Budget Issues: Opportunities to Reduce Federal Fiscal Exposures Through Greater Resilience to Climate Change and Extreme Weather
Published: 2014-07-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Certain types of extreme weather events have become more frequent or intense according to the United States Global Change Research Program, including prolonged periods of heat, heavy downpours, and, in some regions, floods and droughts. While it is not possible to link any individual weather event to climate change, the impacts of these events affect many sectors of our economy, including the budgets of federal, state, and local governments.
GAO focuses particular attention on government operations it identifies as posing a “high risk” to the American taxpayer and, in February 2013, added to its High Risk List the area Limiting the Federal Government's Fiscal Exposure by Better Managing Climate Change Risks . GAO's past work has identified a variety of fiscal exposures—responsibilities, programs, and activities that may explicitly or implicitly expose the federal government to future spending.
This testimony is based on reports GAO issued from August 2007 to May 2014, and discusses (1) federal fiscal exposures resulting from climate-related and extreme weather impacts on critical infrastructure and federal lands, and (2) how improved federal technical assistance to all levels of government can help reduce climate-related fiscal exposures.
GAO is not making new recommendations but has made numerous recommendations in prior reports on this topic, which are in varying states of implementation by the Executive Office of the President and federal agencies.
section_title: What GAO Found
paragraphs: Climate change and related extreme weather impacts on infrastructure and federal lands increase fiscal exposures that the federal budget does not fully reflect. Investing in resilience—actions to reduce potential future losses rather than waiting for an event to occur and paying for recovery afterward—can reduce the potential impacts of climate-related events. Implementing resilience measures creates additional up-front costs but could also confer benefits, such as a reduction in future damages from climate-related events. Key examples of vulnerable infrastructure and federal lands GAO has identified include:
Department of Defense (DOD) facilities. DOD manages a global real-estate portfolio that includes over 555,000 facilities and 28 million acres of land with a replacement value DOD estimates at close to $850 billion. This infrastructure is vulnerable to the potential impacts of climate change and related extreme weather events. For example, in May 2014, GAO reported that a military base in the desert Southwest experienced a rain event in August 2013 in which about 1 year's worth of rain fell in 80 minutes. The flooding caused by the storm damaged more than 160 facilities, 8 roads, 1 bridge, and 11,000 linear feet of fencing, resulting in an estimated $64 million in damages.
Other large federal facilities. The federal government owns and operates hundreds of thousands of other facilities that a changing climate could affect. For example, the National Aeronautics and Space Administration (NASA) manages more than 5,000 buildings and other structures. GAO reported in April 2013 that, in total, these NASA assets—many of which are in coastal areas vulnerable to storm surge and sea level rise—represent more than $32 billion in current replacement value.
Federal lands. The federal government manages nearly 30 percent of the land in the United States—about 650 million acres of land—including 401 national park units and 155 national forests. GAO reported in May 2013 that these resources are vulnerable to changes in the climate, including the possibility of more frequent and severe droughts and wildfires. Appropriations for federal wildland fire management activities have tripled since 1999, averaging over $3 billion annually in recent years.
GAO has reported that improved climate-related technical assistance to all levels of government can help limit federal fiscal exposures. The federal government invests tens of billions of dollars annually in infrastructure projects that state and local governments prioritize, such as roads and bridges. Total public spending on transportation and water infrastructure exceeds $300 billion annually, with about 25 percent coming from the federal government and the rest from state and local governments. GAO's April 2013 report on infrastructure adaptation concluded that the federal government could help state and local efforts to increase their resilience by (1) improving access to and use of available climate-related information, (2) providing officials with improved access to technical assistance, and (3) helping officials consider climate change in their planning processes.

section_title: Letter
paragraphs: I am pleased to be here today to discuss our work on reducing federal  fiscal exposures posed by climate change and extreme weather events.  Climate change affects the American people in far-reaching ways,  according to the National Research Council (NRC) and the United States  Global Change Research Program’s (USGCRP) May 2014 National  Climate Assessment. Certain types of extreme weather events with links  to climate change have become more frequent or intense according to  NRC and USGCRP, including prolonged periods of heat; heavy  downpours; and, in some regions, floods and droughts. In addition,  according to NRC and USGCRP, warming causes sea level to rise, sea  ice to melt, and oceans to become more acidic as they absorb carbon  dioxide. While it is not possible to link any individual weather event to  climate change, these and other observed impacts of such events disrupt  people’s lives and affect many sectors of our economy, including the  budgets of federal, state, and local governments.
