5 ways climate change is making life more expensive (and what to do about it)
This story is part of, CNET’s coverage of the impact of climate change on a range of financial issues.
As temperatures warm and severe storms intensify, some visibly more damaging effects of climate change are taking their toll on our daily cost of living. From groceries to gasoline to insurance, here are five of the biggest categories where extreme weather events are fueling price hikes – and what we can do about it.
1. Food prices
We may be experiencing sticker shock at the supermarket, and climate change is partly to blame. The extreme weather events of the past year (floods, frosts and droughts) devastated farms and agricultural production and, in turn, the food supply chain – which was already reeling from labor shortages. work and bottlenecks linked to the pandemic. All of this reinforces global food inflation: year-over-year prices have been up 33% in September.
Coffee prices have been among the hardest hit. Droughts and extreme temperatures in Brazil, one of the world’s largest food suppliers, wiped out much of the country’s Arabica crop. Bean prices nearly doubled to their highest level in seven years, prompting many distributors and coffee shops to raise prices.
In the United States, wheat production has been attacked by droughts, with the United States Department of Agriculture finding that only 11% spring wheat from 2020 was in good condition. Production projections are at their lowest for 33 years, which could increase the cost of flour (and down the chain, products like bread and cereals).
Ways to save: While there isn’t much we can do to control prices at the grocery store, we can reduce our personal costs by reading sales and buying wholesale when possible to achieve lower unit prices. Joining a local food cooperative can be a way to support local farmers while saving on seasonal produce and items. You might also consider purchasing a freestanding freezer, a worthwhile investment for households with the space to stock up on essential groceries.
2. Health costs
It’s no secret that fossil fuel emissions, one of the main causes of global warming, can harm our health. A report from the Natural Resources Defense Council from May 2021 found that pollution can worsen asthma as well as cardiovascular, metabolic, nervous and reproductive processes. All of this can lead to potentially higher medical bills, making it harder to save money and make ends meet.
Ways to save: Where you live is central to this question. Is it sustainable for your health? Could you consider moving? If not, would investing in certain home improvements mitigate the risks to your health? Depending on the type of climate or environmental end, items such as air purifiers and water filtration systems may be worth the investment.
In addition, we can benefit from the help of medical providers for their advice and suggestions to access more affordable health care options. Physicians have a fiduciary responsibility to act in our best interests, including our financial needs. If a procedure or medication is out of budget, ask for effective and affordable alternatives if possible. Sites like HealthCareBlueBook.com share fair price estimates for common procedures and surgeries, which you can then use to claim lower outlays than estimated.
3. Energy bills
Higher temperatures can cause interruptions to electricity and utilities, which can lead to higher energy bills. Another reason why cooling costs can increase is the need for air conditioning during heat waves.
In Florida, for example, university researchers estimate that paying for air conditioning will become more financial stress without climate action: Floridians could face a $ 122 in electricity bills every year until 2040.
Ways to save: It is essential to reduce our home’s dependence on non-renewable energy., and energy efficient home appliances are investments that can reduce our utility costs in the long run. Additionally, utility or energy companies can offer free home energy audits and provide simple suggestions for weathering and making a home more efficient.
4. Claims insurance and home repairs
As inclement weather causes more property damage, insuring a home can become more difficult and more expensive. âSome of the main risks I see [related to climate change] is in the insurance premiums â, says Sanjay Patnaik, director of the Brookings Institute’s Center of Regulation and Markets. Patnaik’s research focuses on climate policy: âParticularly in areas where extreme weather events are on the rise, like wildfires in California or hurricanes in Florida, you will see increased insurance premiums.
It has already become a reality for landowners in these regions. Insurance companies have reportedly abandoned some policyholders or increased their premiums several times in a year, according to the New York Times. Many providers are even reducing coverage, expecting homeowners to pay out of pocket for things that were previously covered like fire mitigation or roof damage.
Ways to save: Existing homeowners worried about rising rates may want to call their insurer preemptively and ask them for ways to âfortifyâ their home to limit premiums. Potential buyers should be aware of a location’s climate risks: before going too far in the process, examine the area and determine if homes are easy to insure by speaking with trusted real estate agents, existing owners in the area. region and by contacting the insurers yourself. FEMA Flood Maps can identify if a house is in a flood zone.
Many states also offer insurance for homeowners who are struggling to find coverage. The National flood insurance program provides for qualifying homeowners, too. If an area has been affected by flash flooding but you are not in a technical “flood zone”, you can still purchase flood insurance, despite what you may have heard. “It’s a big abuse of language,” says Loretta Worters of the Insurance Information Institute.
Pro tip: Find out about the fire department in the city you want to live in. âInsurance companies prefer homes in areas with professional fire departments, as opposed to volunteer firefighters,â says Worters.
5. Mortgages and credit
Houses by the sea might become more difficult to reach: This study by the Swiss Finance Institute explains how banks can charge higher interest rates on mortgages backed by properties at higher sea level. The riskier a home’s location, the more a bank may worry about its sustainability – or a homeowner’s ability to make payments during a climate disaster.
At the same time, extreme weather conditions and new policies can lead to significant devaluations of certain asset classes, which can further strain bank balance sheets. The runoff can be a tighter loan market where access to credit decreases and interest rates rise.
Ways to save: The most important step in ensuring the best access to credit, whether it’s a loan, credit card or mortgage, is an exceptional credit score. A higher score means potentially lower interest rates and more savings for you. If you’re not yet focusing on your personal credit health, you can get started now: Download your free credit report and ask your bank for a free snapshot of your most recent credit score.
In summary: Climate change leads to extreme weather conditions, and the damage they cause results in high costs for the environment and our daily lives. Cost reduction measures are essential, as is building a general cash buffer for emergencies. “The imperative to save a lot of money … is at an all time high,” says Hilary Hendershott, founder of Hendershott Wealth Management in California. “Without assets that you have an agency on, you will likely have a lot less options. Money solves so many problems.” If you live in a particularly vulnerable part of the country, cutting back on spending to help consolidate funds can help mitigate these and other financial shocks.