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tv   Hearing on Climate Change the Economy  CSPAN  January 8, 2020 7:01pm-8:01pm EST

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unrealistic to what business they do in that country. and an agreement, a global agreement is the only thing that's going to satisfy it.
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trying to figure out. did you guys get in trouble? they sent you down at the other end of the table. everyone is together, but you're down at one end. listen, we're going to get started. the subcommittee hearing will come to order without objection, the chairs authorized to declare recess in the committee to any time. this briefing is an extension of several hearings we have had discussing climate change. and on the current economic impacts of global warming. i'm going to differ in the opening statement for myself and i know when we spoke earlier, in the holding
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area, i mentioned the fact that we would be hopefully trying to do a hearing, in fact, this is a briefing, we do have time for your opening statements, so, what i would like to do is to afford each of you the opportunity to do so. so, let me introduce the four of you and then we will move to you, mr. gomez. we have alfredo gomez, director of national resources and government accountability, office dave, jones's new director for environmental risk, institute for economic freedom and the heritage foundation, doctor michael green stone, milton friedman distinguished service professor of economics at the university of chicago, and the honorable stephen benjamin mayor of the city of columbia, south carolina. so, with, that director gomez, you are now recognized to give an oral presentation of your testimony for five minutes. >> thank, you mister chairman. so, chairman, i am pleased to
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be here today to discuss our work on how to limit the federal government's fiscal exposure by better managing climate change risks. this is an area that has been on our high risk list since 2013. the cost of recent weather disasters history with the need for planning for climate address and for investing in resilience. we discussed today the potential economic effects of climate change in the u.s., several areas where the federal government bases fiscal exposure for climate change risks and the extent to which the federal government has invested in resilience to these. the potential economic effects of climate change could be significant, and unevenly distributed across economic sectors and regions of the u.s.. for example, the southeast, midwest and great plains regions will likely experienced greater combined economic effects, largely because of coastal property damage in the southeast and
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changes in crop yields in the other two regions.. while the estimates of the facts are imprecise doing to modeling limitations, the estimates can help decision-makers better manage climate risk. earlier this year we also reported with the federal government faces fiscal exposure from climate change risks in several areas, including disaster, aid federal insurance programs and federal property and land. the rising number of natural disasters and related federal systems are key source of federal fiscal exposure. since 2000, five federal funding for disaster assistance is at least 450 billion dollars. according to the u.s. global change research program, disaster costs are projected to increase if certain extreme weather events become more frequent and intense due to climate change. in addition, national flood insurance program and the
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federal crop insurance program our sources of federal fiscal exposure, due in part to the vulnerability of the insured property and crops to climate change. from 2013 to 2017, lots -- paid under these programs under 52.3 billion dollars, has of this year the national flight insurance program a 21 billion in debt to the treasury. with regard to federal property, the government owns and operates hundreds of thousands of facilities such as defense installations and it manages millions of acres of land that could be affected by climate change. for example, in september 2018, hurricane florence damaged a marine corps facility in north carolina, resulting in a preliminary repair estimate of 3.6 billion. one month, later hurricane michael devastated tyndall air force base in florida, resulting in a preliminary repair estimate of three
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billion. one way to reduce federal fiscal exposure is to reduce or eliminate long term risk to people and property from natural hazards, for, example in september 2018, we reported that elevating homes and strengthening building codes prevented greater damages in texas and florida during the 2017 hurricane season. congress also passed the disaster recovery reformat of 2018, which enabled additional improvements at the state and local level. with regards to resilience, the federal government has made limited investments, however, it does have the strategic approach for investing in climate resilience project. no one is in charge when it comes to identifying and prioritizing him -- climate resilience or products across the federal government. no federal government is looking holistically at how to strategically prioritize
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projects to ensure they address the nation's most significant climate risk. in summary, the federal government could reduce its fiscal exposure to climate change by focusing on coordinating federal efforts. it made a total of 62 recommendations, and as a december of last, year 25 of these recommendations remain open. some of these identify key government wide efforts needed to help plan for and manage climate risks and develop federal efforts towards common goals. this completes my opening statements. >> thank you very much. mr., jones you are recognized for five minutes for opening comments. >> thank you, mister chairman. my name is dave jones. i sort of the senior director, for 2011 to 2018, had the privilege of serving as california's interest commissioner. i'm a tie and concludes that global temperature rise contribute to catastrophic compliments, heavy
