Climate change’s uneven impact in California

Climate change’s uneven impact in California

BlackRock has made major investments to incorporate geospatial data into investment processes. These insights are designed to help deliver portfolios that are more resilient to the effects of climate change. We recently partnered with the California Resilience Challenge to help analyze extreme weather events and economic impacts they may cause.

KEY POINTS

  • 01

    Extreme heat

    While temperatures have been uniformly rising globally, our research shows California’s temperature trajectory has exhibited greater variability over the last 20 years. We analyze the impact of more variable temperatures as well as the incidence of more “extreme heat” events.

  • 02

    California wildfires

    California has been one of the most drought-prone regions in the United States.1 The causal link between drought and fires is well established, and fire risk across the state has recently climbed to historic highs.

  • 03

    Flooding

    A combination of more intense weather patterns with more arid land being less able to absorb rainfall and runoff has caused severe flood events.

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.

/blk-one01-c-assets/documents/charts/climate-change-uneven-impact-a.csv bar-chart column-stacked Number of disasters declared true

California FEMA disaster declarations rise

Chart
Bar chart with 9 data series.
The chart has 1 X axis displaying categories.
The chart has 1 Y axis displaying Number of disasters declared. Range: 0 to 140.
End of interactive chart.
Chart
CategoryCoastal StormDroughtEarthquakeFireFloodFreezingHurricaneSevere Storm(s)Other
19541
19561
19571
19581
196211
19632
19642
196531
19665
19678
196938
1970617
19711
19724
19736
19748
19763
1977471
197814
197912
1980318
198141
1982111
19834015
19858
198639
19871
1988255
1990124
199133
1992345
199327
1994364
199599
1997448
199841
1999108
20001
200214
20038
20042371
200565815
20061048
20071116
200849
200922
2010176
20114103
20125
20139
2014217
2015131
201614
20171066363
201854
201921032
2020 59

BlackRock, with data from FEMA, October 2021. Excludes “biological disasters”, which are primarily COVID-related in 2020.

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.

/blk-one01-c-assets/documents/charts/climate-change-uneven-impact-b.csv line-chart % line-chart Rolling 5-year temperature mean (% of average, 2003-2020) true

Temperature variation in California counties vs. U.S.

