Climate change’s uneven impact in California

In our work with the California Resilience Challenge, we seek to inform the public debate on the local impacts of climate change in California. To do so, we apply a proprietary investment dataset that combines satellite data with granular economic data. We analyze county-level data, but acknowledge that numerous studies have documented exposure, sensitivity and adaptive capacity to climate risk varies at even more local levels. Our findings highlight a disproportionate incidence as well as a larger and sometimes discontinuous economic impact of extreme climate events on the low-income regions of California.

In the short run, natural disasters inflict health, well-being and economic costs on communities; over longer periods, disasters can permanently disrupt livelihoods, industries and the ability for families to save. The types of natural disasters afflicting California have also changed over time. The chart below shows the breakdown of climate-related FEMA disaster declarations. FEMA declarations tend to accompany the most destructive weather events. The visual highlights that the number of extreme weather disasters has been rising and that more have been fire-related in recent decades.

Extreme heat

While temperatures have been uniformly rising globally, our research shows California’s temperature trajectory has exhibited greater variability over the last twenty years. After remaining relatively stable, temperatures across the state rose in the mid-2010s, then declined in recent years, before beginning to rise again more recently. The figure below also shows some of the wide variation in temperature patterns across CA counties. For example, temperatures in the generally hotter southeastern Imperial County have stayed more consistent, whereas Del Norte County in the northeast, where temperatures are generally cooler, has had higher variability and increased more materially in the last two decades.

Our findings across the state of California align with the global findings from academic literature that suggest that the impact of temperature on human cognition, activity, and hence economic growth is non-linear.² That is, temperatures increasing within moderate ranges are not the same as spikes in temperatures associated with extreme heat. For this reason, instead of focusing on average temperatures, we analyze the impact of more variable temperatures and the incidence of “extreme heat,” which we define as being daily average temperatures above 30° Celsius (86° Fahrenheit). We also expand the analysis beyond simply documenting heat exposure risk to incorporate economic sensitivity based on county industry mixes as well as adaptive capacity, proxied by high- and low-income counties.

California wildfires

California has been one of the most drought-prone regions in the United States. The causal link between drought and fires is well established as dryer conditions exacerbate the risks for larger fires.³ A more recent compounding phenomenon exacerbating fire severity is shifts in wind patterns, particularly in Northern California, that have elevated fire risk close to populated areas and contributed to making fires more deadly and destructive.

As illustrated in the figure below, California has experienced materially above-average fire risk compared with the rest of the United States. Fire risk across the state has recently climbed to historic highs. We note that a majority of the 20 most destructive wildfires in state history have occurred in the past three years.

Consistent with our earlier findings on the impact of extreme heat, we find that droughts and wildfires disproportionately impact the lower income regions of California. Lower income inland regions of the state have greater drought exposure and also tend to be areas where agriculture comprises a higher share of economic output, thereby exacerbating the economic sensitivity to water shortages.⁴ A more concentrated set of fire risks runs north-south along the centerline of the state while more affluent population centers on the coast are notably less prone to drought and fire.

Flooding

While sea level rise is likely to increase the risk of coastal flooding, flood risk in California has, to date, been concentrated within the Delta. At the confluence of the Sacramento and San Joaquin rivers, the Delta area has land that can be as much as 25 feet below sea level in the basin that flows out through the Golden Gate. This makes flood risk acutely concentrated within California counties adjoining the Delta.

Flood severity, though episodic, has been high and increasing in California compared with the rest of the United States. A combination of more intense weather patterns with more arid land being less able to absorb rainfall and runoff has caused a number of particularly severe flood events. The susceptibility of the Delta in California means that rising sea levels can exacerbate flood risk between the Bay Area and Sacramento. However, in contrast to our earlier findings on heat, drought and fire, we find that county-level economic activity across California has, to date, been relatively resilient to floods. It will be important to monitor this relative resilience as the federal flood insurance system changes in 2022.

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