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precipitation, coastal precipitation, wildfires, are weights of you are more frequent by global temperature rise. these events are resulting in loss of life, injury and destruction and these events produce economic insurance losses. these lost a rising over time globally and in the united states. from 1980 to 2019, damaged associated with extreme weather events cost 1 million damages -- 1 million dollars in damage across the u.s. economy, at 1.7 trillion, dollars in 2017 global economic loss of natural catastrophes were 330 billion dollars. total global insured losses were nearly 138, billion the highest losses in history. the united states, and insurance, companies are responding to increase -- decrease losses from severe weather events by excluding limiting coverages for certain risks with the risk of loss to high. flood insurance made understates provides an important example of how private insurance companies may respond when they conclude the risk of loss is too high. decades, ago home insurance companies in the u.s. included the risk of flooding for many
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homes was too high, home insurance companies have since then excluded coverage for flood risk in all standard home insurance policies. today, i would like to focus my testimony on the threat of extreme wildfires, for, example the climate you are in peril facing insurers. the fourth national climate assessment stress the fires are increasing in intensity, duration in frequency, and by mid century, the united states is expected to have 2006 times more damage from wildfires. in 2017, 20, 18 california suffered the most deadly destructive wildfires in its history, tens of thousands of homes and other cars were damaged or destroyed, in california alone suffered 12 billion dollars in losses in 2017, only to be followed in 2018 by 13 billion dollars in losses, the largest insured losses associate with the wildfire ever. home insurers have responded the higher loss the greatest risk of wildfires by raising insurance, and declining to write new policies
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for holmes ensured which face to high risk of wildfires. california is marching steadily toward an insurable future regarding insurance coverage for the homes at risk of wildfires. so, what can we do? greenhouse gas emissions need to be reduced dramatically in order to address the underlying driver a catastrophic weather related risk. one important often overtimes look -- overlooked we're doing so is natural chemical solutions which provide up to 30% of climate reductions needed me to go to the paris agreement. we need more public and private investment these approaches as part of our brought effort to reach the paris agreement targets and and to reduce wildfires, we need to -- collaboration, strategic fuels reduction, innovation and funding are the needs to resilient landscapes and communities. so he took rocket hazardous fuel treatments have proven to be a safe an effective way to reduce risk to communities, removing overgrown brush and, trees leaving forcing more resilient conditions, resilient to wired fires. funding for these and other programs to reduce
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wildfire risk is a continued challenge. the 2018 fire fix help to stabilize the budget but that effort must be coupled with risk reduction administration programs. insurers can also account for the risk of benefits reductions of nature in their pricing underwriting. insurers can design and offer innovative insurance products with the raising risk of wildfires which take into account the ecological management of forest. how much is unavailability the face of increasing wildfire risk is about one example of how it sure is may respond to increase risks a close to -- associate with climate change. hurricane flood risk, hurricane heat islands, all of these are examples of consequences for the pricing of insurance. on an insurance in the insurance sector playing a role in helping to manage these, rest more fundamentally these underlying drivers of these risks need to be addressed. that means reducing greenhouse gas emissions dramatically including national climate
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solution. it also means using nature based solution to reduce or adapt to risk. otherwise, we will find ourselves in an increasingly an insurable world. thank you. >> thank, you mr. jones. doctor green stone you are recognized for five minutes comments.. >> i'm the milton friedman professor of economics and director of the energy policy institute at the university of chicago. the social cost of carbon for the sec is the cost of society of polluting an additional ton of co2 in the atmosphere. the sec enables regulators to and account for potential benefits to society, the lower carbon emissions and points toward the optimal price on carbon required to redress greenhouse gas issues. so, first let me give you a little history. in 2000, nine while working in the obama administration i convened an interagency working group to determine the government wide value for the social cost of carbon. as of 2016, the united
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states government estimated the social cost of carbon at about 50 dollars per ton of co2. since its inception, the sec has been used this foundational tool, setting roughly 150 federal regulations to cover areas such as energy efficiency and fuel economy standards. today, the benefits from u.s. regulations written to include the social cost of carbon total more than one trillion dollars. however, there are several reasons the current administration, the social cost of carbon is too low and as a consequence underlines the well-being of court people. number, one in 2018, the trump administration instituted a smaller social cost of carbon at 107 dollars compared to 50 dollars, it is based on two faulty assumptions, first, it uses it appropriately high discount rates that are not supported by economic theory or financial markings. second, it feels to account for damages that occur outside the united states. this failure
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discourages other countries who in total produced about 90% of total co2 emissions from undertaking emissions cuts that would benefit u.s. citizens. the united states is a special role in global diplomacy can produce demonstrable benefits for u.s. citizens and we are failing here. the absence of meaningful progress at the recent madrid climate talks is evidence of what happened when we were treated. number two, the social cost of carbon is no longer based on the frontier of scientific and economic understanding, as noted by 2017 report issued by the national academy of sciences. to fill this, hole i have started including something called a climate impact lab. this is implementing the recommendations to update the social cost of carbon. a primary climate impact lab findings it changes the mortality rate due to temperature changes alone, will lead to a social cost about 24