Chart
Line chart with 4 lines.
The chart has 1 X axis displaying categories.
The chart has 1 Y axis displaying Rolling 5-year temperature mean (% of average, 2003-2020). Range: 96 to 106.
End of interactive chart.
Chart
CategoryCaliforniaGlobalImperial CountyDel Norte County
11/30/200899.1799.1100.2799.46
12/31/200899.2499.12100.2499.72
1/31/200999.4899.11100.35100.2
2/28/200999.5599.13100.51100.21
3/31/200999.2199.15100.3299.66
4/30/200999.199.14100.2699.46
5/31/200999.2799.17100.3999.76
6/30/200999.0799.18100.2499.6
7/31/200999.1899.21100.3299.7
8/31/200999.299.24100.499.7
9/30/200999.3999.25100.51100.01
10/31/200999.499.25100.5699.95
11/30/200999.699.27100.7799.96
12/31/200999.4799.29100.7899.68
1/31/201099.6499.28100.8299.56
2/28/201099.6999.31100.9399.45
3/31/201099.6399.32100.8899.29
4/30/201099.5599.31100.7999.15
5/31/201099.2299.3100.5498.62
6/30/201099.3299.29100.5498.82
7/31/201099.2399.28100.4998.73
8/31/201099.1399.28100.5398.45
9/30/201099.2699.29100.698.5
10/31/201099.2999.29100.6198.64
11/30/201099.1199.29100.598.44
12/31/201099.0799.28100.5198.27
1/31/201199.2199.28100.5598.74
2/28/201199.0999.24100.498.68
3/31/201199.399.22100.6398.76
4/30/201199.3199.23100.6798.53
5/31/201198.9399.26100.498.01
6/30/201198.6299.26100.2697.64
7/31/201198.4199.3100.1997.31
8/31/201198.4999.33100.3297.4
9/30/201198.6299.36100.4997.61
10/31/201198.7199.39100.6497.56
11/30/201198.5599.4100.4397.65
12/31/201198.5599.42100.2997.86
1/31/201298.7999.43100.597.9
2/29/201298.8799.45100.5598.09
3/31/201298.5499.46100.497.6
4/30/201298.4899.46100.497.47
5/31/201298.4399.48100.4597.23
6/30/201298.3699.48100.4897.04
7/31/201298.2599.48100.4496.84
8/31/201298.2899.49100.3597.02
9/30/201298.5699.52100.4297.41
10/31/201298.7899.55100.5597.8
11/30/201298.7299.57100.5697.68
12/31/201298.799.58100.6697.5
1/31/201398.8299.61100.6497.89
2/28/201398.7999.66100.5497.85
3/31/201398.8699.63100.5797.98
4/30/201398.9499.61100.5698.29
5/31/201398.9999.6100.798.19
6/30/201398.9699.6100.6898.2
7/31/201398.9899.59100.6298.35
8/31/201398.8199.6100.5998.16
9/30/201398.6199.63100.4297.78
10/31/201398.4899.66100.2597.72
11/30/201398.4599.67100.1897.79
12/31/201398.6199.67100.2797.99
1/31/201498.7799.65100.3498.13
2/28/201498.9899.58100.4798.23
3/31/201499.0899.54100.5198.32
4/30/201499.1199.55100.5998.35
5/31/201498.8999.55100.3198.13
6/30/201499.1299.55100.598.34
7/31/201499.0699.54100.3798.42
8/31/201498.9899.56100.1898.47
9/30/201498.8999.59100.198.42
10/31/201499.1799.63100.398.62
11/30/201499.1999.64100.2898.69
12/31/201499.2999.65100.3498.88
1/31/201599.3699.67100.3499.42
2/28/201599.7599.68100.59100
3/31/2015100.1199.69100.85100.51
4/30/2015100.3399.69100.92100.87
5/31/2015100.4599.71100.87101.38
6/30/2015100.6499.73100.91101.9
7/31/2015100.4799.73100.78101.77
8/31/2015100.5799.75100.83101.87
9/30/2015100.5899.76100.72101.96
10/31/2015100.7499.77100.77102.28
11/30/2015100.7399.76100.74102.41
12/31/2015100.6799.75100.62102.34
1/31/2016100.4299.74100.5101.92
2/29/2016100.6799.75100.71102.08
3/31/2016100.7599.75100.69102.33
4/30/2016100.8899.76100.62102.93
5/31/2016100.9799.77100.58103.41
6/30/2016101.1899.79100.63103.57
7/31/2016101.3199.81100.73103.7
8/31/2016101.3299.83100.58103.86
9/30/2016101.1399.87100.38103.51
10/31/2016101.0799.9100.46103.28
11/30/2016101.2399.97100.63103.29
12/31/2016101.24100.01100.82103.03
1/31/2017100.96100.04100.67102.71
2/28/2017100.95100.04100.7102.66
3/31/2017101.13100.06100.85102.84
4/30/2017101.11100.07100.87102.71
5/31/2017101.01100.09100.68102.79
6/30/2017101.11100.11100.73103.08
7/31/2017101.27100.15100.76103.38
8/31/2017101.24100.17100.77103.52
9/30/2017101.03100.19100.67103.26
10/31/2017101.04100.21100.69103.23
11/30/2017101.07100.23100.76103.23
12/31/2017101.44100.27100.93103.84
1/31/2018101.7100.27101.14103.94
2/28/2018101.77100.26101.22103.95
3/31/2018101.45100.3101.07103.55
4/30/2018101.39100.34101.14103.38
5/31/2018101.34100.37101.09103.6
6/30/2018101.29100.39101103.58
7/31/2018101.35100.43101.05103.64
8/31/2018101.47100.45101.1103.87
9/30/2018101.61100.46101.24104.12
10/31/2018101.69100.47101.27104.26
11/30/2018101.73100.48101.26104.35
12/31/2018101.59100.49101.21104.15
1/31/2019101.33100.53101.03103.84
2/28/2019100.92100.57100.72103.39
3/31/2019100.69100.62100.58103.13
4/30/2019100.71100.66100.6103.2
5/31/2019100.4100.69100.39103.03
6/30/2019100.3100.73100.33103
7/31/2019100.17100.78100.34102.64
8/31/2019100.27100.78100.52102.68
9/30/2019100.17100.79100.5102.46
10/31/2019100.03100.83100.36102.43
11/30/2019100.07100.87100.33102.5
12/31/2019100.04100.91100.3102.45
1/31/202099.85100.9100.3101.84
2/29/202099.71100.86100.09101.55
3/31/202099.16100.8299.65100.93
4/30/202099.04100.8499.57100.93
5/31/202099.24100.8599.84100.87
6/30/202099.01100.8999.75100.4
7/31/202099.16100.9499.9100.52
8/31/202099.31100.96100.04100.92
9/30/202099.46101100.21101.2
10/31/202099.69101.04100.42101.36
11/30/202099.9101.1100.64101.53
12/31/2020 100.14100.83101.81

Source: BlackRock, with data from NASA, November 2021.

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.

