oversight

Climate Change: Opportunities to Reduce Federal Fiscal Exposure

Published by the Government Accountability Office on 2019-06-11.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                            United States Government Accountability Office
                            Testimony
                            Before the Committee on the Budget,
                            House of Representatives


                            CLIMATE CHANGE
For Release on Delivery
Expected at 10:00 a.m. ET
Tuesday, June 11, 2019



                            Opportunities to Reduce
                            Federal Fiscal Exposure
                            Statement of J. Alfredo Gómez, Director, Natural
                            Resources and Environment




GAO-19-625T
                                                June 11, 2019

                                                CLIMATE CHANGE
                                                Opportunities to Reduce Federal Fiscal Exposure
Highlights of GAO-19-625T, a testimony before
the Committee on the Budget, House of
Representatives




Why GAO Did This Study                          What GAO Found
Since 2005, federal funding for disaster        The estimated economic effects of climate change, while imprecise, can convey
assistance is at least $450 billion,            useful insight about potential damages in the United States. In September 2017,
including approximately $19.1 billion in        GAO reported that the potential economic effects of climate change could be
supplemental appropriations signed into         significant and unevenly distributed across sectors and regions (see figure). This
law on June 6, 2019. In 2018 alone,             is consistent with the recent findings of the U.S. Global Change Research
there were 14 separate billion-dollar           Program’s Fourth National Climate Assessment, which concluded, among other
weather and climate disaster events             things, that the continued increase in the frequency and extent of high-tide
across the United States, with a total          flooding due to sea level rise threatens America’s trillion-dollar coastal
cost of at least $91 billion, according to      infrastructure.
the National Oceanic and Atmospheric
Administration. The U.S. Global Change          Examples of Potential Economic Effects from Climate Change by 2100
Research Program projects that disaster
costs will likely increase as certain
extreme weather events become more
frequent and intense due to climate
change.
The costs of recent weather disasters
have illustrated the need for planning for
climate change risks and investing in
resilience. Resilience is the ability to
prepare and plan for, absorb, recover
from, and more successfully adapt to
adverse events, according to the
National Academies of Science,
Engineering, and Medicine. Investing in
resilience can reduce the need for far
more costly steps in the decades to
come.
Since February 2013, GAO has included
Limiting the Federal Government’s
Fiscal Exposure by Better Managing
Climate Change Risks on its list of
federal program areas at high risk of
vulnerabilities to fraud, waste, abuse,         Information about the potential economic effects of climate change could inform
and mismanagement or most in need of            decision makers about significant potential damages in different U.S. sectors or
transformation. GAO updates this list
                                                regions. According to prior GAO work, this information could help decision
every 2 years. In March 2019, GAO
                                                makers identify significant climate risks as an initial step toward managing them.
reported that the federal government
had not made measurable progress                The federal government faces fiscal exposure from climate change risks in
since 2017 to reduce fiscal exposure to         several areas, including:
climate change.
                                                •   Disaster aid: due to the rising number of natural disasters and increasing
                                                    reliance on federal assistance. GAO has previously reported that the federal
                                                    government does not adequately plan for disaster resilience. GAO has also
                                                    reported that, due to an artifically low indicator for determining a jursidiction’s
                                                    ability to respond to disasters that was set in 1986, the Federal Emergency
View GAO-19-625T. For more information,
contact J. Alfredo Gómez at (202) 512-3841 or
gomezj@gao.gov.
                                                ______________________________________ United States Government Accountability Office
                                                    Management Agency risks recommending federal assistance for juridisctions
This testimony—based on reports GAO                 that could recover on their own.
issued from October 2009 to March
2019—discusses (1) what is known                •   Federal insurance for property and crops: due, in part, to the vulnerability
about the potential economic effects of             of insured property and crops to climate change impacts. Federal flood and
climate change in the United States                 crop insurance programs were not designed to generate sufficient funds to
and the extent to which this information            fully cover all losses and expenses. The flood insurance program, for
could help federal decision makers                  example, was about $21 billion in debt to the Treasury as of April 2019.
manage climate risks across the                     Further, the Congressional Budget Office estimated in May 2019 that federal
federal government, (2) the potential               crop insurance would cost the federal government an average of about $8
impacts of climate change on the                    billion annually from 2019 through 2029.
federal budget, (3) the extent to which
the federal government has invested in          •   Operation and management of federal property and lands: due to the
resilience, and (4) how the federal                 hundreds of thousands of federal facilities and millions of acres of land that
government could reduce fiscal                      could be affected by a changing climate and more frequent extreme events.
exposure to the effects of climate                  For example, in 2018, Hurricane Michael devastated Tyndall Air Force Base
change.                                             in Florida, with a preliminary repair estimate of $3 billion.
GAO has made 62 recommendations                 The federal budget, however, does not generally account for disaster assistance
related to the Limiting the Federal             provided by Congress or the long-term impacts of climate change on existing
Government’s Fiscal Exposure by                 federal infrastructure and programs. GAO has reported that more complete
Better Managing Climate Change                  information about fiscal exposure could help policymakers better understand the
Risks high-risk area. As of December            trade-offs when making spending decisions.
2018, 25 of those recommendations
remained open.                                  Further, federal investments in resilience to reduce fiscal exposures have been
                                                limited. As GAO has reported, enhancing resilience can reduce fiscal exposure
                                                by reducing or eliminating long-term risk to people and property from natural
                                                hazards. For example, a 2018 interim report by the National Institute of Building
                                                Sciences estimated approximate benefits to society in excess of costs for several
                                                types of resilience projects. While precise benefits are uncertain, the report
                                                estimated that for every dollar invested in designing new buildings to particular
                                                design standards, society could accrue benefits amounting to about $11 on
                                                average.
                                                The federal government has invested in individual agency efforts that could help
                                                build resilience within existing programs or projects. For example, the National
                                                Climate Assessment reported that the U.S. military integrates climate risks into
                                                its analysis, plans, and programs. In additon, as GAO reported in March 2019,
                                                the Disaster Recovery Reform Act of 2018 could improve resilience by allowing
                                                the President to set aside a portion of certain grants for pre-disaster mitigation.
                                                However, the federal government has not undertaken strategic government-wide
                                                planning to manage climate risks.
                                                GAO’s March 2019 High-Risk report identified a number of recommendations
                                                GAO has made related to fiscal exposure to climate change. The federal
                                                government could reduce its fiscal exposure by implementing these
                                                recommendations. Among GAO’s key government-wide recommendations are:
                                                •   Entities within the Executive Office of the President (EOP) should work with
                                                    partners to establish federal strategic climate change priorities that reflect the
                                                    full range of climate-related federal activities;
                                                •   Entities within EOP should use information on potential economic effects
                                                    from climate change to help identify significant climate risks and craft
                                                    appropriate federal responses;
                                                •   Entities within EOP should designate a federal entity to develop and update a
                                                    set of authoritative climate observations and projections for use in federal
                                                    decision making, and create a national climate information system with
                                                    defined roles for federal agencies and certain nonfederal entities; and
                                                •   The Department of Commerce should convene federal agencies to provide
                                                    the best-available forward-looking climate information to organizations that
View GAO-19-625T. For more information,             develop design standards and building codes to enhance infrastructure
contact J. Alfredo Gómez at (202) 512-3841 or       resilience.
gomezj@gao.gov.
                                                ______________________________________ United States Government Accountability Office
Letter
         Letter