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dollars per metric ton of co2, so let me put that in context. that 24 dollars, the mortality, partial social cost of carbon, we computers ten times larger than what the obama number had as the cost, in, fact it is almost half of the entire mortality, obama estimate and it is three to 20 times larger than the trump administration's entire social cost estimate. number three, while estimating climate damages suffered to uncertainty associate with climate models and econometric estimation, this uncertainty actually strengthens the case for reducing emissions. economics and casual observations revealed that people show a propensity towards risk aversion. my fellow witnesses entire industry of insurance depends on the idea that people dislike risk and in fact are willing to pay a premium to avoid on certain outcomes. for this, reason the u.s. government estimates the social cost of carbon, under all
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administrations which failed to account for this, is likely to low. so. what to do. given the scale the charge the need for resources to address other pressing social challenges, it is critical that policy delivers a reduction in co2 emissions both today and in the future. the sheerest way to achieve inexpensive productions today is too pricier to missions with a carbon tax or by implementing a cap and trade program. if set at the right, level these pricing approaches solve the main problem which is that people in firms currently do not take account of the damages they caused by engaging activities that really co2. this approach is great appeal is it unleashes market forces to uncover the least expensive way to reduce emissions by incentivizing admissions reductions, family and businesses can reduce emissions and have money for other priorities. in contrast,
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current and federal state policy is really a hodgepodge. it targets mission the difference actors, in different ways, and with different degrees of intensity. a recent paper by some colleagues that yell at harvard included the range of cost of u.s. co2 mitigation policies is extremely wide, for less than ten dollars per time to over 1000 dollars per ton. i'm most of these costs are relative. most of these emissions reductions are relative in the sense of a vastly exceed the u.s. government 2017 coastal cost of carbon, so, the point is we are getting unnecessarily small reduction of co2, given the amount of money we are spending. in, contrast pricing carbon would prioritize activities with the highest bang for the buck. let me finish quickly, turn into future reductions, the private sector on its own will not invest enough in research development and demonstration to uncover new approaches to reducing co2 because many of the return to those investments would flooded their competitors. the fact that we
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like incentives to engage in energy is a market failure and the government address this by providing subsidies or finding research directly, in conclusion the united states needs to balance the cost to our economy a mitigating climate change today, there is the cost we incur with the climate damages that are coming. carbon pricing that is packed to a former socialist of carbon using the best available evidence along with robust funding will deliver the inexpensive reductions and co2 conditions they're necessary today and in the future thank you. >> thank, you doctor green, stone mayor benjamin you are now recognized for five minutes of comments. >> mister, chair thank, you and ranking member, and member of the subcommittee, for the opportunity to testify. >> obviously we have our condolences and a lot of our chairman, representative cummings, as someone from south carolina with south carolina routes we all miss him a great deal. vice name is steve benjamin. i have the pleasure of serving for the last ten
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years as a mayor of columbia, south carolina, in the center of our great state, in addition to serving as our state government, we also host nearly 50,000 students attending the university of south carolina and columbia college, into historically black colleges, we are all the proud home to fort jackson,, when the largest trade center which trains approximately 45,000 soldiers per year. climate change perhaps the biggest challenge we face, so, please, at the subcommittee hearing on the economic effects of climate, change if the subcommittee wants to hear on local government budgets and local, economies mayor cities throughout the country already grappling with the impacts of climate change, and the government is there to get this impacts to make our duties more resilient, most heartening and modernizing our infrastructure, we cannot tackle this with a strong federal partner, and is therefore i hope that we will see the first step in the development of a robust national climate action program that recognizing bolsters the efforts of mayors in the cities
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that were taken to address this existential challenge. in columbia, we unfortunately witnessed firsthand how climate change is already impacting cities and testing our infrastructure. over three days in october of 2015, the remnants of hurricane joaquin stalled over central south carolina, inundated the carolinas with 11 trillion gallons of, rain 30 inches of rain in our great city, the impact was dire, taking the lives of 19 passions -- precious south carolina, is the storm nearly wiped out our columbia canal, our surface, drinking water treatment plant, ruptured dozens of water to remain, closed over 100 streets, but an hour fire station in primary current -- primary firefighting facility and damage many homes and businesses. since then, we have had several other major rain events. joaquin was a 500-year, event heavy rains are apparently becoming the new normal, and after, that walking, it became clear as the recovery, resilience against future storms, local also getting on
