The sweltering temperatures intensified by climate change have hit US farmers and public insurance programs that protect them from devastating losses in billions of dollars.
These costs may cause losses to the domestic agricultural sector and U.S. taxpayers, who subsidize federal insurance programs to protect farmers from financial shocks, such as crop prices plummeting and yield fluctuations, according to the new Research.
A recent study Environmental Research Letters Climate scientists at Stanford University studied the impact of global warnings on the US crop insurance program, which was established by Congress in the 1930s to revive domestic agriculture after a sandstorm.
The result is obvious.
The study found that between 1991 and 2017, the increase in temperature caused by climate brought about 27 billion U.S. dollars in insurance money to farmers. During this period, these losses accounted for nearly 20% of the total expenditure of the plan.
As climate change intensifies, these numbers are expected to rise.
“This further proves that global warming is already affecting humans and ecosystems, which further proves [climate change] Noah Diffenbaugh, professor of earth system science at Stanford University, said: “We are bearing billions of dollars in financial costs.”
“This is very important for understanding climate change, understanding climate risks, and… assessing the value of mitigation and adaptation actions,” Diffenbaugh added.
The researchers used temperature records and data from the Ministry of Agriculture on crop insurance payments or compensation to study the relationship between insurance losses and county-level temperature changes during all 26 growing seasons. Then, using climate model simulations, they calculated the insurance losses that might occur in a hypothetical scenario (also called “counterfactual”) where there is no global warming.
By comparing “actual compensation and counterfactual compensation in all years and the overall situation of all counties” [United States],” said Diffenbaugh, whose team was able to attribute $27 billion in insurance claims and payments to climate-related trends.
The researchers wrote: “This method quantifies whether the county’s compensation amount is high or low in years when the temperature or precipitation is higher or lower than the county’s average level.”
For example, in 2012—when most parts of the United States experienced severe droughts and record summer temperatures—crop compensation exceeded $18 billion, making it the most costly year for insurance programs. The study estimated that climate-related temperature trends accounted for US$8.8 billion of this.
Diffenbaugh said that in light of more and more studies, “we can expect that in the current climate, what happened in 2012 will happen more frequently—even if the goals of the Paris Agreement are achieved and the situation is global. It will be more serious, but this is a serious discovery.” The temperature rise stayed below 2 degrees. “
“The risk is rising,” he said.
This research is conducted at a time when legislators and regulators are paying more attention to the risks that global warming poses to economic sectors, financial systems, and the broader global economy. President Biden signed an executive order in May to initiate government-wide efforts to address the risks to public and private assets posed by global warming.
Environmentalists, climate finance experts, and some researchers insist that the United States needs to prepare more quickly for the economic impact of rising temperatures.
“At this point, it is clear that we have not adapted to the climate change that has already occurred,” Diefenbo said. “As this and other studies have shown, this has cost us a huge price.”
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