         Chairman Yarmuth, Ranking Member Womack, and Members of the
         Committee:

         Thank you for the opportunity to discuss our work on how to limit the
         federal government’s fiscal exposure by better managing climate change
         risks, an area that has been on our High-Risk List since February 2013. 1
         Addressing climate change risks requires advanced planning and
         investment to reduce the need for far more costly steps in the decades to
         come, which, as we have previously reported, the federal government is
         not well organized to do. The costs associated with recent disasters have
         illustrated the need for such planning and investment. In 2018 alone,
         there were 14 separate billion-dollar weather and climate disaster events
         across the United States, with a total cost of at least $91 billion, according
         to the National Oceanic and Atmospheric Administration (NOAA). 2
         Further, on June 6, 2019, a supplemental appropriation of approximately
         $19.1 billion was signed into law for recent disasters.

         The U.S. Global Change Research Program (USGCRP), which
         coordinates and integrates the activities of 13 federal agencies that
         research changes in the global environment and their implications for
         society, reported in its November 2018 Fourth National Climate
         Assessment that climate change is playing a role in the increasing
         frequency of some types of extreme weather that lead to the billion-dollar
         disasters. 3 These changes include the rise in vulnerability to drought,
         lengthening wildfire seasons, and the potential for extremely heavy
         rainfall becoming more common in some regions. USGCRP reported in
         the prior assessment that the costs of many of these disasters will likely

         1
          Our High-Risk List identifies federal program areas that are at high risk of vulnerabilities
         to fraud, waste, abuse, and mismanagement or most in need of transformation. See GAO,
         High-Risk Series: An Update, GAO-13-283 (Washington, D.C.: Feb. 14, 2013).
         2
          NOAA National Centers for Environmental Information, U.S. Billion-Dollar Weather and
         Climate Disasters (2019). See: https://www.ncdc.noaa.gov/billions/time-series, accessed
         June 3, 2019.
         3
          D.R. Reidmiller, C.W. Avery, D. R. Easterling, K. E. Kunkel, K. L. M. Lewis, T. K.
         Maycock, and B. C. Stewart (eds.), 2018: Impacts, Risks, and Adaptation in the United
         States: Fourth National Climate Assessment, Volume II (Washington, DC: U.S. Global
         Change Research Program, November 2018). Under the Global Change Research Act of
         1990 (Pub. L. No. 101-606, § 103 (1990)), USGCRP is to periodically prepare a scientific
         assessment—known as the National Climate Assessment—which is an important
         resource for understanding and communicating climate change science and impacts in the
         United States. The Office of Science and Technology Policy within the Executive Office of
         the President oversees USGCRP.




         Page 1                                                                          GAO-19-625T
increase as extreme weather events become more frequent and intense
with climate change. 4

In my testimony today, I will discuss (1) what is known about the potential
economic effects of climate change in the United States and the extent to
which this information could help federal decision makers manage climate
risks across the federal government, (2) the potential impacts of climate
change on the federal budget, (3) the extent to which the federal
government has invested in resilience to climate change impacts, 5 and (4)
how the federal government could reduce fiscal exposure to the effects of
climate change. My testimony is based on reports we issued from
October 2009 to March 2019. More detailed information on our objectives,
scope, and methodology can be found in those reports.

The work upon which this statement is based was conducted in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.