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the ground, into the, infrastructure not only are increase rainfall more tests more frequent but of course there are times in 2018 that show that 1969 columbia we experience what 46 days per years, above 90 degrees fahrenheit. from the time i was born, but the time -- to the top maternity, we expected to more than. double we expect this trend not far from your home and not far from the members hometown of topics, bill a doubling also the number of days above 90 degrees. this excessive heat, of course has adverse impacts on everyone, but certainly the elderly, manual laborers impact on food production, decreasing air quality, last year the june of this year at the owner representing my fellow mayors at the notes discovered of mayors, liberalization of cities with problems 30,000 or more the national level. a coalition dedicated
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preserving the tax -- because you are of the sierra clubs, understand energy and past present mayors of offering america associations, i have the pleasure doing this at a time when we are taking renewed prominence the role national states will be at the forefront of public policy and innovation. a 2015 floods were called action for columbia. my written testimony, in, detail has been submitted for the record but we have use energy efficiency and conservation to help save our citizens millions of dollars while updating our infrastructure. one of my first finishes my took office was to operate our regional transportation system. we have been looking for significantly. two years ago we, took the next step of sending -- setting a target of empowering our community with 100% clean and renewable energy by 2035. in addition to our climate change prevention efforts, we have also been actively addressing mitigation. last year we made
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history by entering -- issuing our first evergreen bonds to improve our storm water system, the president fought above 95 million dollar plan for the next several years to address stormwater drainage issues. local governments only collect about 15% of our nation's tax revenue. with that 15% we are expected to deliver a significant array of coal governmental services that we all understand make up the heart of a civilized society, of the western world. we know we cannot tackle that task without -- of the drawing climate things on our own we need a strong federal, local partnership. the conference have mayers has issued the mirrors call to climate action, and include it is attachment to our written testimony, so i will not go into it in detail, but it lays out a significant number of proposals that we believe could be implemented and produce quick results, underscoring the existential threat that climate change
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means to the world and certainly the economic impact it has on our cities, so we appreciate the opportunity to testify and thank you for your work on this major generational challenge. >> thank you, mayor, and thanks to all of you for participating today in this briefing. >> let me emphasize, part of the reason you are here is that the subcommittee on the environment for oversight committee, we were very focused on the impact of climate change. this is the number one issue that we are trying to tackle this year and last year at the 168 congress in that process. we are looking at three phases of hearings, each phase having multiple hearings and briefings. that is, past, present and, future as simple as, that passed, what did we know and when do we know it about climate change? we have already had hearings testimony and evidence was provided, showing that shell and exxon
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new in the late seventies and early eighties about the impact of extensive burning of fossil fuels would have in co2 emissions and the impact on environment as well as climate change and more severe weather events. president, in the present phase of these hearings and briefings, which we are in right now, our goal is to help the public as well as lawmakers understand both the economic and human impact of climate change. unfortunately, mayor benjamin, as you just pointed, out it is often quite easy to figure out the human impact of climate change. it is literally counting the number of people who have died by that -- from that event. we have also heard testimony from others, though, in talking about the human impact from a health care cost, and that certainly is more difficult to ascertain but also
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quite important that we get to that information. the other aspect is the economic event of climate change, and that is what we are really here today to help the public better understand that climate change, more severe weather events causes much greater damage, and greater economic impact than we would experience without having climate change at our doorstep. and then we will move into the third phase of hearings, and that will be on the future, quite, literally we will paint to different pictures. one, nevada, i want apocalyptic, knowing, that if we do, nothing what type of a world we will be living for our children and our grandchildren a future generations. on the other hand, if we do take action now, how we can dramatically impact what our world will look like for future generations, knowing also that even if we take dramatic action now, there is
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going to be impact from climate change that we cannot stop immediately, that we are going to experience negative consequences for our past inaction. so, you being here today it's extremely helpful in allowing us to help educate the public and educate lawmakers, especially those on capitol hill, because it's certainly clear that these states and the mayors around our country have a better understanding of the impact of climate change and ways to address it. so let's dig into a few questions, and i'm going to bounce around here a little bit and when we talk about the economic impact, doctor greenstone, let me start with you. you are talking a little bit about the social cost of carbon and i'd like to try and pin it down a little bit because i think from your comments that there is a wide
