The Crushing Cost of Climate Change: Why We Must Rethink America’s Infrastructure Investments

Shawn Polito uses a sledgehammer to knock apart timbers on the Long Beach, New York boardwalk, which was devastated by Superstorm Sandy.

The mega-drought squeezing Californians’ water supply and the state’s $45 billion-per-year agriculture industry is just the latest example of how climate change is threatening to drain state and local government budgets and hurt consumers’ pocketbooks and businesses’ bottom lines. This week, President Barack Obama’s State, Local and Tribal Leaders Task Force on Climate Preparedness and Resilience is meeting in Los Angeles to tackle a big question: How can the federal government help communities upgrade the United States’ infrastructure to withstand more frequent and severe heat waves, storms, floods, and other climate-change-driven events?  On Capital Hill, lawmakers are seeking answers to similar questions this week at the Senate Homeland Security Committee’s hearing on “Extreme Weather: the Costs of Not Being Prepared.”

Americans rightly expect that the infrastructure we all rely on every day—from roads and bridges to power plants, electric grids, drinking water, and wastewater treatment facilities—is safe and structurally sound. Yet last year, the American Society of Civil Engineers gave our nation’s infrastructure a D+ rating and estimated that the investments needed to modernize it would reach $3.6 trillion by 2020.

Adapting our infrastructure to climate change: How much will it cost?

The annual costs of adapting to climate change could be between several billion dollars and tens of billions of dollars per sector. These conclusions are based on published studies, largely from peer-reviewed journals. Below is a list of actions to maintain and protect infrastructure and the rough annual costs in 2010 dollars.

  • Improve coastal protection: $2 billion to $3 billion through 2100
  • Maintain and make design changes for paved and unpaved roads: Around $2 billion in 2050
  • Strengthen vulnerable bridges: Around $2 billion through 2090
  • Maintain, replace, and improve wastewater treatment facilities: Around $5 billion to $10 billion through 2050
  • Take action to protect and change water-management practices for drinking water utilities: Around $14 billion to $26 billion through 2050

Source: Fran Sussman, “What Will it Cost the United States to Adapt to Climate Change?”, Climate Dollars & Sense, October 21, 2013, available at

According to the Congressional Budget Office, or CBO, state and local governments shoulder about 75 percent of total public spending on transportation and water infrastructure, not including financing from federal grants and loan subsidies; the federal government accounts for the other 25 percent. “Cities at Work,” a new Center for American Progress Action Fund report, concludes that “through intelligent infrastructure investments, cities can save money, protect the environment, provide jobs to members of their community that need them, and mitigate climate change.”

State and city leaders increasingly recognize that if they do not manage extreme weather and other climate-change-related risks today, it will cost significantly more to address them tomorrow. The C40 Cities Climate Leadership Group, a network of the world’s megacities that is working to address climate change, reports that 98 percent of urban leaders surveyed identified climate change as a major risk to their city. What’s more, those leaders are not waiting for another destructive climate event such as Superstorm Sandy to do something about it.

The C40 survey showed that cities collectively reported 1,024 actions they are taking to adapt to climate change, almost half of which are citywide initiatives. A recent CAP analysis, “Climate Change: An Unfunded Mandate,” suggests that the total cost of routine maintenance and actions to build resilient infrastructure will conservatively be in the tens of billions of dollars annually for just a portion of the necessary actions. (see text box) The full costs—which also include rebuilding and restoring services after extreme events and maintaining and making design changes for the full range of critical infrastructure—could easily rise to hundreds of billions of dollars each year.

In Grand Rapids, Michigan, Mayor George K. Heartwell—a member of President Obama’s Task Force on Climate Preparedness and Resilience—is making investments to stop sewage from seeping into the Grand River. Sewage overflows have become a growing problem for Grand Rapids as more frequent and more severe rainstorms inundate the city. It plans to spend more than $240 million—more than $1,200 per resident—to protect the Grand River’s water quality and upgrade the sewer system. Not all cities will face the same risks as Grand Rapids, but if these costs are representative of the magnitude of per-capita expenses nationally, then the price tag for addressing climate threats at the local level could be more than $400 billion over the next 20 years.