/blk-one01-c-assets/documents/charts/climate-change-uneven-impact-c.csv line-chart line-chart Population-weighted wildfire pixel brightness true

California wildfire severity has been rising vs. U.S.

Chart
Line chart with 2 lines.
The chart has 1 X axis displaying categories.
The chart has 1 Y axis displaying Population-weighted wildfire pixel brightness. Range: 4 to 12.
End of interactive chart.
Chart
CategoryCaliforniaU.S.
12/31/20028.0493243444.417527885
1/31/20037.8421762994.409580848
2/28/20037.9191421214.383070659
3/31/20038.2502795464.48024414
4/30/20038.2488901194.808850493
5/31/20038.1548493974.817946913
6/30/20038.3359439344.831799025
7/31/20038.5138578734.928786704
8/31/20038.7594112625.008781763
9/30/20039.0147114045.145863334
10/31/20039.6480837515.478912623
11/30/200310.312288165.608935023
12/31/200310.200019615.524448078
1/31/20049.9892618775.432539675
2/29/20049.8340681515.362482801
3/31/20049.992080425.624229114
4/30/200410.240252375.93366425
5/31/200410.442390285.944134405
6/30/200410.509216725.885152728
7/31/200410.515469575.889156137
8/31/200410.522416045.921771123
9/30/200410.602385696.035885118
10/31/200410.743047356.121931393
11/30/200410.76645186.078095799
12/31/200410.582010845.960208793
1/31/200510.191410195.853816584
2/28/20059.8983958565.800462632
3/31/20059.6983611425.957927637
4/30/20059.7480629546.205551691
5/31/20059.6986199546.222683582
6/30/20059.8522632636.157226913
7/31/20059.8482556576.133505235
8/31/20059.7177686556.143714054
9/30/20059.8737069796.254804586
10/31/200510.303500626.520623387
11/30/200510.372888526.687342497
12/31/200510.151550186.588550671
1/31/20069.9407743266.508099216
2/28/20069.9828895046.494627066
3/31/20069.8083906236.684426098
4/30/20069.5719293756.920384995
5/31/20069.5145146926.942028941
6/30/20069.5041593956.93011836
7/31/20069.6068192596.899887421
8/31/20069.6247672186.911563091
9/30/20069.7059681456.932700142
10/31/20069.9368571527.033094206
11/30/200610.162766827.040495131
12/31/200610.135862696.962738519
1/31/200710.10364836.772057538
2/28/200710.095246826.732595611
3/31/200710.135431986.961912331
4/30/200710.12156297.066263533
5/31/200710.049621157.07311011
6/30/20079.9753509547.031719439
7/31/20079.8946371126.994017894
8/31/20079.8731171577.054098425
9/30/20079.8569043087.104694909
10/31/200710.110051717.220623152
11/30/200710.318117.315351494
12/31/200710.297273787.209261199
1/31/200810.032310187.06112479
2/29/20089.8756572226.996600459
3/31/200810.013167817.113227316
4/30/200810.157255927.217603487
5/31/200810.142938577.2272035
6/30/200810.320272927.220685069
7/31/200810.486836037.222288677
8/31/200810.386658447.179733847
9/30/200810.334693937.139782533
10/31/200810.394522357.238903047
11/30/200810.403835027.320738128
12/31/200810.270416377.149248744
1/31/200910.069669887.030892693
2/28/20099.8703572147.03107482
3/31/20099.8436849577.148724122
4/30/20099.9486658297.273428303
5/31/20099.8172077297.191062475
6/30/20099.668360167.126253459
7/31/20099.678648717.04166145
8/31/20099.6328434396.970555069
9/30/20099.7879923756.903960824
10/31/20099.7974979186.805966435
11/30/200910.039688516.764908206
12/31/20099.8464897116.565996163
1/31/20109.5844777326.408874781
2/28/20109.2961803646.286370707
3/31/20109.1362080576.421207031
4/30/20108.9492415636.709164258
5/31/20108.8917673386.69068995
6/30/20108.957357316.652643665
7/31/20108.922999426.61478856
8/31/20108.7898449136.603875782
9/30/20108.702304396.65283384
10/31/20108.657784986.819328176
11/30/20108.6095304516.893573775
12/31/20108.4069934156.788471447
1/31/20118.146094556.648423899
2/28/20118.0628730646.639775815
3/31/20117.877272066.753390072
4/30/20117.8488123476.832445673
5/31/20117.7908143116.786836307
6/30/20117.745082766.785608217
7/31/20117.7043087296.783481644
8/31/20117.6428375676.791794907
9/30/20117.5852780696.817473148
10/31/20117.5747120076.959170223
11/30/20117.7206724847.031798134