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range of estimates as to what the social impact is from carbon, and i'm curious, do you have a hard number as to -- in current, dollars as to what the cost in tons should be? >> so, i think the best estimate that we have currently is the one from the obama -- left over when the obama administration which is about 51 dollars, so, in plain english, as best i can for, this what that means is that every time we have mid-a ton of co2 in the atmosphere, we are giving the world as an unfortunate gift, about 51 dollars worth of damages. it is true that there is some variability around that number, but what is important to remember is that when things are uncertain, what people want to do is actually by insurance against that, and so that would actually tend to increase how much we would want to spend to protect ourselves. >> and a 51 dollars, just to be clear here, some of the things
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that we go into the calculation of that 51 dollars is shortened lifespans and health care costs due to air pollution, as an example. is that correct? >> yes. thank you, mister chairman. there are several big ticket categories. human health is at the top of the list, and this new research that i was talking about which i think will eventually causes to want to revise the social cost of carbon says that we have been underestimating that, but yes, there will be large increases in mortality rates, people have shorter and secure lies as a consequence of the changing climate, there will be wide parts of the united states, wide parts of the united states that are going to be subject to flooding and a storm surge where i think we will have populations basically move, that were very complicated and thorny decisions about which parts of united states we will protecting which ones we will not, and it will also show up
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and crop yields. >> and if i recall, my building number correctly, i believe in this house bill seven six three on the carbon tax, which i am a cosponsor, of which i am sure you are familiar with that proposed legislation of a tax and dividend, and in your mind, from an economic standpoint, does that free, if implemented, need to be brought in progressively or do we go straight to somewhere around a 50 dollar fee? >> i think the best estimate we have is 50 dollars and so i think there is a good case for starting around there. i think the most important thing is getting it above zero, which it is right now, so, fighting about the exact number is i think critical -- not critical, but would want to end with a number that is close. my projection is that as we learn more, the 50 dollars is going to look a little small and we may want to have some room for allowing a decrease to reflect
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that. >> and the sense here is that the true cost of burning fossil fuels is underpriced by at least 50 dollars and a social impact cost that occurs from it, there, for those who create and burning use fossil fuels should pay the appropriate price associated there, with which would also suggest a faster move by those same operators and manufacturers and companies that develop and implement this, that they would move faster towards green, clean industries. >> mister, chairman there's very little innovation in response to the market, so, until there is a price signal, i think is just hoping for the best in terms of innovation and was there is a clear price signal. the american economy, is extraordinary aspect of it responding to, it and have little doubt that these ideas
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will start flowing in, and give us much less expensive even imagined. >> so, basically this is how capitalism is supposed to work. good. you also mentioned cap and trade, i just want to be clear here, you are not suggesting that they are mutually exclusive, that they could actually work in tandem, correct? >> yes, you could, i think probably the best case would be to choose one and go down that path, and -- >> okay. >> and i think a lot of that probably depends on what one wants to do with the revenues and i think it can often be easier to direct the revenues in particular with the direction of the carbon tax. >> mr. jones, with your many years as insurance commissioner for the city of, california, let's take a few minutes and just talk about the economic impact on average citizens and homeowners as we experience again, more severe weather events and the underlying
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insurance for home, whether it is flat insurance, property insurance or so, on can you talk and speak a little bit to what we can anticipate if we do not provide of greater checks to climate change for homeowners across america? >> certainly. and i think it varies geographically as mr. gomez pointed out but there is no question that the price of home insurance and certain geographies is going to go, up and you see that most acutely in california where fans as recently as 2017, the most recent year for which we have data, there is a 50% on average difference in the price of home insurance, in the high risk for areas to versus those outside, that average in some homes keep paying two, hundred 300% more for insurance if they are facing a high fire risk versus those that are not. the california department insurance
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says you have about 100 filings this year seeking increases in rates. in all likelihood, this will be approved because of the justification of the insurance vis-à-vis the extraordinary losses in 2018 and 2017. we are also seeing unavailability problem as well. at some point, this applies broadly to all insurance, if the risk is so extreme, there is not a price that the insurer can accept in order to cover that risk and we have seen that historically with flood insurance in this come tree where some 50 years ago, home insurance started flood risk was too high so they stopped writing flood risk into standard home policies, and they don't have, that you're seeing that now in california with regard to home insurance and wildfire, risk where we are seeing a significant uptick in non, renewals or not writing new home insurance. anecdotally, we are hearing that that is beginning to have an effect in real estate markets and some of those areas. we do not have hard on that yet, but there is the implication there. as the