4
 Jerry M. Melillo, Terese (T.C.) Richmond, and Gary W. Yohe, eds., Climate Change
Impacts in the United States: The Third National Climate Assessment, U.S. Global
Change Research Program (Washington, D.C.: May 2014).
5
 The National Academies of Sciences, Engineering, and Medicine (National Academies)
define resilience as the ability to prepare and plan for, absorb, recover from, and more
successfully adapt to adverse events. See the National Academies, Committee on
Increasing National Resilience to Hazards and Disasters; Committee on Science,
Engineering, and Public Policy; Disaster Resilience: A National Imperative (Washington,
D.C.: 2012). We reported in May 2016 that two related sets of actions can enhance
resilience by reducing risk. These include climate change adaptation and pre-disaster
hazard mitigation. Adaptation is defined as adjustments to natural or human systems in
response to actual or expected climate change. Pre-disaster hazard mitigation refers to
actions taken to reduce the loss of life and property by lessening the impacts of adverse
events and applies to all hazards, including terrorism and natural hazards, such as health
pandemics or weather-related disasters. In this testimony, we use the term “resilience” for
consistency and to encompass both of these sets of actions as they relate to addressing
climate risks. GAO, Climate Change: Selected Governments Have Approached
Adaptation through Laws and Long-Term Plans, GAO-16-454 (Washington, D.C.: May 12,
2016).




Page 2                                                                        GAO-19-625T
                       We reported in September 2017 that, while estimates of the economic
Information on the     effects of climate change are imprecise due to modeling and information
Potential Economic     limitations, they can convey useful insight into broad themes about
                       potential damages in the United States. 6 We reported that, according to
Effects of Climate     the two national-scale studies available at the time that examined the
Change in the United   economic effects of climate change across U.S. sectors, potential
                       economic effects could be significant and these effects will likely increase
States Could Help      over time for most of the sectors analyzed. 7 For example, for 2020
Federal Decision       through 2039, one of the studies estimated from $4 billion to $6 billion in
                       annual coastal property damages from sea level rise and more frequent
Makers Better          and intense storms. 8 In addition, the national-scale studies we reviewed
Manage Climate         and several experts we interviewed for the September 2017 report
Risks                  suggested that potential economic effects could be unevenly distributed
                       across sectors and regions. For example, one of the studies estimated
                       that the Southeast, Midwest, and Great Plains regions will likely
                       experience greater combined economic effects than other regions, largely
                       because of coastal property damage in the Southeast and changes in
                       crop yields in the Midwest and Great Plains (see figure 1). 9 This is
                       6
                        GAO, Climate Change: Information on Potential Economic Effects Could Help Guide
                       Federal Efforts to Reduce Fiscal Exposure, GAO-17-720 (Washington, D.C.: Sept. 28,
                       2017).
                       7
                        These national-scale studies were the Environmental Protection Agency’s Climate
                       Change Impacts and Risk Analysis—a summary study of an ongoing EPA project—and
                       the Rhodium Group’s American Climate Prospectus. See Environmental Protection
                       Agency, Office of Atmospheric Programs, Climate Change in the United States: Benefits
                       of Global Action, EPA 430-R-15-001 (Washington, D.C.: 2015). The EPA project on which
                       the summary study was based was coordinated by EPA’s Office of Atmospheric
                       Programs—Climate Change Division, with contributions from national laboratories and the
                       academic and private sectors. The detailed methods and results of the project were
                       published in a 2014 special issue of the peer-reviewed journal, Climatic Change entitled,
                       “A Multi-Model Framework to Achieve Consistent Evaluation of Climate Change Impacts
                       in the United States.” An update to this project was used in the 2018 Fourth National
                       Climate Assessment. Also see Rhodium Group, LLC., American Climate Prospectus:
                       Economic Risks in the United States (New York: October 2014). The American Climate
                       Prospectus was funded by the Risky Business Project, a project funded by Bloomberg
                       Philanthropies, the Paulsen Institute, and TomKat Charitable Trust; the Skoll Global
                       Threats Fund; and the Rockefeller Family Fund. The Rhodium Group, LLC, a research
                       consultancy and advisory company, coordinated the effort, which involved authors from
                       universities and the private sector. This study was later published by the Columbia
                       University Press in 2015: Trevor Houser et al., Economic Risks of Climate Change: An
                       American Prospectus (New York: Columbia University Press, 2015). An update to this
                       analysis was published in Science in June 2017: Solomon Hsiang et al “Estimating
                       Economic Damage from Climate Change in the United States,” Science, vol. 356 (2017).
                       8
                       Rhodium Group, American Climate Prospectus.
                       9
                       Rhodium Group, American Climate Prospectus.




                       Page 3                                                                       GAO-19-625T
                                        consistent with the findings of the Fourth National Climate Assessment. 10
                                        For example, according to that assessment, the continued increase in the
                                        frequency and extent of high-tide flooding due to sea level rise threatens
                                        America’s trillion-dollar coastal property market and public infrastructure
                                        sector.