Extreme weather events have cost the nation tens of billions of dollars in  damages over the past decade. In 2012, for example, Superstorm Sandy  alone caused tens of billions of dollars in damages to buildings, utilities,  transportation systems, and other infrastructure. Heavy rainfall and  snowfall events (which increase the risk of flooding) and heatwaves are  generally becoming more frequent, consistent with theoretical  expectations for a warmer and moister atmosphere due to changes in the  climate, according to a February 2014 joint report by the U.S. National  Academy of Sciences and the Royal Society in the United Kingdom. The  federal budget, however, generally does not account for disaster  assistance provided in cases such as Superstorm Sandy—for which  Congress provided about $60 billion in budget authority for such  assistance—or the long-term impacts of climate change on existing  federal infrastructure and programs. Because of these significant  financial risks and the nation’s fiscal condition, in February 2013, we  added Limiting the Federal Government’s Fiscal Exposure by Better  Managing Climate Change Risks to our list of high-risk areas.
One way to reduce the potential impacts of climate change is to invest in  enhancing resilience. The National Academies define resilience as the  ability to prepare and plan for, absorb, recover from, and more  successfully adapt to adverse events. As we reported in April 2013,  enhanced resilience results from actions to reduce potential future losses,  rather than waiting for an event to occur and paying for recovery  afterward. Enhancing resilience has begun to receive more attention  because greenhouse gases that are in the atmosphere could continue  altering the climate system into the future, regardless of efforts to control  emissions.
Implementing resilience measures creates additional up-front costs but  could also confer benefits, such as a reduction in future damages from  climate-related events. Federal efforts have begun to focus on enhancing  resilience and providing information to state and local decision makers so  they can make more informed decisions about fiscal exposure to potential  climate-related events. Decisions to adapt infrastructure to climate  change can also depend on many other factors, such as the availability of  substitutes or the remaining useful life of existing infrastructure.
My testimony today discusses (1) federal fiscal exposures resulting from  climate-related and extreme weather impacts on critical infrastructure and  federal lands, and (2) how improved federal technical assistance to all  levels of government can help reduce climate-related fiscal exposures.  My testimony is based on reports we issued from August 2007 to May  2014. Detailed information on our scope and methodology for our prior  work can be found in those reports. The work this testimony is based on  was conducted 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.
subsections: section_title: Climate-Related and Extreme Weather Impacts on Infrastructure and Federal Lands Increase Federal Fiscal Exposures
paragraphs: As our past work has found, climate-related and extreme weather impacts  on physical infrastructure such as buildings, roads, and bridges, as well  as on federal lands, increase federal fiscal exposures. Infrastructure is  typically designed to withstand and operate within historical climate  patterns. However, according to NRC, as the climate changes, historical  patterns do not provide reliable predictions of the future, in particular,  those related to extreme weather events.may underestimate potential climate-related impacts over their design life,  which can range up to 50 to 100 years. Federal agencies responsible for  the long-term management of federal lands face similar impacts. Climate-  Thus, infrastructure designs  related impacts can increase the operating and maintenance costs of  infrastructure and federal lands or decrease the infrastructure’s life span,  leading to increased fiscal exposures for the federal government that are  not fully reflected in the budget. Key examples from our recent work  include (1) Department of Defense (DOD) facilities, (2) other large federal  facilities such as National Aeronautics and Space Administration (NASA)  centers, and (3) federal lands such as National Parks.
subsections: section_title: DOD Facilities
paragraphs: DOD manages a global real-estate portfolio that includes over 555,000  facilities and 28 million acres of land with a replacement value that DOD  estimates at close to $850 billion. Within the United States, the  department’s extensive infrastructure of bases and training ranges— critical to maintaining military readiness—extends across the country,  including Alaska and Hawaii. DOD incurs substantial costs for  infrastructure, with a base budget for military construction and family  housing totaling more than $9.8 billion in fiscal year 2014. As we reported  in May 2014, this infrastructure is vulnerable to the potential impacts of  climate change, including increased drought and more frequent and  severe extreme weather events in certain locations.
In its 2014 Quadrennial Defense Review, DOD stated that the impacts of  climate change may increase the frequency, scale, and complexity of  future missions, while undermining the capacity of domestic installations  to support training activities. For example, in our May 2014 report on  DOD infrastructure adaptation, we found that drought contributed to  wildfires at an Army installation in Alaska that delayed certain units’  training (see fig. 1). systems in training and decreased the realism of the training.
