that a scientific assessment—which, 

among other things, analyzes the effects of global change on the natural environment, 

agriculture, and energy production and use—be provided to the President and Congress 

not less frequently than every 4 years. USGCRP conducts this National Climate 

Assessment, the most recent of which was released in May 2014. According to USGCRP, 

development of the next National Climate Assessment is underway, with anticipated 

delivery in late 2018. 

Methods Are Complex 

Because They Link 

Complicated Scientific and 

Economic Models
Page 10 GAO-17-720 Climate Change

variables, such as temperature, and related climate impacts, such as 

sea level rise. Some economic models for individual sectors are 

based on relatively new econometric research that uses historically 

observed relationships between climate variables and economic 

effects to assess the potential economic effects of climate change on 

certain segments of the economy. For example, the American Climate 

Prospectus study used analyses of the historical relationships among 

temperature and changes in mortality, labor productivity, and violent 

crime, among other things, to project the economic effects of climate 

change. Other types of sector-specific models use known or 

theoretical relationships among climate variables and economic 

effects to make projections. These types of process-based models 

include, for example, the Forest and Agricultural Sector Optimization 

Model, used in the Climate Change Impacts and Risks Analysis study, 

which estimates changes in market outcomes associated with 

projected impacts of climate change on U.S. crop and forest yields.24

The 2015 Climate Change Impacts and Risks Analysis report included 

18 process-based models and 2 econometric models, according to 

EPA officials. Also, a version of the U.S. Energy Information 

Administration’s National Energy Modeling System, maintained by the 

Rhodium Group and used in the American Climate Prospectus study, 

models the impact of changes in temperature on energy demand, 

power generation, and electricity costs.

• Economy-wide models: These models—called Computable General 

Equilibrium (CGE) models—can help assess how the entire economy, 

including individual sectors or regions, might react to the impacts of 

climate change and how their reactions can have implications for 

other sectors and regions. For example, as a result of changes in 

climate (e.g., higher temperatures), increases in energy demand and 

costs can increase the price of a wide range of goods, and decreases 

in crop yields in Iowa can affect food prices nationwide. As they 

encompass multiple sectors in a model of the U.S. economy, CGE 

models can more fully account for interactions between sectors than 

individual sector models can, potentially affecting findings on the 

 24The Forest and Agricultural Sector Optimization Model was developed for the U.S. 

Department of Agriculture. 
Page 11 GAO-17-720 Climate Change

effects of climate change.25 The American Climate Prospectus used a 

CGE model to examine how these types of interactions among 

sectors affect the magnitude and regional variation of effects on the 

sectors analyzed in the study.26 According to EPA officials, although 

the Climate Change Impacts and Risk Analysis study did not use a 

CGE model to analyze interactions among sectors, some interaction 

between sectors was analyzed. For example, water supply and 

availability projections from the water balance model were used to 

inform irrigation supply in the agricultural sector.

Figure 1 provides an example of how climate models, economic models 

for specific sectors, and economy-wide models can be linked together 

sequentially in a framework to estimate the economic effects of climate 

change.

Figure 1: Example of Linked Models Used to Estimate Economic Effects of Climate 

Change

 25For example, as found in the American Climate Prospectus, by allowing capital and 

labor to move from one economic sector to another in response to changes in relative 

prices as a result of the economic effect of climate change, the economic effect of climate 

change may be lower, all else the same. On the other hand, if substitution possibilities are 

limited, changes in relative prices (e.g., higher energy prices) may increase economic 

effects. 

26The American Climate Prospectus study’s CGE model assumed that labor would not be 

able to move between economic regions, effectively limiting the economy’s flexibility in 

responding to climate change. 
Page 12 GAO-17-720 Climate Change

While the two national-scale studies of the economic effects of climate 

change across sectors in the United States use sequential modeling 

frameworks similar to the one shown in figure 1, other methods—referred 

to by several experts we interviewed as complex integrated assessment 

models—also incorporate feedback between the different climate and 

economic modeling components.27 Such models include the Integrated 

Global System Model, developed at the Massachusetts Institute of 

Technology, and the Global Change Assessment Model, developed at the 

Pacific Northwest National Laboratory. Some experts we interviewed 

noted that these complex integrated assessment models have 

traditionally been used to analyze the effects of different policies on the 

energy sector. The models currently have limited capability to quantify 

economic effects on individual sectors, according to some experts we 

interviewed. For example, some experts we interviewed said that the 

Integrated Global System Model can roughly quantify the economic 

effects of climate change in the health and agriculture sectors.

According to the literature we reviewed and many experts we interviewed, 

methods used to estimate the potential economic effects of climate 

change in the United States, and the national-scale methods that use the 

methods, produce imprecise estimates of economic effects because of 

data and modeling limitations associated with (1) climate modeling 

uncertainty; (2) limited information on which to base models for specific 

economic sectors; (3) incomplete coverage of sectors, interactions among 

sectors, and climate change impacts; and (4) challenges of modeling over 

long time frames.28

 27According to several experts we interviewed, complex integrated assessment models 

differ from so called “aggregate” integrated assessment models that analyze economic 

effects of climate change on a global or multinational scale to assess metrics such as the 

social cost of carbon. Specifically, complex integrated assessment models include much 

more detailed representations of the climate, individual sectors, and the overall economy 

and can produce information on a smaller geographic scale than aggregate integrated 

assessment models.

28EPA officials stated that these models are not meant to provide “precise” estimates and 

focusing on the level of precision in the modeling results would reflect a misunderstanding 

of the purpose and use of such models. They said that models provide an indication of 

direction and relative magnitudes, not an absolute truth, and should be considered as one 

tool among many in the policymaker’s toolbox. Rather than striving for precision, modelers 

aim to provide a robust characterization of uncertainty, according to these officials.

Methods, and the 

National-Scale Studies 

That Use Them, Produce 

Imprecise Results 

Because of Information 

and Modeling Limitations
Page 13 GAO-17-720 Climate Change

According to a 2012 National Academies report, climate models have 

advanced over the decades to provide much information that can be used 

for decision making today, but there are and will continue to be large 

uncertainties associated with climate modeling.29 According to literature 

we reviewed, future greenhouse gas emissions are one key source of 

uncertainty because they will depend on factors that are extremely 

challenging to predict decades into the future, such as rates of economic 

and population growth, technological developments, and policy decisions. 

Climate models use as input different scenarios that represent a range of 

potential future greenhouse gas emissions. These scenarios are based 

on various actions that could be taken to reduce future emissions, such 

as particular policies initiated by the international community. For 

example, the Climate Change Impacts and Risk Analysis study used a 

scenario based on significant global action being taken to reduce future 

emissions.30 The study does not specify what significant global action 

would cost the United States, or what it would entail, and such action may 

or may not occur.

According to literature we reviewed, another key source of uncertainty is 

how much global temperatures will rise in response to a change in carbon 

dioxide concentrations, a factor known as climate sensitivity.31 The 

climate models include assumptions about climate sensitivity that have an 

effect on the model results, with higher values for climate sensitivity 

resulting in greater warming for a particular level of emissions and 

therefore the potential for greater economic effects from climate change. 

Conversely, lower values of climate sensitivity would result in less 

warming for a particular level of emissions, and therefore the potential for 

lower economic effects from climate change. The American Climate 

 29National Academies, Committee on a National Strategy for Advancing Climate Modeling, 

Board on Atmospheric Studies and Climate, Division on Earth and Life Sciences; A 

National Strategy for Advancing Climate Modeling. 

30Specifically, EPA compared a significant global action scenario representing emissions 

reductions with a business-as-usual emissions future. Although the American Climate 

Prospectus study analyzed the economic effects of several emissions reduction scenarios, 

it did not estimate the cost of those alternatives. Both studies acknowledged that 

emissions reductions costs were not considered and that this information can be found 

elsewhere.