Figure 1: Examples of Potential Economic Effects from Climate Change by 2100




                                        As we reported in September 2017, information on the potential economic
                                        effects of climate change could help federal decision makers better
                                        manage climate risks, according to leading practices for climate risk
                                        management, economic analysis we reviewed, and the views of several


                                        10
                                         D.R. Reidmiller e.t. al, Fourth National Climate Assessment, Volume II.




                                        Page 4                                                                     GAO-19-625T
experts we interviewed. 11 For example, such information could inform
decision makers about significant potential damages in different U.S.
sectors or regions. According to several experts and our prior work, this
information could help federal decision makers identify significant climate
priorities as an initial step toward managing climate risks. 12 Such a first
step is consistent with leading practices for climate risk management and
federal standards for internal control. 13 For example, leading practices
from the National Academies call for climate change risk management
efforts that focus on where immediate attention is needed. 14 As noted in
our September 2017 report, according to a 2010 National Academies
report, other literature we reviewed, and several experts we interviewed,
to make informed choices, decision makers need more comprehensive
information on economic effects to better understand the potential costs
of climate change to society and begin to develop an understanding of the
benefits and costs of different options for managing climate risks. 15




11
   In that report, we also found that additional economic information could help federal,
state, local, and private sector decision makers manage climate risks that drive federal
fiscal exposure. GAO-17-720.
12
  GAO-17-720.
13
 National Research Council of the National Academies, America’s Climate Choices:
Panel on Adapting to the Impacts of Climate Change, Adapting to the Impacts of Climate
Change and GAO, Standards for Internal Control in the Federal Government,
GAO-14-704G (Washington, D.C.: September 2014).
14
 National Research Council of the National Academies, America’s Climate Choices:
Panel on Adapting to the Impacts of Climate Change, Adapting to the Impacts of Climate
Change (Washington, D.C.: 2010).
15
  GAO-17-720.




Page 5                                                                          GAO-19-625T
                       The federal government faces fiscal exposure from climate change risks
The Federal            in a number of areas, and this exposure will likely increase over time, as
Government Faces       we concluded in September 2017. 16 In the March 2019 update to our
                       High-Risk List, we summarized our previous work that identified several
Fiscal Exposure from   of these areas across the federal government, including programs related
Climate Change         to the following: 17
Risks, but Does Not    •     Disaster aid. The rising number of natural disasters and increasing
Have Certain                 reliance on federal assistance are a key source of federal fiscal
                             exposure, and this exposure will likely continue to rise. Since 2005,
Information Needed           federal funding for disaster assistance is at least $450 billion. 18 In
to Help Make Budget          September 2018, we reported that four hurricane and wildfire
                             disasters in 2017 created an unprecedented demand for federal
Decisions                    disaster resources and that hurricanes Harvey, Irma, and Maria
                             ranked among the top five costliest hurricanes on record. 19
                             Subsequently, the fall of 2018 brought additional catastrophic

                       16
                           GAO-17-720.
                       17
                         We have identified other areas with potential links to climate and the federal budget in
                       past reports, including global migration, state and local infrastructure, federal supply
                       chains, and public health. See GAO, Climate Change: Activities of Selected Agencies to
                       Address Potential Impact on Global Migration, GAO-19-166 (Washington, D.C.: Jan. 17,
                       2019); Climate Information: A National System Could Help Federal, State, Local, and
                       Private Sector Decision Makers Use Climate Information, GAO-16-37 (Washington, D.C.:
                       Nov. 23, 2015); Federal Supply Chains: Opportunities to Improve the Management of
                       Climate-Related Risks, GAO-16-32 (Washington, D.C.: Oct. 13, 2015); and Climate
                       Change: HHS Could Take Further Steps to Enhance Understanding of Public Health
                       Risks, GAO-16-122 (Washington, D.C.: Oct. 5, 2015). We also have ongoing work in
                       many areas related to federal fiscal exposure to climate change, examining issues such
                       as how to identify and prioritize resilience projects to build resilience to climate change
                       impacts, how to make water infrastructure more resilient to the impacts of climate change,
                       and how to help communities voluntarily relocate to avoid climate change impacts.
                       18
                         This total includes, for fiscal years 2005 through 2014, $278 billion that GAO found that
                       the federal government had obligated for disaster assistance. See GAO, Federal Disaster
                       Assistance: Federal Departments and Agencies Obligated at Least $277.6 Billion during
                       Fiscal Years 2005 through 2014, GAO-16-797 (Washington, D.C.: Sept. 22, 2016). It also
                       includes, for fiscal years 2015 through 2018, $124 billion in select supplemental
                       appropriations to federal agencies for disaster assistance, approximately $7 billion in
                       annual appropriations to the Disaster Relief Fund (a total of $28 billion for the 4-year
                       period). For fiscal years 2015 through 2018, it does not include other annual
                       appropriations to federal agencies for disaster assistance. Lastly, on June 6, 2019, the
                       Additional Supplemental Appropriations for Disaster Relief Act of 2019 was signed into
                       law, which provides approximately $19.1 billion for disaster assistance. H.R. 2157, 116th
                       Cong. (2019) (enacted).
                       19
                        GAO, 2017 Hurricanes and Wildfires: Initial Observations on the Federal Response and
                       Key Recovery Challenges, GAO-18-472 (Washington, D.C.: Sept. 4, 2018).




