Climate change’s $150 billion hit to the US economy

The U.S. now experiences an extreme weather event in which damages and costs top $1 billion every three weeks.

That compares with every four months in the 1980s, when adjusted for inflation, according to the latest installment of the U.S. National Climate Assessment released Tuesday.

For the first time, the assessment includes a separate chapter on the economic impacts associated with climate action.

Such events cost the U.S. nearly $150 billion each year and disproportionately hurt poor and disadvantaged communities. Other economic consequences of climate change will become more severe unless the country invests more in clean energy and adapts cities to higher temperatures and rising sea levels, according to the assessment.

“While some economic impacts of climate change are already being felt across the country, the impacts of future changes are projected to be more significant and apparent across the U.S. economy,” the federal report said.

Ski resorts in the Northwest, farmers in the Midwest and fisheries in the Northeast all face climate-related risks to their local economies. Droughts, wildfires, hurricanes and floods occur more frequently because of rising greenhouse-gas emissions, disrupting the nation’s food and water supplies and way of life. About 40% of the U.S. population lives in coastal communities exposed to sea level rise, and millions of homeowners could be displaced by the end of the century, according to the assessment.

The Energy Department said Tuesday that it is making $3.9 billion in federal grants available to upgrade the country’s stressed power grid, the latest in a string of investments funded by the 2021 infrastructure law. The Environmental Protection Agency, meanwhile, is offering $2 billion for community climate projects through last year’s climate law known as the Inflation Reduction Act.

Such investments are urgent because the U.S. and other countries need to accelerate emissions reductions and remove more carbon dioxide from the atmosphere to slow climate change, Tuesday’s report said.

A recent decline in U.S. emissions isn’t enough to put the country on track to meet its climate goals, the report concluded. Emissions fell less than 1% a year on average from 2005 to 2019 but would have to decline more than 6% on average annually to keep the climate from warming more than 1.5 degrees Celsius above preindustrial levels by midcentury, in line with national targets and the Paris climate accord. Many countries are behind on their Paris pledges.

Tuesday’s report comes ahead of a global climate summit in the United Arab Emirates scheduled to begin later this month. It coincides with a push from the Biden administration to channel billions of dollars into clean-energy projects to create jobs and slow climate change. The report supports the president’s strategy of turning the climate crisis into economic opportunity through subsidies and other incentives, White House national climate adviser Ali Zaidi said.

Companies building new manufacturing facilities to take advantage will have to invest in climate solutions such as water recycling in the Southwest to realize the economic benefits, according to the assessment.

“It just becomes even more important to implement resilience strategies to ensure those critical infrastructure and economic development assets are protected from climate change,” said Dave White, director of Arizona State University’s Global Institute of Sustainability and Innovation and a co-author of the report.

The assessment also focuses on opportunities created by the shift away from fossil fuels, finding that losses in fossil-fuel related jobs are expected to be more than offset by new clean-energy jobs and that the benefits of slowing climate change will outweigh the costs. Cities, states and federal governments will face greater expenses from disaster response and other costs and lower revenue from lost taxes and other sources the longer they wait to act, the report says.

Created in 1990, the national climate assessment is mandated by law and produced every four years, though it sometimes gets delayed. This latest version—the fifth—expands on findings from the last assessment in 2018 and was written by more than 750 experts and reviewed by 14 federal agencies.

The new chapter on economics details how climate change can affect life expectancy, recreational activities and mental health in addition to more tangible disaster costs.

“It really paints a much broader picture of the ways in which climate change is affecting daily life,” said Delavane Diaz, a principal team lead at the nonprofit Electric Power Research Institute and a co-author of the report.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com