Key Issues > Limiting the Federal Government's Fiscal Exposure by Better Managing Climate Change Risks - High Risk Issue
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Limiting the Federal Government's Fiscal Exposure by Better Managing Climate Change Risks - High Risk Issue

Climate change presents a significant financial risk to the federal government.

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This key issue page is related to an area on GAO’s 2019 High Risk Update, visit the related High Risk area.

As first stated in GAO's 2013 High Risk report, climate change is considered by many to be a complex, crosscutting issue that poses risks to many environmental and economic systems—including agriculture, infrastructure, ecosystems, and human health—and therefore presents a significant financial risk to the federal government. Among other reported impacts, climate change could threaten coastal areas with rising sea levels, alter agricultural productivity, and increase the intensity and frequency of severe weather events. As observed by the United States Global Change Research Program (USGCRP), the impacts and costs of weather disasters—resulting from floods, droughts, and other events—will increase in significance as what are considered "rare" events become more common and intense due to climate change. In addition, less acute changes, such as sea level rise, could also result in significant long-term impacts. According to the National Research Council (NRC), although the exact details cannot be predicted with certainty, there is a clear scientific understanding that climate change poses serious risks to human society and many of the physical and ecological systems upon which society depends, with the specific impacts of concern, and the relative likelihood of those impacts, varying significantly from place to place and over time.

The rising number of natural disasters and increasing reliance on the federal government for assistance is a key source of federal fiscal exposure. As of December 2018, total federal funding for disaster assistance since 2005 is approaching half a trillion dollars (about $430 billion), most recently for catastrophic hurricanes, flooding, wildfires, and other losses in 2017 and 2018. The costliness of disasters is projected to increase as extreme weather events become more frequent and intense due to climate change.  There are five areas where government-wide action is needed to reduce federal fiscal exposure, including, but not limited to, the federal government’s role as (1) the insurer of property and crops; (2) the provider of disaster aid; (3) the owner or operator of infrastructure; (4) the leader of a strategic plan that coordinates federal efforts and informs state, local, and private-sector action; and (5) the provider of data and technical assistance to decision makers. The federal government needs a cohesive strategic approach with strong leadership and the authority to manage climate change risks across the entire range of federal activities.

Neither global efforts to mitigate climate change causes nor regional adaptation efforts currently approach the scales needed to avoid substantial damages to the U.S. economy, environment, and human health over the coming decades, according to the November 2018 Fourth National Climate Assessment.

Congress continues to show its commitment to progress on this high-risk issue by enacting legislation such as the National Defense Authorization Act of 2018, which among other things required DOD to report on climate impacts to its installations and the Disaster Recovery Reform Act of 2018.  However, as GAO reported in its 2019 High-Risk Update, the federal government has not made measurable progress since 2017 to reduce its fiscal exposure to climate change, and in some cases, has revoked prior policies designed to do so.

Limiting the federal government’s fiscal exposure to climate change requires significant attention because the federal government has revoked prior policies that had partially addressed this high-risk area and has not implemented several of GAO’s recommendations that could help reduce federal fiscal exposure. For example, since GAO’s 2017 high-risk update, the federal government:

  • revoked Executive Order 13690, which had established a government-wide federal flood risk management standard to improve the resilience of communities and federal assets against the impacts of flooding. This action could increase federal fiscal exposure, as taxpayer-funded projects may not last as long as intended because they are not required to account for future changes in climate-related risk.
  • rescinded its guidance directing agencies to consider climate change in their National Environmental Policy Act of 1969 reviews for certain types of federal projects.
  • has not implemented GAO’s July 2015 recommendation to establish a comprehensive investment strategy identifying, prioritizing, and implementing federal disaster resilience investments that could reduce federal fiscal exposure to climate change.
  • has not implemented GAO’s November 2015 recommendations to create a national climate information system providing authoritative, accessible information useful for state, local, and private-sector decision making.

GAO has made 62 recommendations related to this high-risk area, 12 of which were made since the February 2017 high-risk update. As of December 2018, 25 remain open.

Furthermore, according to NRC and USGCRP, the nation's vulnerability can be reduced by limiting the magnitude of climate change through actions to limit greenhouse gas emissions. However, limiting the federal government's fiscal exposure to climate change risks will present a challenge no matter the outcome of domestic and international efforts to reduce emissions, in part because greenhouse gases already in the atmosphere will continue altering the climate system for many decades, according to NRC and USGCRP.

GAO’s High Risk Report is updated every two years, at the start of each new Congress. For more information on this High Risk Issue, see What We Found and What Remains to Be Done.

Looking for our recommendations? Click on any report to find each associated recommendation and its current implementation status.


2015 Update to GAO's High Risk ListWednesday, February 11, 2015
  • portrait of Alfredo Gomez
    • Alfredo Gomez
    • Director, Natural Resources and Environment
    • (202) 512-3841