                       Page 6                                                                         GAO-19-625T
     disasters such as Hurricanes Florence and Michael and devastating
     California wildfires, with further needs for federal disaster assistance.
     Disaster costs are projected to increase as certain extreme weather
     events become more frequent and intense due to climate change—as
     observed and projected by USGCRP. 20 In July 2015, we reported that
     the federal government does not adequately plan for disaster
     resilience and that most federal funding for hazard mitigation is
     available after a disaster. 21 In addition, our prior work found that the
     Federal Emergency Management Agency’s (FEMA) indicator for
     determining whether to recommend that a jurisdiction receive disaster
     assistance—which was set in 1986—is artificially low because it does
     not accurately reflect the ability of state and local governments to
     respond to disasters. 22 Without an accurate assessment of a
     jurisdiction’s capability to respond to a disaster without federal
     assistance, we found that FEMA runs the risk of recommending that
     the President award federal assistance to jurisdictions that have the
     capability to respond and recover on their own.
•    Federal insurance for property and crops. The National Flood
     Insurance Program (NFIP) and the Federal Crop Insurance
     Corporation are sources of federal fiscal exposure due, in part, to the
     vulnerability of the insured property and crops to climate change. 23
     These programs provide coverage where private markets for
     insurance do not exist, typically because the risk associated with the
     property or crops is too great to privately insure at a cost that buyers
     are willing to accept. From 2013 to 2017, losses paid under NFIP and




20
  Jerry M. Melillo, et. al., Climate Change Impacts in the United States: The Third National
Climate Assessment.
21
  For example, from fiscal years 2011 to 2014, the Federal Emergency Management
Agency obligated more than $3.2 billion for the Hazard Mitigation Grant Program for post-
disaster hazard mitigation while obligating approximately $222 million for the Pre-Disaster
Mitigation Grant Program. GAO, Hurricane Sandy: An Investment Strategy Could Help the
Federal Government Enhance National Resilience for Future Disasters, GAO-15-515
(Washington, D.C.: July 30, 2015).
22
  GAO, Federal Disaster Assistance: Improved Criteria Needed to Assess a Jurisdiction’s
Capability to Respond and Recover on Its Own, GAO-12-838 (Washington, D.C.: Sept.
12, 2012).
23
  The NFIP is administered by FEMA within the U.S. Department of Homeland Security,
and the Federal Crop Insurance Corporation is administered by the Risk Management
Agency within the U.S. Department of Agriculture.




Page 7                                                                         GAO-19-625T
     the federal crop insurance program totaled $51.3 billion. 24 Federal
     flood and crop insurance programs were not designed to generate
     sufficient funds to fully cover all losses and expenses, which means
     the programs need budget authority from Congress to operate. The
     NFIP, for example, was about $21 billion in debt to the Treasury as of
     April 2019. 25 Further, the Congressional Budget Office estimated in
     May 2019 that federal crop insurance would cost the federal
     government an average of about $8 billion annually from 2019
     through 2029. 26
•    Operation and management of federal property and lands. The
     federal government owns and operates hundreds of thousands of
     facilities and manages millions of acres of land that could be affected
     by a changing climate and represent a significant federal fiscal
     exposure. For example, the Department of Defense (DOD) owns and
     operates domestic and overseas infrastructure with an estimated
     replacement value of about $1 trillion. In September 2018, Hurricane
     Florence damaged Camp Lejeune and other Marine Corps facilities in
     North Carolina, resulting in a preliminary Marine Corps repair estimate
     of $3.6 billion. One month later, Hurricane Michael devastated Tyndall
     Air Force Base in Florida, resulting in a preliminary Air Force repair
     estimate of $3 billion and upwards of 5 years to complete the work. In
     addition, we recently reported that the federal government manages
     about 650 million acres of land in the United States that could be
     vulnerable to climate change, including the possibility of more
     frequent and severe droughts and wildfires. 27 Appropriations for
     federal wildland fire management activities have increased




24
  FEMA and Risk Management Agency published data. This does not include the costs of
running these programs or the premiums collected to partially offset the costs. Losses for
the crop insurance program are losses associated with crops harvested in that year, also
known as crop year.
25
  U. S. Department of The Treasury, Bureau of the Fiscal Service. Monthly Treasury
Statement. Table 6. Schedule C (Washington, D.C.: April 2019).
26
  Congressional Budget Office, CBO’s May 2019 Baseline for Farm Programs
(Washington, D.C.: May 2, 2019).
27
 GAO, Climate Change: Various Adaptation Efforts Are Under Way at Key Natural
Resource Management Agencies, GAO-13-253 (Washington, D.C.: May 31, 2013).




Page 8                                                                       GAO-19-625T
     considerably since the 1990s, as we and the Congressional Research
     Service have reported. 28
Although the federal government faces fiscal exposure from climate
change across the nation, it does not have certain information needed by
policymakers to help understand the budgetary impacts of such
exposure. 29 We have previously reported that the federal budget
generally does not account for disaster assistance provided by
Congress—which can reach tens of billions of dollars for some
disasters—or the long-term impacts of climate change on existing federal
infrastructure and programs. 30 For Example, as we reported in April 2018,
the Office of Management and Budget’s (OMB) climate change funding
reports we reviewed did not include funding information on federal
programs with significant fiscal exposures to climate change identified by
OMB and others—such as domestic disaster assistance, flood insurance,
and crop insurance. 31 A more complete understanding of climate change
fiscal exposures can help policymakers anticipate changes in future
spending and enhance control and oversight over federal resources, as
we reported in October 2013. 32 For budget decisions for federal programs
with fiscal exposure to climate change, we found in the April 2018 report
that information that could help provide a more complete understanding
would include: (1) costs to repair, replace, and improve the weather-
related resilience of federally-funded property and resources; (2) costs for

