Climate Change Is Tough On Personal Finances : The Indicator from Planet Money More than three-quarters of adults in the United States say they've experienced extreme weather in the last five years, according to a nationwide survey conducted by NPR, the Robert Wood Johnson Foundation, and the Harvard T.H. Chan School of Public Health.

And events like floods, wildfires and hurricanes are emptying bank accounts — especially when insurance doesn't cover the damage. Today on The Indicator, we bring you an episode of Short Wave, NPR's daily science podcast.

Climate Change Is Tough On Personal Finances

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SYLVIE DOUGLIS, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC'S "WAKING UP TO THE FIRE")

ADRIAN MA, HOST:

Devastating floods, intense heat waves - it's been a summer of extreme weather - weather we're seeing more of because of climate change. And in fact, more than three-quarters of U.S. adults say they've been personally affected by this kind of extreme weather in the past five years. We're talking hurricanes, wildfires and, yeah, floods and heat waves. This is according to a nationwide survey conducted earlier this year by NPR, the Robert Wood Johnson Foundation and Harvard University.

But there's another part of this survey that really caught our attention here at THE INDICATOR, and that is money. A lot of people who responded to the survey said their main problem with extreme weather - it's expensive, and many suffer long-term financial problems because of it. So today on the show, we're doing something a little bit special and turning things over to NPR's daily science podcast Short Wave. After the break, Short Wave co-host Aaron Scott and Becky Hersher from NPR's climate team - they explain what extreme weather means for your wallet.

(SOUNDBITE OF MUSIC)

AARON SCOTT, BYLINE: All right, Becky. So most people in the U.S. say they've experienced weather events that are extreme - that's heat waves and hurricanes, floods and wildfires. And I can think of a lot of ways that could cost a lot of money.

REBECCA HERSHER, BYLINE: Yes. Let's list some of those ways. So I'll start. The wind from a hurricane could blow the shingles off your roof.

SCOTT: Or a wildfire could burn your whole house down.

HERSHER: Here's another one you might not think of. It gets really hot, and the electricity goes out, and then all of your food spoils.

SCOTT: Had that happen before.

HERSHER: Yikes.

SCOTT: Or an unprecedented storm could knock the tree over in your front yard and smash your car. Also happened on my street in April.

HERSHER: Your street sounds kind of dangerous.

SCOTT: (Laughter).

HERSHER: But yes. So obviously, there's a real range of things, and some of them are really big, like your house burning down. But one thing that the survey made clear is that even medium-sized storms and floods can be pretty tough on a family's bank account. So it doesn't need to be those total losses. Almost a fifth of people who experienced extreme weather in the last five years said they had serious financial problems as a result.

SCOTT: So that suggests that it's not just the people who are getting hit by record-breaking weather who are struggling here. It's actually a much broader group.

HERSHER: Yeah, exactly. One of those people was named Jennifer Harris.

JENNIFER HARRIS: Hi, Rebecca. This is Jenny.

HERSHER: Jennifer is a nurse. She has three kids, a husband. She lives in Hampton, Va. And she told me that extreme weather has cost her family a lot of money. So their town is surrounded by water. It's on the coast. There are rivers and the Chesapeake Bay, which means there are hurricanes. There are thunderstorms, nor'easters and floods.

HARRIS: We've had roof damage. We've had siding damage. We have a shed out back where we've had siding damage on that. We've had - our fence, we've replaced it twice.

SCOTT: Wow, Becky, that sounds expensive. I mean, there's the big-ticket items like a roof. Ouch. But I mean, here's a question. Like, what about insurance? Presumably, Jennifer's family had insurance on their house.

HERSHER: Yeah, totally. They have home insurance and special flood insurance, actually, which, side note, is one of the big recurring costs that they're dealing with related to extreme weather. They're required to have flood insurance because they're in a flood zone, but they weren't in a flood zone when they bought the house.

SCOTT: Oh, wow.

HERSHER: So climate change is causing more flood risk - right? - which means more people are in harm's way and have to pay for the special insurance.

SCOTT: Wow. So this is something that a lot of people are dealing with - these big extra bills for special flood insurance that they hadn't even anticipated when they moved there.

HERSHER: I've talked to so many people all over the country who have this same problem - you know, increasingly unaffordable flood insurance, in part because of climate change. You know, it's something the government knows is happening but that Congress has just repeatedly failed to fix. So that is one big cost, this insurance. That is on top of their regular home insurance, which, to your point, covers things like damage to your roof or damage to the siding on your house. But one thing that the survey found is that even if you have home insurance, you're likely to end up paying for some of the repairs yourself after an extreme weather event.