31The Intergovernmental Panel on Climate Change (IPCC) defines climate sensitivity as 

the change in global mean surface temperature at equilibrium that is caused by a doubling 

of the atmospheric CO2 concentration. In its 2013 Fifth Assessment Report, the IPCC 

estimated that the likely range for climate sensitivity is from 1.5 to 4.5 degrees Celsius. 

The report also indicated that a “best” estimate could not be determined. 

Climate Modeling Uncertainty
Page 14 GAO-17-720 Climate Change

Prospectus study incorporated a range of values for climate sensitivity in 

its analysis, and the Climate Change Impacts and Risk Analysis study 

generally used a single value to represent the sensitivity of the climate to 

rising greenhouse gas concentrations.32

The methods rely on limited information that can be used to model the 

relationships between climate and society, requiring assumptions about 

how society will respond to future changes in the climate. For example, 

some sector-specific models assume that historical observed 

relationships between weather events and economic output variables—

such as between temperature and crop production—will represent the 

effects of long-term climate change. However, over the long time periods 

under which climate change is expected to occur, individuals, businesses, 

and government institutions may develop new approaches or 

technologies to adapt to climate change, lessening its economic effect. 

For example, one expert said that farmers may respond by making 

different crop choices. On the other hand, future climate change may 

have effects that are not revealed in historical events. According to one 

study, the likelihood that the climate will produce unprecedented effects—

for example, heat so extreme that it can induce heat stroke in healthy 

individuals—will increase as temperatures rise outside the realm of past 

human experience.

Similarly, data showing how populations will adapt to climate change are 

limited, so the methods use different assumptions about the extent to 

which society will adapt to climate change in different sectors. For 

instance, the Climate Change Impacts and Risk Analysis study assumed 

that for some sectors, such as agriculture, cost-effective adaptation 

actions will be taken, such as adjusting the type of crops grown in a 

region. For the coastal sector, the study considered four adaptation 

strategies: beach nourishment (adding sand), property elevation, 

shoreline armoring (using physical structures to protect from erosion), and 

property abandonment. However, for other sectors, such as the labor 

sector, the study did not take into account potential adaptation 

 32The American Climate Prospectus study incorporated the IPCC range in its analysis. 

According to EPA officials, the Climate Change Impacts and Risks Analysis study used 

climate sensitivity values from the IPCC’s Fourth Assessment Report because the 

emissions scenarios were developed before the IPCC’s Fifth Assessment Report. 

Specifically, the officials said that they assumed a climate sensitivity value of 3 degrees 

Celsius in its main analysis and a value of 6 degrees Celsius in a sensitivity analysis for 

selected economic sectors. Also, some of the underlying studies included estimates for 

different values of climate sensitivity. 

Limited Information on Which 

to Base Sector-Specific Models
Page 15 GAO-17-720 Climate Change

measures—such as using potential technological advances to reduce 

exposure—that could reduce future economic effects. The American 

Climate Prospectus study generally assumed that no adaptation would 

occur in response to climate change.33 Also, the methods might not 

incorporate potential market inefficiencies. For example, in the Climate 

Change Impacts and Risk Analysis, the coastal sector analysis does not 

consider how subsidized insurance might affect adaptation actions. If 

insurance prices do not reflect actual risks—such as in the presence of 

insurance subsidies—insurance availability might disincentivize 

adaptation actions.

The methods have not included all sectors because the U.S. economy is 

complex and the information available for different sectors and climate 

impacts varies. Typically, studies using the methods include sectors for 

which the most information about climate impacts and economic effects is 

available. For example, both the American Climate Prospectus and

Climate Change Impacts and Risk Analysis studies selected sectors 

based on whether sufficient information and modeling methods were 

available for the sector and the potential for impacts in the sector to affect 

the country as a whole, among other things. In addition, the methods do 

not fully cover some of the sectors that are included. For example, the 

American Climate Prospectus study’s analysis of the agricultural sector 

included the impacts of temperature and precipitation changes on the 

largest commodity crops—maize, wheat, soy, and cotton—but not on 

fruits, vegetables, nuts, or livestock, which dominate the agricultural 

sectors in some states.

Furthermore, the methods do not always capture interactions between 

sectors that may influence economic effects. Such interactions include 

the ability of capital and labor to move between sectors in the economy, 

potentially lessening the economic effects of climate change; the impact 

of changes in water supply on the cost of electric power generation; or the 

effects of an extreme event cascading throughout a region over time by 

redistributing the workforce or raising the cost of capital.34

 33According to EPA officials, for several sectors, the study relied on the historical, 

observed relationship between weather variables and economic output. Implicitly, any 

historical adaptation response in the observations would be reflected in the analysis. 

34Analyses that include economy-wide modeling can capture some market interactions 

between sectors. 

Incomplete Coverage of 

Sectors, Interactions, and 

Impacts
Page 16 GAO-17-720 Climate Change

Finally, the methods do not include potential impacts that fall outside of 

the market economy—such as the loss of species from ecosystem 

disruptions and threats to endangered historical or cultural monuments 

from rising sea levels or more intense storms—because many of these 

impacts are difficult to quantify in monetary terms.

Modeling the effects of climate change is challenging because, among 

other things, it often involves projections over long periods into the future, 

and these projections become more uncertain over time. For example, 

the American Climate Prospectus and Climate Change Impacts and Risk 

Analysis studies both included projections of economic effects though the 

end of this century, but how the economy will evolve and how society may 

respond to climate changes over such time frames is inherently uncertain. 

As a result of this high degree of uncertainty, the methods require that 

modelers make assumptions about these factors. For example, the 

American Climate Prospectus study assumed that the structure of the 

U.S. economy would remain as it is today—an assumption the study 

notes is almost guaranteed to be wrong—and therefore provided a 

projection of the effect of potential climate changes through the end of 

this century on today’s economy, as opposed to projecting these effects 

on the economy of the future. The Climate Change Impacts and Risk 

Analysis study made assumptions about future economic growth and 

labor productivity growth but did not report the sensitivity results 

associated with this and other key economic assumptions.

Challenges also arise with discounting future benefits and costs, 

particularly when modeling over long time frames. According to OMB, 

benefits or costs that occur sooner are generally more valuable than 

those that occur later. However, according to the literature reviewed and 

some experts interviewed, the appropriate discount rate to apply when 

considering benefits and costs across generations, such as those 

Challenges of Modeling over 

Long Time Frames
Page 17 GAO-17-720 Climate Change

associated with climate change, is subject to much debate.35 According to 

one of its authors, this debate was one reason why the American Climate 

Prospectus study did not present its estimates in discounted terms. For 

several sectors, the Climate Change Impacts and Risk Analysis study 

presented some estimates in discounted present value terms consistent 

with OMB and EPA guidance but presented undiscounted estimates of 

economic effects for all sectors for 2050 and 2100.36 Nevertheless, 

climate change could have both positive and negative potential economic 

effects at different points in time in the future. Discounting is a way to 

account for differences in the timing of these effects.

As a result of the challenges of modeling over long time frames, 

economic analyses may assess the uncertainty in assumptions and data 

used in making long-term projections. For example, according to one 

author, the American Climate Prospectus study provided ranges of 

estimated economic effects for each sector to help account for uncertainty 

associated with the underlying climate and economic models, such as 

uncertainty in climate sensitivity. The Climate Change Impacts and Risk 

Analysis study primarily reported results as point estimates, not providing 

a range of estimated effects, and reported on only a limited assessment 

 35A discount rate is the interest rate used to convert benefits and costs occurring in 

different time periods to a common present value. OMB Circular A-4 states that for 

regulatory analysis federal agencies should provide estimates of net benefits and costs 

using both a 3 and 7 percent discount rate and, if the rule will have important 

intergenerational benefits or costs, the agency should consider a lower discount rate in 

addition to using the discount rates of 3 and 7 percent. OMB Circular A-4 is designed to 

assist regulatory agencies in conducting regulatory analysis and standardizing the way 

benefits and costs of federal regulatory actions are measured and reported. Neither the 

American Climate Prospectus study nor the Climate Change Impacts and Risk Analysis

study was a regulatory analysis and therefore they were not subject to this guidance. 