28
  GAO, Budget Issues: Opportunities to Reduce Federal Fiscal Exposures Through
Greater Resilience to Climate Change and Extreme Weather, GAO-14-504T (Washington,
D.C.: July 29, 2014) and Congressional Research Service, Wildfire Suppression
Spending: Background, Issues, and Legislation in the 115th Congress, R44966
(Washington, D.C.: November 8, 2017).
29
  In our past work, we identified broad principles for an effective budget process, including
that it should (1) provide information about the long-term effects of decisions; (2) provide
information necessary to make important trade-offs between spending with long-term
benefits and spending with short-term benefits, and (3) provide for accountability and be
transparent, among other principles. Further, in October 2013, we reported that
incorporating more complete information on fiscal exposures could help meet these
principles for an effective budget process. See GAO, Budget Process: Enforcing Fiscal
Choices, GAO-11-626T (Washington, D.C.: May 4, 2011) and GAO, Fiscal Exposures:
Improving Cost Recognition in the Federal Budget, GAO-14-28 (Washington, D.C.: Oct.
29, 2013).
30
  GAO-14-505T.
31
  GAO, Climate Change: Analysis of Reported Federal Funding, GAO-18-223
(Washington, D.C.: Apr. 30, 2018).
32
  GAO-14-28.




Page 9                                                                          GAO-19-625T
                      federal flood and crop insurance programs; and (3) costs for disaster
                      assistance programs, among other identified areas of fiscal exposure to
                      climate change. 33 To help policymakers better understand the trade-offs
                      when making spending decisions, we recommended in the April 2018
                      report that OMB provide information on fiscal exposures related to climate
                      change in conjunction with future reports on climate change funding. 34


                      Although the federal government faces fiscal exposure to climate change,
Federal Investments   its investments in resilience to climate change impacts have been limited.
in Resilience to      One way to reduce federal fiscal exposure is to enhance resilience by
                      reducing or eliminating long-term risk to people and property from natural
Climate Change        hazards. For example, in September 2018 we reported that elevating
Impacts Have Been     homes and strengthened building codes in Texas and Florida prevented
                      greater damages during the 2017 hurricane season. 35 In addition, one
Limited               company participating in a 2014 forum we held on preparing for climate-
                      related risks noted that for every dollar it invested in resilience efforts, the
                      company could prevent $5 in potential losses. 36 Finally, a 2018 interim
                      report by the National Institute of Building Sciences examined a sample of
                      federal grants for hazard mitigation. The report estimated approximate
                      benefits to society (i.e., homeowners, communities, etc.) in excess of
                      costs for several types of resilience projects through the protection of
                      lives and property, and prevention of other losses. 37 For example, while

                      33
                        GAO-18-223.
                      34
                        OMB disagreed with this recommendation and has not implemented it, but we continue
                      to believe that the recommendation is valid. GAO-18-223.
                      35
                        Specifically, FEMA officials said Hurricane Harvey demonstrated how prior hazard
                      mitigation projects prevented greater damages (e.g., elevated homes and equipment
                      sustained less damages). FEMA officials said Florida strengthened its building codes for
                      resilience as a result of Hurricanes Andrew in 1992, and Matthew in 2016. GAO-18-472.
                      36
                        GAO, Highlights of a Forum: Preparing for Climate-Related Risks: Lessons from the
                      Private Sector, GAO-16-126SP (Washington, D.C.: Nov. 19, 2015).
                      37
                         This report examined a narrow sample of hazard mitigation grants awarded by FEMA,
                      the Economic Development Administration, and the Department of Housing and Urban
                      Development from 1993 to 2016 to address various hazards. Extrapolation to a broader
                      set of grants needs to be interpreted in the context of the selected sample. These hazards
                      included fires at the wildland-urban interface (i.e., fires in areas where homes are built
                      near or among lands prone to wildland fire), hurricane- and tornado-force winds, and
                      riverine floods (i.e., floods that occur when river flows exceed the capacity of the river
                      channel). See Multihazard Mitigation Council, a council of the National Institute of Building
                      Sciences, Natural Hazard Mitigation Saves: 2018 Interim Report (Washington, D.C.:
                      December 2018).




                      Page 10                                                                         GAO-19-625T
precise benefits are uncertain, the report estimated that for every grant
dollar the federal government spent on resilience projects, over time,
society could accrue benefits amounting to the following:

•    About $3 on average from projects addressing fire at the wildland
     urban interface, with most benefits (69 percent) coming from the
     protection of property (i.e., avoiding property losses).
•    About $5 on average from projects to address hurricane and tornado
     force winds, with most benefits (89 percent) coming from the
     protection of lives. This includes avoiding deaths, nonfatal injuries,
     and causes of post-traumatic stress.
•    About $7 on average from projects that buy out buildings prone to
     riverine flooding, with most benefits (65 percent) coming from the
     protection of property.
The interim report also estimated that society could accrue benefits
amounting to about $11 on average for every dollar invested in designing
new buildings to meet the 2018 International Building Code and the 2018
International Residential Code—the model building codes developed by
the International Code Council—with most benefits (46 percent) coming
from the protection of property. 38

We reported in October 2009 that the federal government’s activities to
build resilience to climate change were carried out in an ad hoc manner
and were not well coordinated across federal agencies. 39 Federal
agencies have included some of these activities within existing programs
and operations—a concept known as mainstreaming. For example, the
Fourth National Climate Assessment reported that the U.S. military
integrates climate risks into its analysis, plans and programs, with
particular attention paid to climate effects on force readiness, military




38
  The International Code Council is a member-focused association with over 64,000
members dedicated to developing model codes and standards used in the design, build,
and compliance process to construct safe, sustainable, affordable and resilient structures.
The report used a baseline of buildings constructed to a prior generation of codes
represented by 1990s-era design and National Flood Insurance Program requirements.
39
 GAO, Climate Change Adaptation: Strategic Federal Planning Could Help Government
Officials Make More Informed Decisions, GAO-10-113 (Washington, D.C.: Oct. 7, 2009).