GAO-14-446. Adaptation is defined as adjustments to natural or human systems in  response to actual or expected climate change.
section_title: Other Large Federal Facilities
paragraphs: The federal government owns and operates hundreds of thousands of  non-defense buildings and facilities that a changing climate could affect.  For example, NASA’s real property holdings include more than 5,000  buildings and other structures such as wind tunnels, laboratories, launch  pads, and test stands. In total, these NASA assets—many of which are  located in vulnerable coastal areas—represent more than $32 billion in  current replacement value. Our April 2013 report on infrastructure  adaptation showed the vulnerability of Johnson Space Center and its  mission control center, often referred to as the nerve center for America’s  human space program. As shown in figure 3, the center is located in  Houston, Texas, near Galveston Bay and the Gulf of Mexico. Johnson  Space Center’s facilities—conservatively valued at $2.3 billion—are  vulnerable to storm surge and sea level rise because of their location on  the Gulf Coast.
The federal government manages nearly 30 percent of the land in the  United States for a variety of purposes, such as recreation, grazing,  timber, and habitat for fish and wildlife. Specifically, federal agencies  manage natural resources on about 650 million acres of land, including  401 national park units and 155 national forests. As we reported in May  2013, these resources are vulnerable to changes in the climate, including  increases in air and water temperatures, wildfires, and drought; forests  stressed by drought becoming more vulnerable to insect infestations;  rising sea levels; and reduced snow cover and retreating glaciers. In  addition, various species are expected to be at risk of becoming extinct  due to the loss of habitat critical to their survival. Many of these changes  have already been observed on federally managed lands and waters and  are expected to continue, and one of the areas where the federal  government’s fiscal exposure is expected to increase is in its role as the  manager of large amounts of land and other natural resources. According  to USGCRP’s May 2014 National Climate Assessment, hotter and drier  weather and earlier snowmelt mean that wildfires in the West start earlier  in the spring, last later into the fall, and burn more acres. Appropriations  for the federal government’s wildland fire management activities have  tripled, averaging over $3 billion annually in recent years, up from about  $1 billion in fiscal year 1999.
section_title: Improved Climate- Related Technical Assistance to All Levels of Government Can Help Limit Federal Fiscal Exposures
paragraphs: As we have previously reported, improved climate-related technical  assistance to all levels of government can help limit federal fiscal  exposures. Existing federal efforts encourage a decentralized approach to  such assistance, with federal agencies incorporating climate-related  information into their planning, operations, policies, and programs and  establishing their own methods for collecting, storing, and disseminating  climate-related data. Reflecting this approach, technical assistance from  the federal government to state and local governments also exists in an  uncoordinated confederation of networks and institutions. As we reported  in our February 2013 high-risk update, the challenge is to develop a  cohesive approach at the federal level that also informs action at the state  and local levels.
subsections: section_title: Federal Decision Makers
paragraphs: The Executive Office of the President and federal agencies have many  efforts underway to increase the resilience of federal infrastructure and  programs. For example, executive orders issued in 2009 and 2013  directed agencies to create climate change adaptation plans which  integrate consideration of climate change into their operations and overall  mission objectives, including the costs and benefits of improving climate  adaptation and resilience with real-property investments and construction  of new facilities.
Recognizing these and many other emerging efforts, our prior work  shows that federal decision makers still need help understanding how to  build resilience into their infrastructure and planning processes. For  example, in our May 2014 report, we found that DOD requires selected  infrastructure planning efforts for existing and future infrastructure to  account for climate change impacts, but its planners did not have key  information necessary to make decisions that account for climate and   We recommended that DOD provide further information to  related risks. installation planners and clarify actions that account for climate change in  planning documents. DOD concurred with our recommendations.
GAO-14-446. even with the creation of strategic policy documents and high-level  agency guidance.
section_title: State and Local Decision Makers
paragraphs: The federal government invests tens of billions of dollars annually in  infrastructure projects prioritized and supervised by state and local  governments. In total, the United States has about 4 million miles of roads  and 30,000 wastewater treatment and collection facilities. According to a  2010 Congressional Budget Office report, total public spending on  transportation and water infrastructure exceeds $300 billion annually, with  roughly 25 percent of this amount coming from the federal government   However, the  and the rest coming from state and local governments. federal government plays a limited role in project-level planning for  transportation and wastewater infrastructure, and state and local efforts to  consider climate change in infrastructure planning have occurred primarily  on a limited, ad hoc basis. The federal government has a key interest in  helping state and local decision makers increase their resilience to  climate change and extreme weather events because uninsured losses  may increase the federal government’s fiscal exposure through federal  disaster assistance programs.