Office of Management and Budget, Regulatory Analysis, OMB Circular A-4 (Washington, 

D.C.: Sept. 17, 2003). 

36OMB Circular A-4 and Environmental Protection Agency, National Center for 

Environmental Economics, Guidelines for Preparing Economic Analyses (Washington 

D.C.: May 2014). Where the Climate Change Impacts and Risk Analysis study used 

present values, it used a single discount rate of 3 percent but did not analyze the 

sensitivity of the results to this selection. OMB Circular A-4 is designed to assist regulatory 

agencies in conducting regulatory analysis and standardizing the way benefits and costs 

of federal regulatory actions are measured and reported. EPA’s Guidelines for Preparing 

Economic Analyses, among other things, explains how EPA implements OMB Circular A4. Neither the American Climate Prospectus study nor the Climate Change Impacts and 

Risk Analysis study was a regulatory analysis and therefore they were not subject to this 

guidance. 
Page 18 GAO-17-720 Climate Change

of uncertainty.37 The authors of the study further acknowledged that 

exploration of the uncertainties and limitations throughout the study, 

including the development of ranges for all impact projections, would 

strengthen the Climate Change Impacts and Risk Analysis study’s results.

Several experts we interviewed noted that even though the methods 

produce imprecise results, they can convey useful insight into broad 

themes about potential climate damages across sectors in the United 

States. For example, according to several experts we interviewed, these

methods can provide valuable research information about the potential 

magnitude of economic effects and potential areas of greatest concern, 

including where assets may be at greatest risk. Some other experts told 

us that using the methods can help identify areas where additional 

research would be most useful. Finally, another expert said that exploring 

differences among the results from various models and scenarios can 

help researchers explore and better understand some of the factors that 

drive the potential economic effects of climate change.

Recent and emerging research could produce additional insight and begin 

to address some of the limitations of the methods, including those related 

to incomplete coverage of sectors and climate impacts, according to 

some experts we interviewed. For example, a new study published in 

June 2017 by almost all of the same authors of the American Climate 

Prospectus study and others expands on the research of the American 

Climate Prospectus study and provides additional insight into the potential 

economic effects of climate change in particular sectors and regions of 

the United States by examining county-level effects.38 In addition, since 

 37According to EPA officials, the Climate Change Impacts and Risk Analysis study was 

designed to investigate the relative importance of four key sources of uncertainty 

regarding physical climate science: (1) future greenhouse gas emissions growth, (2) 

climate sensitivity, (3) natural variability, and (4) climate model selection. Because 

process-based sectoral impact models can be computationally demanding to run, the 

Climate Change Impacts and Risk Analysis study first assessed the degree to which each 

of these four sources of uncertainty could influence future climate outcomes in the United 

States. The results of this screening analysis were then used to inform the selection of 

scenarios and uncertainty sources simulated in the impact models and described in the 

2015 summary study. According to EPA officials, the journal papers underlying the study 

reported a broader evaluation of uncertainty for most sectors.

38Hsiang et al., “Estimating Economic Damage from Climate Change in the United 

States.” According to EPA officials, this study represents a major advance in the field by, 

for example, constructing spatially explicit, probabilistic, and empirically derived estimates 

of economic damages in the United States resulting from climate change.

Methods Can Convey 

Useful Insight into Broad 

Themes about Potential 

Climate Damages in the 

United States
Page 19 GAO-17-720 Climate Change

the 2015 Climate Change Impacts and Risk Analysis summary study was 

published, EPA has expanded the research project to enhance the 

analysis of sectors covered in the 2015 report; expand analyses of 

adaptation for some of these sectors; and include additional sectors such 

as winter recreation, Alaskan infrastructure, and rail. According to EPA

officials involved in the study, they plan to publish a study summarizing 

these new modeling analyses, estimating impacts across 24 sectors in 

conjunction with the Fourth National Climate Assessment.

The two national-scale studies—the American Climate Prospectus and 

the Climate Change Impacts and Risk Analysis—and many of the experts 

we interviewed suggested that although the methods are developing and 

produce imprecise results, the potential economic effects of climate 

change could be significant in many sectors across the U.S. economy 

and unevenly distributed across U.S. sectors and regions.

The national-scale studies and many experts we interviewed suggested 

that climate change could result in significant economic effects in the 

United States, and the studies indicated that these effects will likely 

increase over time for most of the sectors analyzed. As shown in table 1, 

the American Climate Prospectus study estimated net costs in the near 

term for most of the five sectors analyzed and net costs by the end of the 

century for almost all of the six sectors analyzed. For example, the study 

projected potential economic costs from climate change impacts such as 

damage to coastal property from storms, decreases in labor supply from 

higher temperatures, and increases in energy expenditures for air 

conditioning. The study estimated that the likely combined direct 

National-Scale 

Studies and Experts 

Suggested That 

Potential Economic 

Effects of Climate 

Change in the United 

States Could Be 

Significant and 

Unevenly Distributed

National-Scale Studies 

and Experts Suggested 

That Potential Economic 

Effects of Climate Change 

in the United States Could 

Be Significant
Page 20 GAO-17-720 Climate Change

economic effects of the six sectors could reach 0.7 to 2.4 percent of the 

U.S. gross domestic product per year by the end of this century.39

Table 1: Economic Effects of Climate Change in the United States Reported by the American Climate Prospectus Study

Dollars in billions

Annual projected economic effects of climate change with no 

additional emissions reductions within different time periodsa

(positive values indicate costs and negative values indicate benefits)

Sector Climate change impacts measured 2020-2039 2040-2059 2080-2099

Health Changes in temperature-related 

mortality costs based on the value of 

statistical life Not reported -12 to 161 90 to 506 

Lost lifetime labor supply from changes 

in temperature-related mortality Not reported 3.4 to 14 13 to 41 

Labor Changes in labor productivity from lost 

work hours 0.1 to 22 10 to 52 42 to 150 

Coastal 

communities

Storm losses from sea level rise, 

changes in the intensity and frequency 

of storms, and increase in inundation Not reported Not reported 59 to 89 

Storm losses from sea level rise and 

changes in the frequency and intensity 

of storms 4 to 6 13 to 23 51 to 74 

Storm losses from sea level rise 2 to 3.7 6 to 12 18 to 27 

Energy Increase in average annual energy 

expenditures from increased energy 

demand 0.5 to 11 8.3 to 29 32 to 87 

Agriculture Change in crop yields from changes in 

temperature, precipitation, and carbon 

dioxide fertilization -8.5 to 9.2 -8.2 to 19 -12 to 53 

Crime Change in direct property and violent 

annual crime costs associated with 

increased temperatureb 0 to 2.9 1.5 to 5.7 5.0 to 12 

Source: GAO presentation of Rhodium Group results. | GAO-17-720

Note: The American Climate Prospectus study was produced by the Rhodium Group in 2014 to 

assess the economic effects of potential climate changes on different sectors of the U.S. economy 

and regions of the country. According to the study, these estimates are intended to provide 

information on the probability, timing, and scope of climate impacts, rather than provide a definitive 

estimate of climate change costs in the United States. Rhodium Group, LLC., American Climate 

Prospectus: Economic Risks in the United States (New York: October 2014).