12/31/20117.5856022576.905441597
1/31/20127.5821130536.851474214
2/29/20127.5922930786.789089489
3/31/20127.5989881866.952415184
4/30/20127.4516861087.064177986
5/31/20127.3295663047.039190392
6/30/20127.3462322817.031066073
7/31/20127.328373997.010891684
8/31/20127.3056367556.984165741
9/30/20127.2871753266.998807838
10/31/20127.265465897.049835104
11/30/20127.3153220047.12571023
12/31/20127.1920794257.026494863
1/31/20137.0152764486.88950913
2/28/20137.1788691736.831737111
3/31/20137.2777351886.904196172
4/30/20137.2357210446.982764756
5/31/20137.1835562156.948726232
6/30/20137.2605359966.888443745
7/31/20137.2089926026.835003092
8/31/20137.1820398916.789058237
9/30/20137.14707046.830416403
10/31/20137.2344173696.870920101
11/30/20137.3973068036.849097184
12/31/20137.3904715576.70824344
1/31/20147.3314973126.586247362
2/28/20147.3875843996.501665727
3/31/20147.4319639916.624717017
4/30/20147.3531277016.808184067
5/31/20147.3261452126.8265791
6/30/20147.300348476.752698825
7/31/20147.2137411246.68390769
8/31/20147.1035677966.644808732
9/30/20147.0233516376.647134611
10/31/20147.0854863976.737167732
11/30/20147.0707686456.763436955
12/31/20146.9259423526.660055176
1/31/20156.7709654976.532667749
2/28/20156.7578712876.534418897
3/31/20156.8479074726.557134306
4/30/20156.8996956346.675249667
5/31/20156.8681269126.650756075
6/30/20156.866552076.589649631
7/31/20156.8763069676.55222538
8/31/20156.9549845586.582971484
9/30/20156.9143125516.624216405
10/31/20157.0470315826.734539958
11/30/20157.2763814966.709929788
12/31/20157.2315372876.606651269
1/31/20167.0032185516.449104887
2/29/20166.955363226.473918546
3/31/20166.9600798056.6387707
4/30/20167.0232521096.830265231
5/31/20167.0466172396.827318264
6/30/20167.177896476.79082808
7/31/20167.3329079096.768267272
8/31/20167.3637898796.711393027
9/30/20167.4473877166.738734581
10/31/20167.613445166.841356697
11/30/20167.83947516.90053552
12/31/20167.7478561276.757736649
1/31/20177.4835503626.61880608
2/28/20177.3351957476.735948913
3/31/20177.4017195796.911789115
4/30/20177.500717627.040845507
5/31/20177.6126047937.013726397
6/30/20177.5936686686.952845892
7/31/20177.6772789196.909171297
8/31/20177.7114355286.873103549
9/30/20177.9851171596.890463955
10/31/20178.38134677.009365109
11/30/20178.6534029867.049590514
12/31/20178.9689076726.986223521
1/31/20188.8772736826.8636178
2/28/20189.1649197456.773793015
3/31/20189.2469372156.925717396
4/30/20189.2987041127.060518683
5/31/20189.2642135097.107786308
6/30/20189.2300121897.06104976
7/31/20189.2182974197.056132753
8/31/20189.431495727.053570633
9/30/20189.5767559337.010540496
10/31/20189.7026950936.958810728
11/30/20189.7572190476.829537029
12/31/20189.6479361846.633697683
1/31/20199.5008863676.442230957
2/28/20199.3733930996.293896452
3/31/20199.2994232616.343402174
4/30/20199.2277909946.479760477
5/31/20199.1760824566.448734675
6/30/20199.2131087976.388678886
7/31/20199.1906108926.349136689
8/31/20199.0883151276.33619813
9/30/20199.1138290736.37041805
10/31/20199.3439752366.409913968
11/30/20199.5385195566.364470536
12/31/20199.3711021546.237946358
1/31/20209.1836334596.090662989
2/29/20209.4864596275.98945663
3/31/20209.8588183036.057174929
4/30/20209.9320136846.120669294
5/31/20209.9776708636.116081729
6/30/2020 9.9593426296.079354781

Source: BlackRock, with data from NASA, November 2021. Fire severity is reported through NASA satellite measures of pixel brightness, designed to pick up alternate levels of exposure to fire.

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.

Download report

Thomas Becker, PhD
BlackRock Multi-Asset Strategies & Solutions
Portfolio Manager
Adrian Covert
Senior Vice President, Public Policy
Bay Area Council
BlackRock Systematic Investing
Portfolio Manager
BlackRock Multi-Asset Strategies & Solutions
Portfolio Manager
BlackRock Systematic Investing
Portfolio Manager