Congressional Budget Office, Public Spending on Transportation and Water  Infrastructure, Pub. No. 4088 (Washington, D.C.: November 2010). the national gross domestic product by about $7.8 billion.shows Louisiana State Highway 1 leading to Port Fourchon.
We found in April 2013, that infrastructure decision makers have not  systematically incorporated potential climate change impacts in planning  for roads, bridges, and wastewater management systems because,  among other factors, they face challenges identifying and obtaining  available climate change information best suited for their projects.when good scientific information is available, it may not be in the  actionable, practical form needed for decision makers to use in planning  and designing infrastructure. Such decision makers work with traditional   Even  engineering processes, which often require very specific and discrete  information. Moreover, local decision makers—who, in this case,  specialize in infrastructure planning, not climate science—need  assistance from experts who can help them translate available climate  change information into something that is locally relevant. In our site visits  to several locations where decision makers overcame these challenges— including Louisiana State Highway 1—state and local officials  emphasized the role that the federal government could play in helping to  increase local resilience.
Any effective adaptation strategy must recognize that state and local  governments are on the front lines in both responding to immediate  weather-related disasters and in preparing for the potential longer-term  impacts associated with climate change. We reported in October 2009,  that insufficient site-specific data—such as local temperature and  precipitation projections—complicate state and local decisions to justify  the current costs of adaptation efforts for potentially less certain future  benefits. We recommended that the appropriate entities within the  Executive Office of the President develop a strategic plan for adaptation  that, among other things, identifies mechanisms to increase the capacity  of federal, state, and local agencies to incorporate information about  current and potential climate change impacts into government decision  making. USGCRP’s April 2012 strategic plan for climate change science  recognizes this need, by identifying enhanced information management  and sharing as a key objective. According to this plan, USGCRP is  pursuing the development of a global change information system to  leverage existing climate-related tools, services, and portals from federal  agencies.
In our April 2013 report, we concluded that the federal government could  help state and local efforts to increase their resilience by (1) improving  access to and use of available climate-related information, (2) providing  officials with improved access to technical assistance, and (3) helping  officials consider climate change in their planning processes. As a result, we recommended, among other things, that the Executive Director  of USGCRP or other federal entity designated by the Executive Office of  the President work with relevant agencies to identify for decision makers  the “best available” climate-related information for infrastructure planning  and update this information over time, and to clarify sources of local  assistance for incorporating climate-related information and analysis into  infrastructure planning, and communicate how such assistance will be  provided over time.
These entities have not directly responded to our recommendations, but  the President’s June 2013 Climate Action Plan and November 2013  Executive Order 13653 drew attention to the need for improved technical  assistance. For example, the Executive Order directs numerous federal  agencies, supported by USGCRP, to work together to develop and  provide authoritative, easily accessible, usable, and timely data,  information, and decision-support tools on climate preparedness and  resilience. In addition, on July 16, 2014, the President announced a  series of actions to help state, local, and tribal leaders prepare their  communities for the impacts of climate change by developing more  resilient infrastructure and rebuilding existing infrastructure stronger and  smarter.
We have work under way assessing the strengths and limitations of  governmentwide options to meet the climate-related information needs of  federal, state, local, and private sector decision makers. We also have  work under way exploring, among other things, the risks extreme weather  events and climate change pose to public health, agriculture, public  transit systems, and federal insurance programs. This work may help  identify other steps the federal government could take to limit its fiscal  exposure and make our communities more resilient to extreme weather  events.
Chairman Murray, Ranking Member Sessions, and Members of the  Committee, this concludes my prepared statement. I would be pleased to  answer any questions you have at this time.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: If you or your staff members have any questions about this testimony,  please contact me at (202) 512-3841 or gomezj@gao.gov. Contact points  for our Offices of Congressional Relations and Public Affairs may be  found on the last page of this statement. Alfredo Gomez, Director;  Michael Hix, Assistant Director; Jeanette Soares; Kiki Theodoropoulos;  and Joseph Dean Thompson made key contributions to this testimony.
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