IF YOU had the power to prevent not just one Great Depression but two, you probably would not hesitate to use it. But for some (not very mysterious) reason, that is pretty much what we do when we ignore an increasingly hot and violent climate.
Two of the biggest myths about climate change are that, one, it is a problem for future generations, and two, trying to alleviate it will hurt economic growth.
In fact, climate change is not just a challenge already for those of us lucky enough to be alive today, it is also an economic catastrophe. Ignoring it will be far more costly than fighting it.
The latest evidence comes from Bloomberg Intelligence (BI), which this week estimated that climate-related disasters have cost the US economy at least US$6.6 trillion in higher insurance premiums, clean-up spending and other expenses over the past 12 years.
Adjusted for inflation, that makes climate disasters already twice as expensive as the Great Depression’s US$3.3 trillion in losses over the same time frame, BI estimates.
Again, for those who fell asleep in that paragraph: Climate change is already twice as painful economically as the Great Depression.
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For now, climate costs are only half as expensive as the 2008 financial crisis and subsequent Great Recession, which kept economic growth below its full potential for a decade and immiserated a generation.
But climate losses would have to grow by only 2 per cent a year over the next dozen years to become the biggest financial disaster in US history, by BI’s estimate.
Recent performance suggests 2 per cent per year is a low bar to clear. Annual climate losses have more than doubled from less than US$500 billion in 2013 to nearly US$1 trillion in the past 12 months, BI has found.
Average annual growth over the past five years has been nearly 15 per cent. At that rate, climate costs will exceed the Great Recession’s initial 12-year toll in just five more years.
These figures are consistent with the growth in the number of US disasters inflicting at least US$1 billion in damage. The annual incidence of those doubled between 2012 and 2024, noted the National Oceanic and Atmospheric Administration (NOAA), thanks not only to more destructive storms, but Americans’ eagerness to set up house in the country’s riskiest ZIP codes.
Because disasters magically go away when you do not look at them, President Donald Trump’s NOAA has stopped keeping track of this data. But already in 2025, there have been several natural catastrophes that each inflicted more than US$1 billion in losses, including January’s Los Angeles wildfires and tornadoes, flooding and other severe weather in the central US.
BI’s damage estimates, like the NOAA’s, are in some ways an undercount. They do not include the many thousands of American lives lost to extreme heat and other natural disasters over the past 12 years.
Deaths from wildfire smoke alone could cause US$244 billion in annual economic losses by 2050, a recent working paper for the National Bureau of Economic Research (NBER) reported.
BI’s estimates do not account for the profound long-term health effects of wildfire smoke, heat and other growing hazards of a chaotic climate. They also do not include the potential growth lost from dollars being diverted towards rebuilding and insurance, and away from more-productive investments.
Economists are still trying to figure out how big the damage could get if the atmosphere heats beyond the 1.3 deg C above pre-industrial averages it has already warmed.
Another NBER paper last year estimated that each 1 degrees Celsius of heating shaves 12 per cent from global GDP, meaning the 3 deg C path we are currently on would mean a global economy that is poorer by a third.
There is still time to limit this damage, but not much. A report this month by dozens of top climate scientists suggests the world has just three years of action left to cap warming at 1.5 deg C, the stretch goal of the Paris climate accords.
After that, 2 deg C won’t be far away. We need to stop burning fossil fuels as quickly as possible, and make communities more resilient to the disasters already in the pipeline. But global governments remain a “quantum leap” away from doing what is necessary, the United Nations warned last year.
The US, once a leader in the climate fight, has switched teams in President Donald Trump’s second term. He and his fellow Republicans in Congress are doing all they can to further enrich the fossil-fuel companies that gave them millions in campaign dollars in 2024.
That includes pretending climate change is not a problem, contrary to science and the opinion of the vast majority of US voters.
They are doing so in the name of keeping energy prices low for those voters, claiming fossil fuels are cheaper and more secure sources of energy.
But to call them “cheap” or “secure” requires blurring your eyes to their many physical and financial risks. Those have become too big to ignore. BLOOMBERG