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price goes up, it becomes increasingly difficult for those on fixed incomes and doesn't lower incomes to afford insurance, and it has consequences for their ability to have insurance, that means that they may go without insurance over catastrophic event occurs they have nothing to fall back on in order to help recover. so, all of those are consequences of climate driven risk that play out in the insurance sector. >> along those lines, mr. gomez it was not long ago i was in miami and saw firsthand in a neighborhood i was in where groundwater was coming up and causing flooding. on an average sunny day. and the implications from flood insurance, from title insurance, from the marketability of these properties, you start to get a very good sense of what could occur in many municipal areas around the country. can you speak a little bit to what the
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economic impact would be if we see a deterioration of the real estate market and homeownership markets in many parts of our country? >> at least in the studies that we have looked at, there are some regions of the country, as you, noted the coastal regions are going to have high economic impacts, related to flooding, sea level rise, and so we are seeing that from the studies that are telling us that there and really i, think it's more benjamin noted, it is really the cities, it is to local folks that are seeing the impacts because that is what -- where is taking place. from the federal perspective, it is up to us to figure out how we can assess that, how we can provide assistance, whether it is through information, for helping them interpret and translate the information that they can use to make better decisions, right? whether it is to build a seawall higher, improve the building codes and standards, so, there is many opportunities where the federal
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government and we have recommended many things but the federal government can do to help the state and locals. >> let's take this further, what happens if due to some of these events much like we have seen in california with these wildfires where you have apocalyptic events and many people lose their homes and bc insurance koreas go into business because of their inability to pay the claims, often federal government act as a backstop for those situations. is there a concern that we may come to a day where there are so many cataclysmic events that the federal government won't be in a position, or unwilling to be in a position to backstop those situations? >> that is a good question and again, the areas that we have placed on the high-risk, list those are areas we want to bring attention and one of the areas we've been talking about is a national flood insurance program. it has its own harvest designation and it is essentially because that
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program of the crop insurance program we never really designed to generate enough revenue to pay for the expenses. as i noted, the national flood insurance program owes the treasury 21 billion dollars currently. i believe that congress actually wrote off a similar amount recently. so, yes, these are growing federal fiscal exposures to the federal government faces and they are unsustainable. >> mayor benjamin, i want to circle back to a couple of comments from your narrative. one was, you talked about how you prepare for your plan for greater climate change related event. help me understand that. what do you and your city council, does it city, council how do you budget and plan to address future climate change
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related event for your city? >> sure, thank you mister chairman. with increased focus on resiliency and mitigation, we obviously run a tight ship fiscally and we have finished this last several years with a budget surplus. we always balance the budget. we have clean books. we recognize that a smart investment in infrastructure, in infrastructure that now becomes more expensive because we have to also of invest in resiliency and mitigation and obviously thinking about the long term cost of defusing that that, no one pays cash straight up even in this wonderful interest rate environment, all of those costs have to be borne by our common taxpayers and ratepayers. we decided, actually, my council voted unanimously. we do not vote unanimously on a lot of things, this nearly 100 million dollar investment was addressing in our city but the investment over the last six,
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years we invested about 750 million dollars in water and sewer and storm infrastructure protecting the environment, protecting our three rivers but it has gotten that much more expensive as we build on the cost of resiliency and mitigation and we have had the opportunity, because of previous decisions made by the federal government, to mitigate some of those costs. i mentioned the energy conservation granted. we think that is obviously a significant opportunity that should be renewed. we believe strongly in the focus on targeting investments in climate resilient infrastructure is a smart move and, certainly one of the major challenges we face, i mentioned the role that the taxes on these bonds allows us to make these investments in infrastructure, particularly water, sewer, stormwater, most of that investment, i think almost 90% of it is borne by local governments, not by the
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state or federal governments. we lost in the tax cut jobs, act the ability to advance refined our that. the thing that back someday is also the case, but now every single decision we have made post 2015 certainly includes additional cost, additional cost that eventually will have to be borrowed and the fees, over a period of time, already affecting cash strapped local governments, i will say they're also driving the american economic experiment, american gdp, creating season major metropolitan economies will be wonderful if we could find creative, ways all of them laid out in our statement and the plane from the conference of mayors to return -- to repatriate some of those dollars back home to explore investment in american infrastructure. >> so so i say, it would be helpful to have leadership from washington d.c., recognizing, not just the impacted seriousness of climate change but also working to pass
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infrastructure bills where we can help local municipalities and states better address these issues. >> absolutely. the question you asked earlier, i think, since 2005 federal government spent for under 30 billion in disaster relief funding. if we had that type of investment on the front end, it would be amazing what we can do to mitigate some of the damages to our homes and businesses and families. >> doctor greenside any others can weigh on this as well, if you have information. my understanding is that wall street is looking more and more at pricing the impact of climate change, in the pricing of bonds. and i am curious if you have come across that type of information as well, because ultimately, as mayor benjamin talked a minute ago as the green bonds that his city has issued, if there is additional
