Short Wave - Climate Change Is Tough On Personal Finances

Episode Date: June 29, 2022

A majority of people say they have 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 can't cover the damage. Aaron Scott talks to science reporter Rebecca Hersher about the new survey, and the hidden ways climate change could impact your finances. See pcm.adswizz.com for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences.NPR Privacy Policy

You're listening to Shortwave from NPR. Hi, Aaron. Hey, Becky Hersher. So question for you. What do you think about when you hear the words extreme weather? Extreme weather. I think about the heat wave that parked on the Northwest last summer and made us feel like we're living in an oven.

Yeah. And I also think about climate change because, I mean, that's when I notice it the most, when the weather is weird and bad and scary. Yeah, that makes sense. So, you know, I cover climate change. We have a whole climate team here at NPR, exactly. And we wanted to know more about this exact thing. Like, what are people's individual experiences with extreme weather in the U.S.? So we did a national survey. I love surveys. How did it happen? So we wrote some survey questions, NPR editors did, worked with Harvard University and the Robert Wood Johnson Foundation. And more than 2,000 people actually responded all over the country. Wow. The majority of them, more than three quarters, said that they had been personally affected by extreme weather in the last five years. So that includes hurricanes, wildfires, floods, cold snaps. Yeah, and I have heat waves on the phone. They want to be included, too.

Yes, yes, they're very much on the list. In fact, heat waves stood out as the most common type of extreme weather, actually. But the thing I personally found most interesting was about money, because a lot of people told us that the main problem with extreme weather is that it's expensive, like, in ways I had not really thought about before. Becky, are you going all planet money on us today? I mean, not officially, but sure, yeah. Anyway, today on the show, climate change means most people in the U.S. are experiencing. experiencing scary weather. What does that mean for your bank account? I'm Rebecca Hersher. And I'm Aaron Scott, and you are listening to Shortwave, the Daily Science Podcasts from MPR. All right, Becky. So most people in the U.S. say they've experienced weather or 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. Yes, totally. For fun, let's list some of those ways. So I'll start. The wind from a hurricane could blow the shingles off your roof.

Or a wildfire could burn your whole house down. Okay. Yes. Total house loss. Definitely very expensive. 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. Had that happened before.

Yikes. Or an unprecedented storm could knock the tree over in your front yard and smash your car. Also happened on my street in April. Your street sounds kind of dangerous. 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.

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. Yeah, exactly. And one cool thing about this survey is that it actually asks people, would you be willing to talk to a reporter about your experience? And some people, I love these people, by the way. Some people said, yeah, sure. One of those people was named Jennifer Harris. Hi, Rebecca. This is Jenny. Wait, wait, wait, hold the phone. So this person got a survey in her email, filled it out, checked a box that said, sure, a reporter, can call me. Here's my number. Did you find the friendliest person in America? Seriously, Erin? I think I might have. Or one of them, at least.

I'm a very trusting person, Rebecca. So Jennifer is a nurse. She has three kids and a husband. She lives in Hampton, Virginia. 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. We've had roof damage. We've had siding damage. We have a shed out back where we've had siding damage done that. We've had our fence. We've replaced it twice. 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?

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. 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. 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. Yeah, exactly. And this is something I've done an almost embarrassing amount of reporting on over the years. But that means 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 this 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. Yeah, I'm guessing we're going to be waiting into some of the fine print now. 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.

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 had cost to rebuild my house. Right. So what does it look like if you're underinsured? I have the exact same fears. Like, you haven't rebuilt your house until you're rebuilding your house.

So one example of what it looks like is what happened to Jennifer Harris and her family. You know, a storm damaged their roof. So basically we assumed our home insurance would cover everything. But we had a, what was it, babe, a deductible? 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. 10% of the home, not 10% of the cost of the roof, 10% of the home value? That's huge. I mean, the medium home value in the U.S. I think is like around $350,000, which means they're on the hook to pay $35,000 at a pocket.

Yeah. Which I mean, I think is the cost of repairing the roof. Like, who has that kind of money sitting around? 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. 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. She says it took five years for the family to recover financially. Wow, which raises the question for me. I mean, can this survey look into what the long-term effects are?

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 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. 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 haves-nots. 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.

It's terrible, Becky. One thing I'm hearing is that it's really expensive to repair damage or, you replace the household items that you lost in wildfire or to a flood or other extreme weather event. But it seems like there's a lot to be gained from being prepared. Totally. You know, like preventing the damage in the first place, right? 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 just started on June 1st. It's supposed to be extra bad this year, according to weather forecasters. It is expensive. being hurricane ready. That's the only thing. Right. I mean, even the small things add up. 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. Yeah, gas at today's prices. Ouch. Plus, they need an emergency kit. But Harris says it's always getting cannibalized for everyday stuff. Because 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. Yeah, our earthquake kit was stolen out of the back of our car, and it's not just the money to replace it, but it's also just a lot of time to go shopping for all those things and organize them. I get it. So what is this all add up to? Are there things that could help? 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. As extreme weather gets more common, I think we're going to be talking about this a lot in the coming years. And it's always a joy to talk to you, Becky. So thank you for bringing this to us. Yeah, thanks so much, Aaron. This episode was produced by Margaret Serino and Giselle Grayson.

It was edited by Giselle Grayson, who is also our senior supervising editor. Rachel Carlson checked the facts, and the audio engineer was co-Tagasugi Chernivan. Beth Donovan is our senior director, and Anya Grumman is our senior vice president of programming. I'm Aaron Scott. Thanks for listening to Shortwave from NPR.