President Obama’s Climate Action Plan directs federal agencies to “encourage and support smarter, more resilient investments.” Updating federal grant programs is one way for agencies to meet that objective. Some agencies have taken small steps in this direction. The Department of Housing and Urban Development, or HUD, and the Department of Transportation, or DOT, for example, made some Superstorm Sandy disaster-recovery assistance available for resilience projects, as advocated in “Shelter from the Superstorm,” a recent CAP report.

But federal agencies need to do much more—and act now—to help states and cities address the skyrocketing costs of climate change. DOT, HUD, the Environmental Protection Agency, the Army Corps of Engineers, and other agencies should only fund infrastructure project designs that can withstand more extreme heat, floods, and storms. HUD should ensure that the roughly $3 billion available annually for Community Development Block Grants, or CDBGs, support climate-resilient housing and other projects.Similarly, DOT should ensure that the $600 million available in 2014 for Transportation Investment Generating Economic Recovery, or TIGER, discretionary grants—which help improve our nation’s infrastructure—support storm-ready roads, rails, transit systems, and ports. At a minimum, President Obama should require that all federal infrastructure investments meet the resilience infrastructure guidelines developed by the Hurricane Sandy Rebuilding Task Force, which are similar to those supported in “Infrastructure and Resilience,” a recent CAP report.

But executive power only extends so far. As described in “Storm-Ready Cities,” another recent CAP report, local and state officials need to work closely with the private sector and neighboring communities and states to develop infrastructure designs that are cost effective and boost productivity by integrating with other infrastructures where possible. To minimize costly disaster damages, cities also need to invest in green infrastructure—parks and green roofs that soak up rainwater and reduce stormwater runoff—and the restoration of natural systems in coastal areas, such as wetlands and oyster reefs that serve as buffers to storm surges and provide other environmental and economic benefits. In extreme cases, states can use voluntary buyouts to allow homeowners to sell property in flood-prone areas to the government, which then restores the land to its natural state to reduce future flooding and disaster costs, create new public recreational spaces, and enhance wildlife habitat.

In addition, cities need to develop sound hazard-mitigation plans that account for rising climate change risks and update building codes to reduce future extreme weather damage and other climate change threats to building safety. As a first step, city leaders can draw on the model-building codes developed by the Hurricane Sandy Rebuilding Task Force.

State and local governments also need to work with utilities to increase electricity grid resilience by putting vulnerable power lines underground where possible, creating incentives for consumers to install smart meters, and distributing and decentralizing clean power around the grid so that communities are not as vulnerable to massive outages.

Lastly, Congress should swiftly enact President Obama’s proposal to create a National Infrastructure Bank to use $10 billion in public funding to leverage private investment in national and regional infrastructure priorities. Sens. Mark Warner (D-VA) and Roy Blunt (R-MO) revived this idea with bipartisan support in November. Their bill, the Building and Renewing Infrastructure for Development and Growth in Employment Act, or BRIDGE Act, calls for an “infrastructure financing authority” with $10 billion in financing. According to Sen. Warner’s office, these funds could help unlock an additional $300 billion for new transportation projects. This national financing entity could also help coordinate national and regional infrastructure and resilience planning. Until Congress enacts this proposal, the White House should task agency heads with crafting a national strategy for infrastructure resilience, as advocated by CAP in “Infrastructure and Resilience.” Such a strategy would expand and harmonize federal support to states and cities, as well as coordinate investments regionally, to optimize infrastructure investments.

Closing America’s widening infrastructure investment gap will require identifying and mobilizing new resources well beyond the $10 billion proposed for the National Infrastructure Bank. Nonetheless, by supporting the above actions, President Obama’s task force, federal agencies, state and local governments, and Congress would go a long way toward strengthening our nation’s infrastructure and economy in the face of a changing climate.

Cathleen Kelly is a Senior Fellow at the Center for American Progress. Fran Sussman is an economist and independent consultant with almost three decades of experience analyzing issues affecting the environment and climate change.

Thank you to Bracken Hendricks, Dan Weiss, Michael Conathan, Meghan Miller, Carl Chancellor, Akeya Dickson, and Anne Paisley for their contributions to this column.