 39The American Climate Prospectus study included a macroeconomic analysis described 

by the authors as “a conceptual exercise” using a CGE model to explore how direct 

impacts in individual sectors or regions may affect other regions. For example, a decrease 

in agricultural output in Iowa can affect food prices nationwide. When considering some of 

these macroeconomic effects, the study reports combined economic effects from climate 

change from 1.0 to 3.0 percent of gross domestic product. 
Page 21 GAO-17-720 Climate Change

a

These results were based on comparison of a scenario in which no policies are enacted to reduce 

global greenhouse gas and assumed that these emissions will continue to rise along current 

trajectories, with a scenario in which future climate conditions are unchanged relative to those in 

2012. The estimates are presented in real 2011 dollars. Office of Management and Budget guidance 

for conducting benefit-cost analyses of federal programs states that benefits and costs expected to 

occur in the future should be discounted to account for the time value of money—the concept that 

benefits and costs that occur sooner are more valuable. According to an American Climate

Prospectus study author, the authors of the study did not discount the results, in part, because the 

selection of a rate is subject to debate. The author also noted that in discounting the results, one 

would have to account for projected economic growth, which could increase the numbers.

b

According to the American Climate Prospectus study, other studies have found that individuals are 

more likely to exhibit aggressive or violent behavior toward others if temperatures are higher.

In all sectors analyzed, estimated net economic costs increased over 

time, becoming greater by late in the century. Specifically, for all sectors 

that have net economic costs at the lower and upper bounds of the likely 

ranges of economic effects, the study indicated a projected increase from 

about two to four times from mid-century to late century. For example, the 

study estimated that coastal property losses from sea level rise and 

increases in the frequency and intensity of storms could range from $4 

billion to $6 billion per year in the near term (i.e., 2020 through 2039), 

increasing to a range of $51 billion to $74 billion per year by late century. 

According to several experts we interviewed, the estimates presented in 

the study are not precise and may be underestimated because the study 

did not quantify all known climate impacts.40

While the results of the Climate Change Impacts and Risk Analysis study 

cannot be directly compared with those of the American Climate 

Prospectus study, the Climate Change Impacts and Risks Analysis study 

also suggested that climate change could have significant economic 

effects on several of the economic sectors analyzed, and that those 

effects would increase by the end of the century.41 The results of this 

study, shown in table 2, were primarily presented in terms of the benefits 

 40For example, the study does not include: (1) all potential effects within the included 

market impacts; (2) interactions between impacts; (3) some nonmarket impacts, such as 

ocean acidification; and (4) effects on international trade and security. 

41The American Climate Prospectus and the Climate Change Impacts and Risk Analysis 

studies are not directly comparable because their analyses are based on different 

greenhouse gas emissions scenarios, compared to different baselines. Specifically, the 

primary results reported in the American Climate Prospectus study are calculated using 

different trajectories of greenhouse gas emissions, compared to a baseline of the climate 

in 2012. The primary results of the Climate Change Impacts and Risk Analysis study are 

calculated using a greenhouse gas emissions scenario that would require significant 

global emissions reductions, compared to a baseline current trajectories of greenhouse 

gas emissions. 
Page 22 GAO-17-720 Climate Change

associated with significant global action to reduce greenhouse gas 

emissions.42

Table 2: Economic Effects of Significant Global Emissions Reductions in the United States Reported by the Climate Change 

Impacts and Risk Analysis Study

Dollars in billions

Annual economic effects from emissions reductionsa

(positive values indicate benefits and negative values 

indicate costs)

Sector Climate change impacts measured 2050 2100

Health Value of avoided deaths from poor air quality 160 930 

Value of avoided deaths from extreme heat and cold in 

49 major U.S. cities 21 200 

Value of avoided loss of labor hours 18 110 

Avoided damages from poor water quality 0.507 to 0.700 2.6 to 3.0 

Infrastructure Value of fewer bridges made structurally vulnerable 0.12 to 1.5 1.1 to 1.6 

Avoided adaptation costs for roads 0.56 to 2.3 4.2 to 7.4 

Avoided adaptation costs for urban drainage in 50 cities 0.056 to 2.9 0.050 to 6.4 

Avoided damages and adaptation costs for coastal 

property from sea level rise and storm surge 0.14 3.1b

Electricity Savings in power system costs from changes in energy 

demand 10 to 34 Not estimated

Water 

resources

Avoided damages from changes in inland flooding 

-0.260 to 0.230 -0.032 to 2.5 

Avoided damages to the agriculture sector from drought 1.2 to 1.4 2.6 to 3.1 

Avoided damages because of water shortages 3.9 to 54 11 to 180c

Agriculture and 

forestry

Avoided agriculture damages 

1.5 to 3.8 6.6 to 11 

Avoided forestry damages -9.6 to -9.5 0.520 to 1.5 

Ecosystems Avoided losses of coral reefs in Hawaii, Florida, and 

Puerto Rico 1.4 1.2 

Benefits to consumers from avoided loss of shellfish 

supply 0.085 0.380 

Avoided damages from changes in recreational 

freshwater fishing -0.0038 to 0.013 0.095 to 0.280 

Avoided wildfire response costs 0.160 to 0.390 0.940 to 1.4 

Source: GAO presentation of Environmental Protection Agency (EPA) results. | GAO-17-720

 42The study did not estimate the potential costs of significant global action to reduce 

greenhouse gas emissions, noting that such costs were well-examined elsewhere in the 

literature. 
Page 23 GAO-17-720 Climate Change

Note: The Climate Change Impacts and Risk Analysis, an ongoing EPA project, published a 2015 

summary study entitled Climate Change in the United States: Benefits of Global Action, to assess the 

extent to which reducing global greenhouse gas emissions may help avoid or reduce climate change 

impacts and adverse economic effects to multiple U.S. sectors. According to the study, these results 

are intended to provide insight into the potential direction and magnitude of climate change impacts to 

the United States, rather than provide definitive predictions of future impacts at a particular place or 

time.

a

These estimates represent the projected benefits of a global greenhouse gas emissions reduction 

policy representing “significant global action,” relative to current policies in which greenhouse gas 

emissions will increase along current trajectories. None of the estimates consider the costs of global 

greenhouse gas emissions reductions. In addition, the estimates are presented in 2014 dollars; the 

annual estimates presented here are not discounted. Also, for some of the sectors analyzed—such 

as coastal infrastructure and roads and bridges—the study assumed that some measures to adapt to 

climate change would be taken. The analyses for other sectors assumed no adaptation. Finally, the 

study reported point estimates for several of the sectors analyzed because EPA did not conduct a 

robust sensitivity analysis of the effect of underlying assumptions and data on the estimates. For 

additional details on the analysis, see https://www.epa.gov/cira.

b

Using a scenario without emissions reductions, the study projected $5.0 trillion in damages to coastal 

property through 2100 (discounted at 3 percent).

c

Using a scenario without emissions reductions, the study projected $7.7 billion to $190 billion in 

damages associated with the supply and demand of water across the United States.

According to EPA officials involved in the study, the results highlighted 

sectors with potentially higher economic effects of climate change. For 

some sectors, the study estimated the costs of climate changes without 

any emissions reductions. For example, the study reported $5.0 trillion in 

economic costs to coastal property from climate change through 2100 

(discounted at 3 percent).43 However, the study did not explain how these

estimated costs were obtained, and these estimated costs did not match 

those reported in the underlying journal papers.44 EPA officials told us 

 43The authors of the study reported that this estimate is based on the assumption that no 

adaptation measures are taken to protect coastal infrastructure from the effects of climate 

change. In addition, the results of the coastal infrastructure analysis were only presented 

for a time frame that might not capture the benefits of emissions reductions on sea level 

rise, the methodology did not allow for feedback between adaptation actions and property 

values (e.g., the model for the coastal sector did not allow for any potential effects that the 

adaptation actions themselves might have on property values), and the distributional 

analysis did not account for storm surge. In addition, only a limited number of adaptation 

strategies were considered. 

