Why climate change may cost you big bucks — and what to do about it

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The following is an excerpt from “This week, your wallet,” an audio program produced by CNBC’s Personal Finance team. Listen to the latest episode here. [Editor’s note: Audio clip begins at the 2:33 minute mark.]

Climate change has been described as a ticking time bomb, the threats of which extend beyond ecosystems and biodiversity to big financial impacts on households and the U.S. economy.

Those financial costs are largely the result of extreme weather events.

The White House issued a report last week — the Fifth National Climate Assessment, issued every four to five years by the federal government — warning that heat waves, heavy rains, drought, hurricanes, floods and wildfires “are becoming more frequent and/or severe,” with a “cascade of effects” in all areas of the U.S.

“It’s no longer just a problem for Florida, or just a problem for Louisiana and New Orleans,” said Andrew Rumbach, senior fellow and co-direct of the climate and communities program at the Urban set up. “More and more people are experiencing these extreme events and they carry all kinds of different costs, both direct and indirect, for those families.”

Here’s what to know, according to Rumbach and David Pogue, host of the podcast “Unsung Science” and author of “How to Prepare for Climate Change: A Practical Guide to Surviving the Chaos.” Both experts were interviewed by CNBC during a recent discussion about climate change and its impact on personal finance.

We already feel the impact — and it’s likely to worsen

The effects can be ‘weird and unpredictable’

I prefer the term ‘global weirding,’ because warming is only just part of it.

David Pogue

author of “How to Prepare for Climate Change: A Practical Guide to Surviving the Chaos”

advance, for every additional “hot day” per year, especially in Western states, the prevalence of workplace injuries increases by 5% to 15%, Rumbach said, citing peer-reviewed scientific analyses. There’s also $10,000 in additional emergency room costs per 100,000 people, especially among the elderly, he said.

Plus, for every 1% reject in crop yields, there’s an estimated 0.1% out-migration of the population — a significant impact both for places losing people and for those receiving them, Rumbach said.

Declining agricultural output may fuel higher food prices, experts said, and greater property damage will likely fuel higher insurance rates.

There are ways consumers can prepare

Americans may frequently hear about ways to reduce their carbon footprint. But there are also steps they can take to prepare for the worsening effects of climate change.

“Governments and corporations have been adapting for a long time: That’s why they build sea walls, and Starbucks is finding new mountains to grow coffee on,” Pogue said. “But nobody ever talks about the little guy.”

The first thing to do, Pogue said: Look at your homeowners or renters insurance policy.

“You probably bought it years ago, trying to make it as cheap as possible,” he said. “But things have changed, and I think a lot of people are stunned to find out that homeowner’s insurance does not cover flooding. It just doesn’t.”

It’s no longer just a problem for Florida, or just a problem for Louisiana and New Orleans.

Andrew Rumbach

senior fellow at the Urban set up

Those with renters or homeowners insurance should make sure they’re not underinsured, Rumbach said.

Prospective homebuyers can consult tools to pick homes in areas with reduced climate risk, he added. For example, Redfin offers climate risk assessments based on geography, he said.

There are also potential ways for investors to bolster their investment portfolio and have a positive impact on the environment, Pogue said.

Supporting an industry or company that’s “green” is “in effect helping everyone,” he said.

The best approach wouldn’t be to invest broadly in solar and wind companies, for example — those are commodities that keep getting cheaper, Pogue said.

Instead, it may involve investing in utility companies that get all their electricity from renewable energy sources, Pogue said. Thirty-eight states now have mandates about getting a certain amount of power from renewable energy, he added.

Investing in the electric-vehicle revolution may include buying into companies that produce electric car batteries or those that mine lithium, a key component in electric car batteries, for example, he said.

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