Climate Change: Information on Potential Economic Effects Could Help Guide Federal Efforts to Reduce Fiscal Exposure
Released: 2017-10-24T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: 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.

section_title: What GAO Found
paragraphs: 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).

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.

section_title: What GAO Recommends
paragraphs: 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.

section_title: Letter
paragraphs: 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. 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. 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. For example, according to  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.

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. 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. 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. 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. 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,  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. 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.

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. As a part of this work,  we reviewed 30 studies published in 2005 or later and identified the only  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. 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. 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.
subsections: section_title: Background
paragraphs: 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,  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. 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, have led specific government-wide climate information efforts,  such as USGCRP’s May 2014 Third National Climate Assessment, which  summarizes the impacts of climate change on the United States, now and  in the future.

section_title: 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
paragraphs: 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.
subsections: section_title: Methods Are Based on Developing Research
paragraphs: 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  detailed information about specific regions or sectors within a country.  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:

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— within different regions of the country. 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.

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. 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  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.

section_title: Methods Are Complex Because They Link Complicated Scientific and Economic Models
paragraphs: 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 Greenhouse- gas 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  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.  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  effects of climate change. 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. 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.

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. 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.

section_title: Methods, and the National-Scale Studies That Use Them, Produce Imprecise Results Because of Information and Modeling Limitations
paragraphs: 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.
subsections: section_title: Climate Modeling Uncertainty
paragraphs: 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. 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. 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. 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.

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.

section_title: Limited Information on Which to Base Sector-Specific Models
paragraphs: 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  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. 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.

section_title: Incomplete Coverage of Sectors, Interactions, and Impacts
paragraphs: 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.

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.

section_title: Challenges of Modeling over Long Time Frames
paragraphs: 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  associated with climate change, is subject to much debate. 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. 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  of uncertainty. 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.

section_title: Methods Can Convey Useful Insight into Broad Themes about Potential Climate Damages in the United States
paragraphs: 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. In addition, since  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.

section_title: National-Scale Studies and Experts Suggested That Potential Economic Effects of Climate Change in the United States Could Be Significant and Unevenly Distributed
paragraphs: 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.
subsections: section_title: National-Scale Studies and Experts Suggested That Potential Economic Effects of Climate Change in the United States Could Be Significant
paragraphs: 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  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.

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.

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. The results of this  study, shown in table 2, were primarily presented in terms of the benefits  associated with significant global action to reduce greenhouse gas  emissions.

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). 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. EPA officials told us  that the scenario that led to this estimate was added as a result of  reviewer comments.

section_title: National-Scale Studies and Experts Interviewed Suggested That the Potential Economic Effects of Climate Change Could Be Unevenly Distributed across Sectors and Regions
paragraphs: 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 sector- specific 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.  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.

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. 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. Figure 2 shows examples of  potential economic effects in different U.S. geographic areas.

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. 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  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.

section_title: According to Leading Practices and Experts, Information on the Potential Economic Effects of Climate Change Could Help Decision Makers Better Manage Climate Risks
paragraphs: 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.
subsections: section_title: Existing Information on Potential Economic Effects Could Help Identify Significant Climate Risks to the Federal Government
paragraphs: 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  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.  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. 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  for responding to the risks—and management may need to conduct  periodic risk assessments.

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. 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. 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. 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. Then, in July 2015, we reported that the  federal government does not adequately plan for disaster resilience and  that most federal funding for hazard mitigation is available after a  disaster.

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. 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. 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.

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

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. 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 government- wide priorities to manage significant climate risks, which we  recommended in May 2011 to reduce federal fiscal exposure and  continue to believe is important. 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.

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.

section_title: Additional Information on Potential Economic Effects Could Help Decision Makers’ Efforts to Manage Climate Risks
paragraphs: 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  efficient resource allocation through well-informed decision making in  certain circumstances.

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. 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. 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.

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.  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.

section_title: Conclusions
paragraphs: 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 national- scale 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  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.

section_title: Recommendation for Executive Action
paragraphs: 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)

section_title: Agency Comments
paragraphs: 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   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.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: 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. 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.

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  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.

section_title: Appendix II: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts

section_title: Staff Acknowledgments
paragraphs: 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.

Fast facts: Climate-related impacts, such as coastal property damage, have already cost the federal government billions of dollars, and these costs will likely rise in the future. We found that information on the economic effects of climate change is developing and imprecise, but it can convey insights into the nation's regions and sectors that could be most affected.

As an initial step in establishing government-wide priorities to manage climate risks, we recommended that the Executive Office of the President use information on economic effects to help identify significant climate risks and craft appropriate federal responses.

Question-summary annotations: questions: question: What do the two available national-scale studies examining climate change suggest?
answer: 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.
child_questions: question: What specifically did one of the studies estimate?
answer: 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.

question: Why might the Southeast face greater effects of climate change?
answer: Also, under this study, the Southeast likely faces greater effects than other regions because of coastal property damages (see figure).

questions: question: What could inform decision makers about damages in different US sectors?
answer: Information about the potential economic effects of climate change could inform decision makers about significant potential damages in different U.S. sectors or regions.
child_questions: question: How could this information be helpful?
answer: 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.

question: What has the federal government not yet done regarding climate change?
answer: 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.

questions: question: What has cost the federal government $350 billion?
answer: 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.
child_questions: question: How will this cost change in the future?
answer: These costs will likely rise as the climate changes, according to the U.S. Global Change Research Program.

question: What did GAO put on its High-Risk List?
answer: In February 2013, GAO included Limiting the Federal Government's Fiscal Exposure by Better Managing Climate Change Risks on its High-Risk List.

questions: question: What was GAO asked to review?
answer: GAO was asked to review the potential economic effects of climate change and risks to the federal government.
child_questions: question: What does GAO's report examine?
answer: 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.

question: How did GAO get information for its review?
answer: 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.