16-Jun-23 ESG

Fires show the limits of climate adaptation

The economic impact of climate change is demonstrated by seeing, feeling and smelling wildfire smoke. Measuring and forecasting all their costs is a lot harder.

Estimates on the costs of health damages due to air pollution only tell part of an even bigger story

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* GDP impacted from PM2.5 air pollution (2019 Purchasing Power Parity)

Sources: World Bank (January 2022); Global Health Cost of PM2.5 Air Pollution: A Case for Action Beyond 2021 as of 6/13/23

Tiny particulate matter (also known as PM2.5) causes numerous diseases and millions of premature deaths globally including 48,000 people in the U.S. Wildfire smoke has undone the benefit of reduced vehicle and factory air pollution as the number of Americans affected by at least one very smokey day is 27x higher than 10 years ago. Higher income and Hispanic populations are increasingly affected. [1] Experts warned in 2022 that the U.S. wasn’t ready for the next wildfire smoke wave.[2] Billions of people breathe unhealthy air.[3]

By 2030, climate change could mean 14% more extreme wildfires.[4] Humanity cannot fully adapt to climate impacts as staying indoors does not fully protect people.[5] This points to the limitations of current estimates of air pollution cost. Typically, such estimates do not recognize that wildfire smoke is more toxic[6] or wildfire’s growing frequency and intensity. Also, lost labor market earnings likely exceed mortality and illness impacts.[7] Wildfire smoke risks increases preterm birth risk, hurts children’s health, their ability to learn and their future earnings.[8]

The U.S. government draft Social Cost of Carbon[9]in 2030 is US$140-380/ton CO2 but this does not yet include many climate impacts. This higher cost will guide policy decisions and indicates how regulations could strengthen for companies to internalize the damage caused by their use of fossil fuels. We are also starting to see insurance companies and re-insurance companies withdrawing coverage for some risks, such as flooding or indeed firers altogether[10] Plainly, there are likely to be plenty of economic costs that current estimates on the impact of air pollution do not fully capture. All the more reason for individuals and institutions to act to limit climate change with greater urgency.

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1. Childs et al (2022) Journal of Environmental Science Technology.   https://web.stanford.edu/~mburke/papers/ChildsEtAl2022_smoke.pdf

2. University of Stanford (July 2022) U.S. isn’t ready for the next wildfire smoke wave https://earth.stanford.edu/news/us-isnt-ready-next-wildfire-smoke-wave-heres-what-needs-change

3. World Health Organisation (2022) Over 6,000 cities now monitor air quality https://www.who.int/news/item/04-04-2022-billions-of-people-still-breathe-unhealthy-air-new-who-data

4. UNEP (February 2022) https://www.unep.org/news-and-stories/press-release/number-wildfires-rise-50-2100-and-governments-are-not-prepared

5. University of Stanford (July 2021) Stanford researchers offer practical tips to mitigate harm from wildfire smoke https://news.stanford.edu/2021/07/07/tips-protect-wildfire-smoke/

6. Aguilera et al (March 2021) Nature Communications Wildfire smoke impacts respiratory health more than fine particles from other sources: observational evidence from Southern California https://www.nature.com/articles/s41467-021-21708-0

7. Molitor et al (2022) Air pollution and the labor market https://www.davidmolitor.com/research

8. University of Stanford (June 2023) Wildfire smoke and air quality https://earth.stanford.edu/news/wildfire-smoke-and-air-quality

9. EPA (November 2022)

10. What to do when the US becomes uninsurable | Financial Times (ft.com)

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