SCOTT: Yeah. I'm guessing we're going to be wading into some of the fine print now.

HERSHER: Yes, but I promise it is not going to be boring. So among those who had serious property damage or financial problems after a disaster, more than 70% said they were either uninsured or underinsured, meaning the money they got from their insurance company did not cover most of the costs of repairs.

SCOTT: Yeah. I have to admit, this is something that scares me every time I sign up for insurance. Like, I look at the numbers saying, you're insured for this amount. And then I wonder, is that enough? I don't know what it'd cost to rebuild my house.

HERSHER: Right.

SCOTT: So what does it look like if you're underinsured?

HERSHER: So one example of what it looks like is what happened to Jennifer Harris and her family. You know, a storm damaged their roof.

HARRIS: So basically, we assumed our home insurance would cover everything. But we had a - what was it, babe, a deductible?

HERSHER: So she's yelling to her husband in the background. But basically their insurance policy required them to pay 10% of their home's value out of pocket before the insurance company would start paying.

SCOTT: Ten percent of the home - not 10% of the cost of the roof - 10% of the home value. That's huge. I mean, the median home value in the U.S., I think, is, like, around $350,000, which means they're on the hook to pay $35,000 out of pocket...

HERSHER: Yeah. Yeah.

SCOTT: ...Which, I mean, I think is the cost of repairing the roof. Like, who has that kind of money sitting around?

HERSHER: I mean, not a lot of people. Jennifer said they were shocked by this - super frustrated. And they didn't have the savings necessary. So they had to ask her parents for help.

HARRIS: We budget. And I don't want to make it seem like we're poor. But honestly, we do live paycheck to paycheck, and it's hard to save up when something like that happens.

HERSHER: She says it took five years for the family to recover financially.

SCOTT: Wow - which raises the question for me - I mean, can this survey look into what the long-term effects are?

HERSHER: No, but there is research that looks at that. Like, there was a study in 2020 that found that natural disasters can cause lower credit scores, more debt, more mortgage delinquency and that people who live in less wealthy neighborhoods or in neighborhoods where most people are not white are hit harder. So Caroline Ratcliffe - she was one of the authors of that study. Now she's an economist at the Consumer Financial Protection Bureau, although she worked at the Urban Institute think tank when she did the research.

CAROLINE RATCLIFFE: Disasters can have the effect of widening existing inequalities, and it's going to make - create a bigger spread basically between the haves and the have-nots.

HERSHER: And actually, this survey does back that up. So households that make less than $50,000 a year suffered weather-related financial problems at more than four times the rate of those who make more money.

SCOTT: One thing I'm hearing is that it's really expensive to repair damage or, you know, replace the household items that you lost in a wildfire or to a flood or other extreme weather event. But it seems like there's a lot to be gained from being prepared...

HERSHER: Totally.

SCOTT: ...You know, like, preventing the damage in the first place, right?

HERSHER: Yes. Yes, 100%. And I asked Jennifer Harris about this exact thing. She said she would love to feel more prepared for hurricane season. It's supposed to be extra bad this year, according to weather forecasters.

HARRIS: It is expensive being hurricane-ready. That's the only thing.

SCOTT: Right. I mean, even the small things add up.

HERSHER: Yeah. And there are just a lot of things to pay for. So there are the sandbags to keep water out of the house. The family has to be ready to evacuate if there's a storm, which means either getting a hotel room or buying gas to drive, you know, hours and hours to stay with relatives.

SCOTT: Yeah. Gas at today's prices - ouch.

HERSHER: Plus, they need an emergency kit, but Harris says it's always getting cannibalized for everyday stuff.

HARRIS: There's water bottles there. There's batteries. As soon as Christmas hits, I always forget to buy batteries. We dip into that kit and grab the batteries.

SCOTT: (Laughter) Yeah, I get it. So what does this all add up to? Are there things that could help?

HERSHER: Yeah. So policies that take some of the pressure off of individuals and families would help. That's at least what disaster experts say. Things like building homes to be more resilient in the first place, subsidizing that special insurance like flood insurance for people who aren't as wealthy - things like that would really take the edge off and maybe help people stay solvent as extreme weather gets more common.

(SOUNDBITE OF MUSIC)

SCOTT: This episode was produced by Margaret Cirino and Gisele Grayson. It was edited by Gisele Grayson, who is also our senior supervising editor. Rachel Carlson checked the facts, and the audio engineer was Ko Takasugi-Czernowin. I'm Aaron Scott. Thanks for listening to Short Wave from NPR.

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