Page 11                                                                       GAO-19-625T
bases, and training ranges. 40 However, according to the Fourth National
Climate Assessment, while a significant portion of climate risk can be
addressed by mainstreaming, the practice may reduce the visibility of
climate resilience relative to dedicated, stand-alone approaches and may
prove insufficient to address the full range of climate risks. 41

In addition, as we reported in March 2019, the Disaster Recovery Reform
Act of 2018 (DRRA) was enacted in October 2018, which could improve
state and local resilience to disasters. DRRA, among other things, allows
the President to set aside, with respect to each major disaster, a
percentage of the estimated aggregate amount of certain grants to use for
pre-disaster hazard mitigation and makes federal assistance available to
state and local governments for building code administration and
enforcement. 42 However, it is too early to tell what impact the
implementation of the act will have on state and local resilience.

The federal government has made some limited investments in resilience
and DRRA could enable additional improvements at the state and local
level. However, we reported in September 2017 that the federal
government had not undertaken strategic government-wide planning to
manage significant climate risks before they become fiscal exposures. 43
We also reported in July 2015 that the federal government had no
comprehensive strategic approach for identifying, prioritizing, and

40
   Lempert, R., J. Arnold, R. Pulwarty, K. Gordon, K. Greig, C. Hawkins Hoffman, D.
Sands, and C. Werrell. 2018. Reducing Risks Through Adaptation Actions. In Impacts,
Risks, and Adaptation in the United States: Fourth National Climate Assessment, Volume
II (Washington, D.C.: U.S. Global Change Research Program, 2018). We also reported in
May 2014 that officials from the Office of the Secretary of Defense and the military
departments stated that their goal is to address potential climate change impacts and
vulnerabilities through existing infrastructure planning processes so that the effects of
climate change are considered in the same way other impacts and vulnerabilities—such
as force protection—are currently considered. GAO, Climate Change Adaptation: DOD
Can Improve Infrastructure Planning and Processes to Better Account for Potential
Impacts, GAO-14-446 (Washington, D.C.: May 30, 2014).
41
   Lempert, R., J. Arnold, R. Pulwarty, K. Gordon, K. Greig, C. Hawkins Hoffman, D.
Sands, and C. Werrell, 2018: Reducing Risks Through Adaptation Actions. In Impacts,
Risks, and Adaptation in the United States: Fourth National Climate Assessment, Volume
II (Washington, D.C.: U.S. Global Change Research Program, 2018).
42
  FAA Reauthorization Act of 2018, Pub. L. No. 115-254, div. D, §§ 1206(a)(3),
1234(a)(2)(C), 1234(a)(5), 132 Stat. 3186, 3440, 3462 (2018). The FAA Reauthorization
Act of 2018, which included the DRRA, became law on October 5th, 2018.
43
 GAO-17-720.




Page 12                                                                      GAO-19-625T
implementing investments for disaster resilience. 44 As an initial step in
managing climate risks, most of the experts we interviewed for the
September 2017 report told us that federal decision makers should
prioritize risk management efforts on significant climate risks that create
the greatest fiscal exposure. 45 However, as we reported in our March
2019 High-Risk List, the federal government had not made measurable
progress since 2017 to reduce fiscal exposure in several key areas that
we have identified. 46 The High-Risk List identified Limiting the Federal
Government’s Fiscal Exposure by Better Managing Climate Change
Risks as an area needing significant attention because the federal
government has regressed in progress toward one of our criterion for
removal from the list. 47




44
  In our 2015 report, we recommended that the Mitigation Framework Leadership group—
an interagency body chaired by FEMA—create a National Mitigation Investment Strategy
to help federal, state, and local officials plan for and prioritize disaster resilience. In
response, the Mitigation Framework Leadership Group developed a draft, high-level
strategy. FEMA officials expect to publish the final version of the strategy by July 2019.
However, the draft strategy does not explicitly address future climate change risks.
GAO-15-515.
45
 GAO-17-720.
46
 GAO-19-157SP.
47
  We update our High-Risk List every 2 years. To determine which federal government
programs and functions should be designated high-risk, we consider qualitative factors
such as whether the risk could result in significantly impaired service, or significantly
reduced economy, efficiency, or effectiveness; the exposure to loss in monetary or other
quantitative terms; and corrective measures planned or under way. We have issued the
following five criteria for an area to be removed from the list: leadership commitment,
capacity, action plan, monitoring, and demonstrated progress. In the March 2019 report,
the federal government regressed in progress toward meeting the monitoring criterion for
the Limiting the Federal Government’s Fiscal Exposure by Better Managing Climate
Change Risks high-risk area. Criteria for removing this area from the High-Risk List
include demonstrating leadership commitment that is sustained and enhanced to address
all aspects of the federal fiscal exposure to climate change cohesively.