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basis points that we price into bonds at the municipal level, whatever the pricing might dictate, based on the geographic location, that is a cost it is ultimately passed on to the citizens of those areas. so, doctor green stone, if you want to weigh in on that, and mr., gomez i would not be surprised if you have an opinion or two are not as well. >> sure, thank you, mister chairman. let me just, say, climate change is, here we are not debating whether not we have climate change anymore, it is here, and the impacts of immitigably climate change are beginning to show up, the man was talking about the ways it impacts the functioning of a city and you pointed to how it started to show up in financial markets. i think importantly, it is showing up in insurance rates which we highlighted and that is causing people to make different decisions and now there has been a growing recognition on wall street it is beginning to show up in bond
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prices, and it will show up in a variety of other asset classes as well, but there is a big difference between the impact showing up versus policy that sends a clear signal, which would also affect markets and that would affect markets in different ways and it would reduce the emissions, whereas the prices you are pointing to our all sending signals for how people should adapt to climate change and just treated as though it cannot be changed but sending a price signal through cap in trade or carbon tax would also affect financial markets and would be very, very powerful at reducing the amount that we have. >> very good. mr. gomez. >> sure. i would agree with that. we are seeing that in the insurance sector, for example, lots of activity in that area. one of the things that i wanted to mention is that a few years ago, our controller general convened a form of primarily
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private sector companies to come to julio and talk about more on the adaptation side but, what were they doing to deal with the influence of climate change, because it is real, and this is a variety of private sector companies, we had oil and gas, companies we had food and beverage, we had insurance companies. all talking about the kinds of things that they were doing because they were already seeing the impact, whether it was oil and gas infrastructure, whether it was beverages companies, figuring out where they were sourcing their materials from, and it was getting hotter, and so they were willing to show how the private sector has been reacting to the tax and that is what we showed in that report. mr. jones? >> the g20 financial stability board in roughly 2016, concluded that climate change poses a systemic risk to the global financial system. the created a task force on climate
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later financial disclosures, led by the private sector, which in 2017 set forth a series of recommendations with regard to what the real economy and the financial sector ought to do, criminally -- principally among those is disclosure, both real economy firms as well as the financial sector firms ought to be disclosing risks. that is not happening, sufficiently. second, the d.c. fc recommended that the financial sector undertake stressed hasn't -- testing and scenario analysis of it portfolio to test the robustness of -- against physical and transition risks associated with climate change. that is not happening with sufficient uptake. another challenge we have in united states is that although a number of other international financial regulators including central bank regulators like the bank of england and others are taking up these recommendations, u.s. financial regulators are liking behind.
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if the report in march or a pro this year, they undertook to look at three sectors, bonds,, utilities and commercial facilities. they go down to the onset level and were able to ascertain the differences in fiscal risk of the assets underlying each of those sectors and there were some wide variance, the extreme risk of flooding, the utility, inland not so, much and yet, the physical risk that those underlying physical assets faced were not borne out in any discernible price differentiation in each of those three sectors, securities, so, that is a big problem. certainly, the nature conservancy supports a carbon price, a carbon tax, cap in trade, a mechanism to adopt that but sadly, climate change already baked into our system given the degree of greenhouse
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gas emissions we already a crew, physical impacts are already occurring and those impacts, the risk of those impacts are not being borne out in places sections and financial markets and has to do with a lack of disclosure, a lack of uptake of analysis by the financial sector. the rating agencies, to their credit, i'm going to take on capacities to look at these impacts but they have yet to mainstream the esg ratings into core financial ratings, currently the as easy as cost large cloud of doubt over whether a mainstream financial filing should include these risks, but it is a huge mistake, i think it is all not this is a risk we have a chance to talk, about our transition risks, which of those associated with markets, technologies and government moving away from fossil fuel based economy, which is where we need to go dramatically, but, that poses risks for assets in those sectors of the economy that are largely greenhouse gas
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admitting that poses risks for investors investing in those sectors and that is another kind of risk that investors need to be looking at and the insurance companies are principal investors in this regard, the bank lending into the sexes need to be looking at it. and so we need to be looking at a lot more with regard to our financial risk and we are currently doing in our country because that is a big area versus. well >> while you have the right, front allow me to ask this question as well. there's been a few ongoing battles between the trump administration and the state of california, one of those over coffee standards, or california has the ability to provide, to ban higher status from auto manufacturers with 13 other states in the country of canada follow as well, and the administration is trying to overturn california's right as well as other states and canada, so they can make their own decision but has looked to