44EPA officials stated that the differences in results between the 2015 summary study and 

underlying method papers were primarily based on the use of different base years, dollar 

years, and discounting. EPA officials also stated that (1) minor modeling modifications 

(e.g., changes to the extrapolation of storm surge hydraulic relationships between sample 

sites and updated construction cost data) were made to the national coastal property 

model in response to comments from peer reviewers of the 2015 summary study, (2) 

updates were made after the underlying papers were submitted to the respective journals 

but prior to finalizing the 2015 summary study, and (3) all results were verified during 

quality control checks and subject to external and independent peer reviews. 
Page 24 GAO-17-720 Climate Change

that the scenario that led to this estimate was added as a result of 

reviewer comments.

According to the two national-scale studies and several experts we 

interviewed, potential economic effects could be unevenly distributed 

across sectors and regions. First, the studies and some experts 

suggested that climate change will affect certain sectors more than 

others. The results of the American Climate Prospectus study suggested 

that nationwide economic effects on sectors, including human health, 

labor, coastal infrastructure, and energy, could exceed the economic 

effects on the agriculture and crime sectors. The factors driving the 

economic effects on the health, labor, coastal infrastructure, and energy 

sectors included costs associated with, respectively, (1) an increase in 

premature mortality from higher temperatures, (2) reduced number of 

hours worked because of high temperatures, (3) infrastructure damage 

from increased flooding and storm surge, and (4) increased energy 

demand. In the near term, the annual sector-specific economic effects 

reported in this study for 2020 through 2039 varied from a range of $8.5 

billion in benefits to $9.2 billion in costs for the agriculture sector up to a 

range of $0.1 billion to $22 billion in costs from changes in labor 

productivity. In the long term, for 2080 through 2099, the annual sectorspecific economic effects reported in this study varied from a range of $12 

billion in benefits to $53 billion in costs for the agriculture sector up to a 

range of $90 billion to $506 billion in mortality costs for the health sector.

The Climate Change Impacts and Risk Analysis study suggested that the 

benefits from emissions reductions would affect some sectors more than 

others. For example, among the sectors analyzed, the study reported that 

emissions reductions would generate relatively larger effects in 2050 for 

sectors relating to human health, water resources, and electric power.45

The factors driving the estimated economic effects in this study included 

lost labor hours and premature mortality from poor air quality and extreme 

heat in the health sector, costs to water users—such as domestic and 

industrial water users—when sufficient water is not available, and costs to 

expand power system capacity in the energy sector.

 45The study also reported the largest benefits in emissions reductions for the health and 

water resources sectors in 2100 but did not report a value for the electricity sector in 2100. 

National-Scale Studies 

and Experts Interviewed 

Suggested That the 

Potential Economic Effects 

of Climate Change Could 

Be Unevenly Distributed 

across Sectors and 

Regions
Page 25 GAO-17-720 Climate Change

Another difference in the economic effects across different sectors 

identified in the studies is that adaptation actions can reduce the negative 

economic effects of climate change in particular sectors, according to the 

national-scale studies and several experts we interviewed. For example, 

the Climate Change Impacts and Risk Analysis study reported that 

protective adaptation measures—such as beach nourishment, property 

elevation, shoreline armoring, and property abandonment—can reduce 

projected coastal property damage in the contiguous United States.46 In 

addition, some experts we interviewed said that adaptation actions in 

coastal areas can be cost effective. However, according to the studies 

and some experts, information on the cost-effectiveness of adaptation 

actions in many other sectors remains limited.

With regard to variation across regions, the studies suggested that the 

economic effects of climate change could be more significant in some 

geographic areas than others. For example, the American Climate 

Prospectus study reported that depending on the specific climate impacts 

evaluated, the combined direct net economic effects for each state could 

range from annual benefits of 0.8 to 4.5 percent of economic output in 

Vermont to annual costs of 10.1 to 24 percent of current economic output 

in Florida by the end of the century. In the Tampa Bay, Florida, area 

alone, the Climate Change Impacts and Risk Analysis study estimated 

that damage to coastal property from sea level rise and storm surge could 

reach $2.8 billion per year by 2100.47 Figure 2 shows examples of 

potential economic effects in different U.S. geographic areas.

 46The Climate Change Impacts and Risk Analysis study reported that certain protective 

adaptation measures could reduce projected coastal property damages in the contiguous 

United States from an estimated $5.0 trillion to $810 billion. As we previously mentioned, 

the study does not explain how the $5.0 trillion estimate was obtained. The study also 

does not explain how the $810 billion estimate was obtained. EPA officials told us that the 

difference with regard to the underlying journal papers cited as sources was due to using 

different base years to compute dollar estimates, among other factors. EPA officials also 

stated that underlying studies have always been intended to serve as the methodological 

basis for the modeling analyses, not a repository of results and that all results were 

verified during quality control checks and subject to external and independent peer 

reviews. 

47This estimate is based on a scenario using current greenhouse gas emissions 

trajectories and assumes no adaptation measures will be implemented. 
Page 26 GAO-17-720 Climate Change

Figure 2: Examples of Potential Economic Effects from Climate Change by 2100

Note: Examples are shown in approximate locations and do not reflect the relative magnitudes of 

potential economic effects.

According to the American Climate Prospectus study, the Southeast, 

Midwest, and Great Plains regions will likely experience greater combined 

economic effects than other regions, largely because of coastal property 

damage in the Southeast and changes in crop yields in the Midwest and 

Great Plains.48 The Climate Change Impacts and Risk Analysis study also 

reported economic effects in particular regions. For instance, according to 

the study, ocean acidification in the Pacific Northwest is already affecting 

shellfish harvests, which the study projected could decline by 32 to 48 

 48The study estimated that the economic effects on these regions from unmitigated 

emissions growth would range from less than 1 percent to about 6 percent of output, 

depending on the region and model used. 
Page 27 GAO-17-720 Climate Change

percent by the end of the century in a scenario without emissions 

reductions. In addition, under the same scenario, the study estimated that 

wildfires could burn an additional 1.9 million acres annually in the Rocky 

Mountains by the end of the century, compared to today, which would 

significantly increase wildfire response costs. Some experts noted the 

importance of considering the economic effects of climate change in 

specific sectors and regions because nationwide estimates can average 

out some important differences. For example, in the agricultural sector, 

climate change could cause economic benefits in northern regions of the 

country from moderate warming, which could offset some agricultural 

economic losses from more extreme heat in southern regions.

Information on the potential economic effects of climate change could 

help federal decision makers better manage climate risks, according to 

leading practices for climate risk management and economic analysis we 

reviewed and the views of several experts we interviewed. Several 

experts we interviewed said that existing information on the potential 

economic effects of climate change could help federal decision makers 

identify significant climate risks to the federal government. Further, 

additional economic information could help federal, state, local, and 

private sector decision makers manage climate risks that drive federal 

fiscal exposure.

Even though existing information on the potential economic effects of 

climate change, such as that from the two national-scale studies, is 

imprecise, it is a first step toward effective climate risk management at the 

federal level. Several experts we interviewed said federal decision 

makers could use the insight this information provides about economic 

damages in various sectors or regions for different scenarios. Along with 

other available information about current and future climate risks, 

collectively this information could start informing federal decision makers 

about climate risks in different sectors and identifying areas of high fiscal 

exposure. For example, several experts we interviewed said that existing 

research indicates that infrastructure in coastal areas faces high financial 

risks relative to the risks posed to many other sectors or geographic 

regions. In addition, according to some experts we interviewed, 

projections about adverse economic effects in coastal areas, when 

According to Leading 

Practices and 

Experts, Information 

on the Potential 

Economic Effects of 

Climate Change 

Could Help Decision 

Makers Better 

Manage Climate 

Risks

Existing Information on 

Potential Economic Effects 

Could Help Identify 

Significant Climate Risks 

to the Federal 

Government
Page 28 GAO-17-720 Climate Change

considered with other information—for example, disaster costs already 

incurred such as the approximately $50 billion appropriated for recovery 

from Hurricane Sandy—could help decision makers better understand the 

potential magnitude of risks to coastal areas and identify vulnerable 

coastal infrastructure as a source of potentially high fiscal exposure.