Page 13                                                                       GAO-19-625T
                       As we reported in March 2019, the federal government could reduce its
The Federal            fiscal exposure to climate change by focusing and coordinating federal
Government Could       efforts. 48 However, the federal government is currently not well organized
                       to address the fiscal exposure presented by climate change, partly
Reduce Its Fiscal      because of the inherently complicated and crosscutting nature of the
Exposure by            issue. We have made a total of 62 recommendations related to limiting
                       the federal government’s fiscal exposure to climate change over the
Focusing and           years, 12 of which have been made since February 2017. As of
Coordinating Federal   December 2018, 25 of these recommendations remained open. In
                       describing what needs to be done to reduce federal fiscal exposure to
Efforts                climate change, our March 2019 High-Risk report discusses many of the
                       open recommendations. 49 Implementing these recommendations could
                       help reduce federal fiscal exposure. Several of them, including those
                       highlighted below, identify key government-wide efforts needed to help
                       plan for and manage climate risks and direct federal efforts toward
                       common goals, such as improving resilience:

                       •     Develop a national strategic plan: In May 2011, we recommended
                             that appropriate entities within the Executive Office of the President
                             (EOP), including OMB, work with agencies and interagency
                             coordinating bodies to establish federal strategic climate change
                             priorities that reflect the full range of climate-related federal activities,
                             including roles and responsibilities of key federal entities. 50
                       •     Use economic information to identify and respond to significant
                             climate risks: In September 2017, we recommended that the
                             appropriate entities within EOP use information on the potential
                             economic effects of climate change to help identify significant climate
                             risks facing the federal government and craft appropriate federal
                             responses. 51 Such federal responses could include establishing a
                             strategy to identify, prioritize, and guide federal investments to
                             enhance resilience against future disasters.


                       48
                           GAO-19-157SP.
                       49
                           GAO-19-157SP.
                       50
                         EOP neither agreed nor disagreed with our recommendation and as of March 2019, had
                       not implemented it. GAO, Climate Change: Improvements Needed to Clarify National
                       Priorities and Better Align Them with Federal Funding Decisions, GAO-11-317
                       (Washington, D.C.: May 20, 2011).
                       51
                         EOP neither agreed nor disagreed with this recommendation and as of March 2019, had
                       not implemented it. GAO-17-720.




                       Page 14                                                                  GAO-19-625T
•     Provide decision makers with the best available climate
      information: In November 2015, we reported that federal efforts to
      provide information about climate change impacts did not fully meet
      the climate information needs of federal, state, local, and private
      sector decision makers, which hindered their efforts to plan for climate
      change risks. 52 We reported that these decision makers would benefit
      from a national climate information system that would develop and
      update authoritative climate observations and projections specifically
      for use in decision-making. As a result, we recommended that EOP
      (1) designate a federal entity to develop and periodically update a set
      of authoritative climate observations and projections for use in federal
      decision-making, which other decision makers could also access; and
      (2) designate a federal entity to create a national climate information
      system with defined roles for federal agencies and nonfederal entities
      with existing statutory authority. 53
•     Consider climate information in design standards: In November
      2016, we reported that design standards, building codes, and
      voluntary certifications established by standards-developing
      organizations play a role in ensuring the resilience of infrastructure to
      the effects of natural disasters. However, we reported that these
      organizations faced challenges to using forward-looking climate
      information that could help enhance the resilience of infrastructure. As
      a result, we recommended in the November 2016 report that the
      Department of Commerce, acting through the National Institute of
      Standards and Technology—which is responsible for coordinating
      federal participation in standards organizations—convene federal
      agencies for an ongoing government-wide effort to provide the best
      available forward-looking climate information to standards-developing
      organizations for their consideration in the development of design
      standards, building codes, and voluntary certifications. 54

In conclusion, the effects of climate change have already and will
continue to pose risks that can create fiscal exposure across the federal
government and this exposure will continue to increase. The federal
52
    GAO-16-37.
53
  EOP neither agreed nor disagreed with these recommendations and as of March 2019,
had not implemented them.
54
  Commerce neither agreed nor disagreed with this recommendation and as of May 2018,
had not implemented it. GAO, Climate Change: Improved Federal Coordination Could
Facilitate Use of Forward-Looking Climate Information in Design Standards, Building
Codes, and Certifications, GAO-17-3 (Washington, D.C.: Nov. 30, 2016).




Page 15                                                                 GAO-19-625T
                  government does not generally account for such fiscal exposure to
                  programs in the budget process nor has it undertaken strategic efforts to
                  manage significant climate risks that could reduce the need for far more
                  costly steps in the decades to come. To reduce its fiscal exposure, the
                  federal government needs a cohesive strategic approach with strong
                  leadership and the authority to manage risks across the entire range of
                  related federal activities. The federal government could make further
                  progress toward reducing fiscal exposure by implementing the
                  recommendations we have made.


                  Chairman Yarmuth, Ranking Member Womack, and Members of the
                  Committee, this completes my prepared statement. I would be pleased to
                  respond to any questions that you may have at this time.


                  If you or your staff have any questions about this testimony, please
GAO Contact and   contact me at (202) 512-3841or gomezj@gao.gov. Contact points for our
Staff             Offices of Congressional Relations and Public Affairs may be found on
                  the last page of this statement. GAO staff who made key contributions to
Acknowledgments   this testimony are J. Alfredo Gómez (Director), Joseph Dean Thompson
                  (Assistant Director), Anne Hobson (Analyst in Charge), Celia Mendive,
                  Kiki Theodoropoulos, Reed Van Beveren, and Michelle R. Wong.




(103594)
                  Page 16                                                         GAO-19-625T
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