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california for its leadership in this area, what is the impact of for not just the people in those states but across the country and the world with the increase pollution that we would be looking at if that is enacted? >> so, i think the impacts are negative and they are multiple. one impact is just more initiatives generally recurring with the related health facts, but, a sizable portion of california trying to accomplish through those standards a significant reduction in greenhouse gases in the transport sector, which is one of the largest emitters, until undercutting california's ability to administer a separate standard will have a significant negative consequence on the battle against greenhouse gas emissions. >> you, know it is worth noting, for the public, 40% of the imports of the united states that have come in by ship come in through los angeles and long
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beach ports, 25% of our exports go out so california certainly we'd like to be able to continue to monitor and set appropriate levels for admissions in our states, since those goods reach all 485 districts. doctor green, stone you wanted a comment as well. >>, yes it is only partly related i apologize if it is too far afield, but, i think café is actually a terrific example of what i think is kind of the hodgepodge approach to regulating co2. the textbook solution to this which the bill reflects would be to have an economy wide price on carbon and instead we have these sector by sector things that don't directly carbon -- target carbon, and in the case of café we are getting reductions of co2 probably at the cost of one to 200 dollars per ton. if
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instead we were able to rely on a clear price signals, there are reductions of co2 available for 15 dollars per ton into effectively we are paying for things -- to do things like café about ten times what we will be able to pay for using a more direct mechanism. >> votes are about to be called, i will take this opportunity to ask all four of you, is there anything else you would like to add often in these hearings and briefings you hear somebody else say something, or question gets asked that you are not able to respond to, and this is your chance to jump in and fill in any holes that you might have seen. >> thank you for your leadership. we look forward to continuing this conversation in helping to push along, mister chairman. >> i would just add one thing, i am very well aware of pushing a carbon pricing which your bill does, the politics of that are complicated and when he hip
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up in that is a concern, an important concern about distributional issues and what will happen low income middle class families, so i just want to highlight because i know you know very well from the nature of your bill that the carbon tax creates revenue that can be directly funded to consumers and can actually improve the standing of middle class families and so i think all of that brought up is not a true impact. >> yes, thank, you mr. johnson. >> we would like to thank you for your leadership, mister chairman, and thank the committee for holding this important series of hearings and we urge you to consider natural climate solutions as well as if you're base solutions to mitigating adapting to the climate crisis. i would urge you to consider, delving into there is one
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bright spot among u.s. financial regulators, there is the treaty commission, and the commissioner has established subcommittee on climate risk that is going to be making a recommendation in regard to all of this financial regulators, as to what steps they should be taken to try to address this risk. i think this would be a very interesting subject for your committee to take up and finally, with regard to insurance, insurance is a very important mechanism to help manage risks, to help individual families and businesses recover from catastrophic events but if we do not dramatically and quickly reduced the underlying driver of that risk, insurance is not going to solve this problem. thank you, mister chair. >> mr. gomez. >> yes, mister chairman, we are always ready to assist congress in its oversight responsibility,
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and i want to thank you for bringing that into our work, thank you. >> thank, you and again, what we were not able to have an official hearing, i cannot thank each of you enough for attending this briefing and providing your comments. at the end of this process of additional hearings we will be having addressing climate change and laying, out as i mentioned earlier one of two roads that we are faced with, our hope is to provide concrete recommendations as to how we can achieve a road that reduces the impact of climate change. what are the tools of the tool box that we can pull out and effectively make a difference? recognizing that there is no single tool that is going to be the panacea for addressing this issue but it will take multiple tools to accomplish the outcomes we desire. so, your comments here today will be a part of that final report that we take forward. in addition,
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don't be surprised if we make all on you again to attend another hearing down the road, and then we would certainly hope that you will consider participating in doing so. finally, along those lines as well as we continue to understand the true economic and human impact of climate change, we also need to further understand what are those tools, what are the emerging technologies that can help us in our quest and, if you are aware of emerging technologies or economic tools that should be considered under the tax code, or an effort to move us in the right direction, move our country in the right, direction please bring that to our committee's attention. with that, again, i appreciate all of you taking the time to come to washington, d.c., to provide us with your knowledge, and give us a very important
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briefing and with that this briefing is adjourned. thank you.
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