Such a first step in risk assessment is consistent with leading practices 

for climate risk management and federal standards for internal control.49

The National Academies’ 2010 leading practices state that managing risk 

in the context of climate change involves using the best information, 

including economic information, to assess risks and determine priorities 

for managing them. Further, in its 2010 report, the National Academies 

concluded that an iterative process—in which decisions are based on an 

evolving understanding of the underlying natural and social science—can 

improve decisions related to climate change risk management because of 

the opportunities it offers for considering uncertainty. This is consistent 

with what we reported in December 2016—that the first steps in 

developing enterprise risk management involve identifying and assessing 

risks to understand the likelihood of impacts and their associated 

consequences.50 As we found in that report, federal managers often 

handle complex and risky missions, such as preparing for and responding 

to natural disasters and building and managing safe transportation 

systems. While it is not possible to eliminate all uncertainties associated 

with these missions, risk management strategies exist to help federal 

managers anticipate and manage risks. In addition, under federal 

standards for internal control, management—in this case, the federal 

government—should identify, analyze, and respond to risks related to 

achieving the defined objectives. For example, management estimates 

the significance of a risk by considering the magnitude of impact, 

likelihood of occurrence, and nature of the risk—which provides a basis 

 49National Research Council of the National Academies, America’s Climate Choices: 

Panel on Adapting to the Impacts of Climate Change, Adapting to the Impacts of Climate 

Change and GAO, Standards for Internal Control in the Federal Government, 

GAO-14-704G (Washington, D.C.: September 2014).

50As we found in our December 2016 report, once risks are identified and analyzed, the 

next steps in the enterprise risk management process include planning risk responses and 

making decisions. GAO, Enterprise Risk Management: Selected Agencies’ Experiences 

Illustrate Good Practices in Managing Risks, GAO-17-63 (Washington, D.C.: Dec. 1, 

2016).
Page 29 GAO-17-720 Climate Change

for responding to the risks—and management may need to conduct 

periodic risk assessments.51

Our past work and the work of others have reported that climate change 

impacts and their economic effects have already cost the federal 

government money and pose future risks that could lead to increased 

federal fiscal exposure.52 As we concluded in our October 2009 report, 

given the potential magnitude of climate change and the lead time 

needed to adapt, preparing for these impacts now may reduce the need 

for far more costly steps in the decades to come.53 For example, we 

reported in our February 2013 High-Risk update that federal disaster aid 

functions as the insurance of last resort in certain circumstances, 

increasing the federal government’s fiscal exposure to a changing 

climate.54 We also reported in December 2014 that from fiscal years 2004 

through 2013, the Federal Emergency Management Agency obligated 

about $95 billion in federal disaster assistance for 650 major disasters 

declared during this time frame.55 Then, in July 2015, we reported that the 

 51GAO-14-704G. The federal standards for internal control apply across the federal 

government and provide agencies the overall framework for establishing and maintaining 

effective internal controls, a key factor in improving accountability in achieving an entity’s 

mission. 

52In particular, climate change impacts call attention to areas where government-wide 

action is needed to reduce fiscal exposure. Specifically, our High-Risk List framework for 

Limiting the Federal Government’s Fiscal Exposure by Better Managing Climate Change 

Risks outlines five areas where action is needed: (1) strategic plan that coordinates 

federal efforts and informs state, local, and private sector action; (2) defense facilities and

federal property; (3) federal flood and crop insurance programs; (4) data and technical 

assistance to federal, state, local, and private sector decision makers; and (5) disaster aid. 

Criteria for removing this issue from the High-Risk List include demonstrating leadership 

commitment that is sustained and enhanced to address all aspects of the federal fiscal 

exposure to climate change cohesively. See, for example, GAO-14-446; GAO, Federal 

Emergency Management Agency: Opportunities Exist to Strengthen Oversight of 

Administrative Costs for Major Disasters, GAO-15-65 (Washington, D.C.: Dec. 17, 2014); 

and Office of Management and Budget, Climate Change: The Fiscal Risks Facing the 

Federal Government.

53GAO, Climate Change Adaptation: Strategic Federal Planning Could Help Government 

Officials Make More Informed Decisions, GAO-10-113 (Washington, D.C.: Oct. 7, 2009). 

54GAO-13-283.

55While not all of these disasters can be attributed to climate change, as discussed, 

USGCRP reported that the impacts and costliness of weather disasters will increase in 

significance as what are considered rare events become more common and intense 

because of climate change. See GAO-15-65 and Melillo, Richmond, and Yohe, Climate 

Change Impacts in the United States: The Third National Climate Assessment.
Page 30 GAO-17-720 Climate Change

federal government does not adequately plan for disaster resilience and 

that most federal funding for hazard mitigation is available after a 

disaster.56

Even with the magnitude of these disaster recovery costs, the federal 

government does not have government-wide strategic planning efforts in 

place to help set clear priorities for managing significant climate risks 

before they become federal fiscal exposures. The federal government has 

not undertaken strategic, government-wide planning to manage climate 

risks, using the best available information, including information on the 

potential economic effects of climate change, to identify and assess 

significant risks. In May 2011, we found that a government-wide strategic 

planning process could enhance how priorities for an overall federal 

response to climate change are set and recommended that the Executive 

Office of the President establish federal strategic climate change 

priorities.57 The Executive Office of the President has not implemented 

this recommendation. Later, in July 2015, we found that the federal 

government had no comprehensive, strategic approach to identifying, 

prioritizing and implementing investments for disaster resilience.58 This 

report concluded that a strategy to guide federal investments in disaster 

resilience could result in more effective returns on these investments.

Building disaster resilience can include taking actions to adapt to the 

effects of climate change, as we found in May 2016.

59

In addition, in our February 2015 High-Risk update, we reported that 

federal officials do not have a shared understanding of strategic 

government-wide priorities related to climate change, which along with 

 56For example, from fiscal years 2011 to 2014, the Federal Emergency Management 

Agency obligated more than $3.2 billion for the Hazard Mitigation Grant Program for postdisaster hazard mitigation while obligating approximately $222 million for the Pre-Disaster 

Mitigation Grant Program. GAO, 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).

57GAO, Climate Change: Improvements Needed to Clarify National Priorities and Better 

Align Them with Federal Funding Decisions, GAO-11-317 (Washington, D.C.: May 20, 

2011). Entities within the Executive Office of the President—such as the Council on 

Environmental Quality, Office and Management and Budget, and Office of Science and 

Technology Policy—work together to ensure that federal climate change activities are 

guided by the latest climate science. 

58GAO-15-515. 

