Climate change is actually draining our bank accounts. Here’s what to do

When discussing climate change, it’s only natural to focus on the environmental impacts of this issue. However, there are economic costs, too. These economic costs are affecting everyone around the globe, regardless of where they live.

However, you can take some steps to reduce the impact of these economic costs of pollution on your own wallet—while doing your part to push toward a net-zero future.

Climate change costs

Estimates of the economic costs of climate change vary widely according to the measures used and the organization doing the estimating. For example, the World Economic Forum (WEF) estimated in 2023 that climate change damage could cost $1.7 trillion to $3.1 trillion per year globally by 2050.

That amounts to $16 million per hour, and over time, the costs are likely to increase as the effects of climate change worsen. That total comes from the approximately $2.8 trillion estimated cost of damages from extreme weather alone over the last 20 years.

A separate study published in the journal Nature found that climate change could slash average incomes by nearly 20% over the next 26 years. Additionally, this study significantly ratchets up estimates for the economic costs of extreme weather-related impacts on climate change—only one year after the WEF estimate.

In that study, researchers from the Potsdam Institute for Climate Impact Research estimate that extreme weather alone will directly cause $38 trillion in destruction annually by 2050. According to the researchers, the result will be a 19% plunge in average income per capita in the coming 26 years. They also projected the cost of mitigating carbon emissions at about $6 trillion—one-sixth the cost of destruction from extreme weather caused by climate change.

Looking at it yet another way, a study conducted by ICF for Consumer Reports suggested that climate change will cost a typical child born this year between $500,000 and $1 million over their lifetime. Those totals are in 2024 dollars and don’t include the effects of inflation.

How climate change is already draining your bank account

Looking at such massive numbers can make it difficult to see exactly how they affect the average person. However, various organizations have pointed out some areas that affect every one of us, hitting our wallets and bank accounts.

According to the WEF, these economic costs for the average person include damage not only to human health but also to agriculture, infrastructure, and property. Climate change and extreme weather have caused fields to wash away and livestock to drown while also damaging infrastructure and property.

Additionally, the Carnegie Endowment for International Peace identified other costs that affect all of us: specifically, yields from agriculture, workers’ physical and cognitive performance, energy demand, and even incidences of crime, unrest, and conflict.

For example, one study of the effects of air pollution on crime found that severe air pollution raises anxiety levels and can cause people to behave unethically, leading to potentially threatening situations that cause the brain to develop responses for self-protection and self-interests.

Finally, Consumer Reports cited cost-of-living increases and reduced earnings as the reasons for the high costs projected to be carried by a typical child born in 2024.

What you can do about the economic costs of climate change

If the above numbers are meant to trigger shock, it’s for good reason. Climate change isn’t just something that affects the weather by raising the temperature a few degrees over many years. It affects every part of our lives, including our wallets.

However, the good news is that you can take steps to reduce the impacts of climate change on your own wallet—while doing good for the environment. Some things are simple and can be done at home with little to no investment.

For example, unplugging electronics and even chargers when you aren’t using them will reduce your electric bill, especially when you make a regular habit. Swapping out old light bulbs for more efficient LED bulbs should also help. Adjusting your thermostat by one or two degrees can also make a huge difference.

Other changes at home

Some other things you can do around the home will cost you in the near term but save you significant amounts of money over the long term. For example, new energy-efficient appliances and HVAC equipment will slash your monthly bills, while updating the insulation in your home will help save on heating and cooling costs.

Planting trees, especially on the south side of your home, can also help cut these costs by providing much-needed shade during the summertime, keeping your home cool with less electricity. Swapping out dark curtains or shades for light ones will also help because light reflects sunlight while dark colors absorb it. Additionally, storm doors and windows can hold hot or cold air in.

Aside from making changes to your home, you can install a vehicle-to-grid system that sends power back to the grid when your electric vehicle doesn’t need to keep charging. Of course, solar panels can also help lower electricity usage.

Beyond the home

Finally, you can think more carefully about where to spend and invest. For example, it might be a good idea to avoid moving to places that could be more prone to flooding, wildfires, or extreme weather in the future due to climate change.

There’s also a wide variety of investments to choose from, with more and more funds that don’t even specifically target green stocks or bonds beginning to incorporate environmental, social, and governance (ESG) concerns. An investment adviser can help clear up any questions about which funds or investments may be more climate-friendly than others while diversifying beyond just green investments.