59GAO, Climate Change: Selected Governments Have Approached Adaptation through 

Laws and Long-Term Plans, GAO-16-454 (Washington, D.C.: May 12, 2016). 
Page 31 GAO-17-720 Climate Change

other issues, limits the federal government’s ability to manage climate 

risks.60 In February 2017, we found that federal agencies had undertaken 

various strategic planning efforts, but it was unclear how they related to 

each other or whether they amounted to a government-wide approach for 

reducing federal fiscal exposures.61 Subsequently, a March 2017 

Executive Order rescinded some of these planning efforts and created 

uncertainty about whether other planning efforts would continue or take 

their place.62

The National Academies’ 2010 leading practices state that climate 

change risk management efforts need to be focused where immediate 

attention is needed and that, by prioritizing federal climate risk 

management activities well, the federal government can help to minimize 

negative impacts and maximize opportunities associated with climate 

change.63 In addition, most experts we interviewed told us that federal 

decision makers should prioritize risk management efforts on significant 

climate risks that create the greatest fiscal exposure. By using information 

on the potential economic effects of climate change to assess and identify 

significant climate risks and craft appropriate federal responses, the 

federal government could take an initial step in establishing governmentwide priorities to manage significant climate risks, which we 

recommended in May 2011 to reduce federal fiscal exposure and 

continue to believe is important.64 This initial step could include 

establishing a strategy to identify, prioritize, and guide federal 

investments to enhance resilience against future disasters, as we 

recommended in July 2015.

65

 60GAO-15-290.

61GAO-17-317. Such strategic planning efforts include the June 2013 Climate Action Plan, 

the March 2015 Executive Order 13693 on Planning for Federal Sustainability in the Next 

Decade, and an October 2016 report by the interagency Council on Climate Preparedness 

and Resilience. 

62Specifically, Executive Order 13783 rescinded the Climate Action Plan and revoked the 

executive order establishing the Council on Climate Preparedness and Resilience. 

Although Executive Order 13693 has not been revoked, it is uncertain whether the agency 

adaptation plans and other strategic planning efforts it calls for will continue. 

63National Research Council of the National Academies, America’s Climate Choices: 

Panel on Adapting to the Impacts of Climate Change, Adapting to the Impacts of Climate 

Change.

64GAO-11-317.

65GAO-15-515. 
Page 32 GAO-17-720 Climate Change

To achieve the ultimate objective of establishing government-wide 

priorities, decision makers need information on policy alternatives that are 

representative of all available alternatives and their economic effects, 

such as benefits and costs. The authors of the American Climate 

Prospectus study highlighted, for instance, that national decision makers 

must weigh the potential economic and social impacts of climate change 

against the costs of policies to reduce emissions or make our economy 

more resilient. Further, EPA officials stated that using information from 

national-scale economics reports to make policy choices would involve a 

number of intermediate analytical steps, including (1) estimating the 

federal risk exposure from the national or regional estimates, (2) 

identifying policy options, and (3) analyzing the costs and benefits of 

those options. The relevant point for decision makers, according to these 

EPA officials, is that multisector, national estimates of climate damages 

can be made available for use, though additional analysis may be needed 

for specific policy actions.

A strategy to identify, prioritize, and guide federal investments to enhance 

resilience against future disasters could include additional information on 

the economic effects of climate change. Such economic information could 

help inform future efforts by federal, state, local, and private sector 

decision makers to manage climate risks, according to a 2010 National 

Academies report, our prior work, literature we reviewed, and several 

experts we interviewed. The 2010 National Academies report, literature 

we reviewed, and several experts we interviewed noted that to make 

informed adaptation choices, decision makers need more comprehensive 

information on economic effects to better understand the potential costs 

of climate change to society and begin to develop an understanding of the 

benefits and costs of different adaptation options. In addition, economic 

guidance generally states that investment decisions—which would 

include decisions about adaptation investments—should be informed by a 

consideration of both benefits and costs of relevant alternatives. For 

example, OMB has issued guidance on using benefit-cost analyses to 

help federal agencies efficiently allocate resources through well-informed 

decision making. This guidance includes OMB Circular A-94, which 

directs agencies to follow certain economic guidelines for benefit-cost and 

cost-effectiveness analyses of federal programs or policies to promote 

Additional Information on 

Potential Economic Effects 

Could Help Decision 

Makers’ Efforts to Manage 

Climate Risks
Page 33 GAO-17-720 Climate Change

efficient resource allocation through well-informed decision making in 

certain circumstances.66

The American Climate Prospectus study also recognized the importance 

of balancing benefits and costs, stating that national policy makers must 

weigh the potential economic and social impacts of climate change 

against the cost of the policies to manage climate risks. When it comes to 

managing climate risks through adaptation, the literature we reviewed and 

several experts we interviewed noted that a full understanding of the 

adaptation alternatives would require information on the economic effects 

of climate change impacts, how adaptation may lessen some of these 

effects, and the costs of adaptation.

In our 2013 High-Risk update, we reported that the federal government 

has a role to play in providing information to decision makers so they can 

make better choices about adapting to climate change since their 

decisions can drive federal fiscal exposure.67 Moreover, we found in our 

2015 High-Risk update that state, local, and private sector decision 

makers drive federal climate-related fiscal exposures because they are 

responsible for planning, constructing, and maintaining certain types of 

vulnerable infrastructure paid for with federal funds, insured by federal 

programs, or eligible for federal disaster assistance.68 Therefore, federal 

efforts to provide information to these decision makers could help them 

make more informed choices about how to manage climate risks, 

ultimately helping to reduce federal fiscal exposure. In our November 

2016 report, we reported that these decision makers need climate 

information—including economic information—that represents the best 

available information and is updated over time.69

 66Office of Management and Budget, Guidelines and Discount Rates for Benefit-Cost 

Analysis of Federal Programs, OMB Circular A-94 (Washington, D.C.: Oct. 29, 1992). 

These guidelines apply, with limited exception, to any analysis used to support 

government decisions to initiate, renew, or expand programs or projects that would result 

in a series of measurable benefits or costs extending for 3 or more years into the future. 

The circular applies specifically to: (1) benefit-cost or cost-effectiveness analysis of federal 

programs or policies, (2) regulatory impact analysis, (3) analysis of decisions on whether 

to lease or purchase; and (4) asset valuation and sale analysis.

67GAO-13-283. 

68GAO-15-290. 

69GAO, Climate Information: A National System Could Help Federal, State, Local, and 

Private Sector Decision Makers Use Climate Information, GAO-16-37 (Washington, D.C.: 

Nov. 23, 2015).
Page 34 GAO-17-720 Climate Change

Some experts we interviewed noted that emerging research—which 

includes updates to the national-scale studies of the economic effects of 

climate change—will help fill information gaps. Recognizing that decision 

makers need more comprehensive economic information to manage 

climate risks, the National Academies recommended in 2016 that 

USGCRP integrate social, behavioral, and economic science into the 

National Climate Assessment to support decision-making processes.70

EPA officials told us that, as a step toward this integration, the agency’s 

updates to the Climate Change Impacts and Risk Analysis project 

advance the understanding of economic effects of climate change. The 

officials said that this information is documented in new analyses serving 

as input to the next National Climate Assessment. While several experts 

we interviewed noted that information on the economic effects of climate 

change is currently relatively sparse, they also said that new information 

is still emerging.

Climate change impacts are already costing the federal government 

money, and these costs will likely increase over time as the climate 

continues to change. Even though existing information on the potential 

economic effects of climate change, such as that from the two nationalscale studies, is imprecise, it could help identify significant potential 

damages for federal decision makers—an initial step in the process for 

managing climate risks. Under the National Academies’ 2010 leading 

practices, climate change risk management efforts need to be focused on 

where immediate attention is needed, and by prioritizing federal climate 

risk management activities well, the federal government can help to 

minimize negative impacts and maximize opportunities associated with 

climate change. The 2010 National Academies report, literature we 

reviewed, and several experts we interviewed noted that to make 

informed adaptation choices, decision makers need more comprehensive 

information on economic effects to better understand the potential costs 

of climate change to society and begin to develop an understanding of the 

benefits and costs of different adaptation options. By using information on 

the potential economic effects of climate change to help identify 

significant climate risks and craft appropriate federal responses—such as 

establishing a strategy to guide federal investment to enhance resilience 

against future disasters—the federal government could take an initial step 

 70National Academies, Review of the U.S. Global Change Research Program’s Update to 

the Strategic Plan Document. 

Conclusions
Page 35 GAO-17-720 Climate Change

in establishing government-wide priorities to manage significant climate 

risks. To help prioritize and guide federal investments, such a strategy 

could include developing more comprehensive information on the 

potential benefits and costs of different adaptation options.

We are making the following recommendation to the Executive Office of 

the President:

The appropriate entities within the Executive Office of the President, 

including the Council on Environmental Quality, Office and Management 

and Budget, and Office of Science and Technology Policy, should use 

information on the potential economic effects of climate change to help 

identify significant climate risks facing the federal government and craft 

appropriate federal responses. Such responses could include establishing 

a strategy to identify, prioritize, and guide federal investments to enhance 

resilience against future disasters. (Recommendation 1)

We provided a draft of this report for review and comment to the Council 

on Environmental Quality, the Office of Science and Technology Policy,

and EPA. The Council on Environmental Quality and the Office of 

Science and Technology Policy did not provide comments. EPA did not 

provide written comments on our findings and recommendation but 

instead provided technical comments, which we incorporated as 

appropriate.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Director of the Office 

of Science and Technology Policy, the Director of the Council on 

Environmental Quality, and the Administrator of the Environmental 

Protection Agency. In addition, the report will be 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 J. 

Alfredo Gómez at (202) 512-3841 or gomezj@gao.gov or Oliver Richard 

at (202) 512-2700 or richardo@gao.gov. Contact points for our Offices of 

Recommendation for 

Executive Action

Agency Comments
Page 36 GAO-17-720 Climate Change

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 II.

J. Alfredo Gómez

Director, Natural Resources and Environment

Oliver Richard

Director, Applied Research and Methods
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-17-720 Climate Change

In this report, we examine (1) what is known about methods used to 

estimate the potential economic effects of climate change in the United 

States; (2) what is known about the potential economic effects of climate 

change in the United States; and (3) to what extent have leading 

practices and experts found that information about the potential economic 

effects of climate change could inform efforts to manage climate risks 

across the federal government.

To address our audit objectives, we conducted a literature search for 

studies that (1) described the methods used to develop estimates of the 

economic effects of climate change in the United States and (2) produced 

estimates of such effects at a national scale, across different sectors and 

regions. We targeted the literature search to studies that were published 

in 2005 or later to encompass the 10 years of research preceding the 

start of our work. We identified relevant studies though three efforts: (1) 

searching literature databases, including Scopus, Web of Science, 

EBSCO, ProQuest, PolicyFile, and OCLC databases; (2) referrals from 

experts we interviewed during semistructured interviews (a discussion of 

these interviews is included below); and (3) reviewing citations in 

literature we reviewed. In total, we identified 30 studies that were relevant 

to our objectives and scope. We reviewed these studies to identify 

common themes related to the types of methods used to estimate the 

economic effects of climate change in the United States, the limitations of 

these methods, and what is known about the economic effects of climate 

change in the United States.

Of the 30 studies identified that described methods to estimate economic 

effects, 2 included estimates of the potential economic effects of climate 

change in the United States on a national-scale, across different sectors 

and regions—the American Climate Prospectus study by the Rhodium 

Group and the Climate Change Impacts and Risk Analysis study by the 

Environmental Protection Agency.1 Many experts we interviewed 

confirmed that these two studies represented the best available estimates 

to date. To review the two national-scale studies, we used standard 

economic principles, similar to those embodied in federal and agency 

guidance, including a review of the statement of objective and scope, 

methodology, analysis of effects, sensitivity analysis, and documentation. 

 1

Rhodium Group, LLC., American Climate Prospectus: Economic Risks in the United 

States (New York: October 2014), and Environmental Protection Agency, Office of 

Atmospheric Programs, Climate Change Impacts in the United States: Benefits of Global 

Action, EPA 430-R-15-001 (Washington, D.C.: 2015).

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 38 GAO-17-720 Climate Change

Through this assessment, we identified several limitations that affect the 

precision of the studies’ results and are common to the methods used to 

estimate the economic effects of climate change that were identified in 

literature we reviewed and by experts we interviewed. We discuss these 

limitations in the report. Finally, we interviewed the authors of these 

studies to discuss the studies’ methodologies and limitations.

In addition, to address our audit objectives we conducted 26 

semistructured interviews with economists and other experts we identified 

through snowball sampling based on expert referrals. Specifically, we 

interviewed experts who (1) were recommended by at least one other 

expert, (2) authored at least one study identified through our literature 

review, (3) were available and agreed to meet with us, and (4) had a 

range of views and expertise needed to address our objectives. For 

example, we interviewed experts who were knowledgeable enough about 

methods to estimate the economic effects of climate change impacts that 

they could discuss strengths and limitations of these methods. Repeated 

recommendations of the same experts indicated that we reached 

saturation of the field and were identifying the appropriate experts. We 

reviewed experts’ curricula vitae—to the extent they were available—to 

ensure that their areas of expertise and research were relevant to the 

engagement’s objectives and that we were gathering the range of 

expertise that we needed, including expertise on the strengths and 

limitations of the methods discussed in this report. During these 

interviews, we asked experts about (1) methods used to develop 

estimates of the economic effects of climate change impacts in the United 

States; (2) strengths and limitations these methods may have; (3) what is 

known about the economic effects of climate change in the United States; 

(4) potential federal fiscal exposures that could result from these effects; 

and (5) how, if at all, information about potential economic effects of 

climate change could inform climate risk management across the federal 

government. We interviewed 23 out of the 26 experts in person in select 

geographic areas: Berkeley, California; Stanford, California; Boulder, 

Colorado; Boston, Massachusetts; Cambridge, Massachusetts; and 

Washington, D.C. Because this is a nonprobability sample, our findings 

cannot be generalized to other experts we did not interview. Rather, these 

interviews provided us with illustrative examples of methods used to 

estimate economic effects of climate change, what is known about 

economic effects of climate change in the United States, and ways 

information about the potential economic effects of climate change could 

inform efforts to manage climate risks across the federal government. In 

addition, the specific areas of expertise varied among the experts we 
Appendix I: Objectives, Scope, and 

Methodology

Page 39 GAO-17-720 Climate Change

interviewed, so not all of the experts commented on all of the interview 

questions we asked.

Finally, to address our third audit objective, we reviewed leading practices 

and principles of risk management to identify key elements. We reviewed 

these practices and principles to identify how, if at all, economic 

information could be considered in risk management frameworks. 

National Academies’ leading practices on climate risk management 

characterize climate change adaptation as a risk management strategy, 

so we then identified how information about the economic costs and 

benefits of climate change could be considered to manage climate risks. 

We also reviewed our reports related to risk management and climate 

change to determine what federal actions could reduce fiscal exposure 

because of climate risks. We then determined how, if at all, what is known 

about economic effects of climate change could help implement or 

enhance these actions.

We conducted this performance audit from December 2015 to September 

2017 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.
Appendix II: GAO Contacts and Staff 

Acknowledgments

Page 40 GAO-17-720 Climate Change

J. Alfredo Gómez, (202) 512-3841 or gomezj@gao.gov

Oliver Richard, (202) 512-2700 or richardo@gao.gov

In addition to the individual contacts named above, Joseph Dean 

Thompson (Assistant Director), Colleen Candrl, Lilia Chaidez, Ellen Fried, 

Cindy Gilbert, Tim Guinane, Anne Hobson, Jeanette Soares, Sara 

Sullivan, Kiki Theodoropoulos, and Michelle R. Wong made key 

contributions to this report.

Appendix II: GAO Contacts and Staff 

Acknowledgments

GAO Contacts

Staff 

Acknowledgments

(100520)
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