California is the most populous state in the United States and the world’s eighth—soon to be seventh— largest economy. It’s also a microcosm of the nation’s diverse economy and geography. With a wealth of natural resources, California leads the U.S. in agriculture, manufacturing, and tourism and is a major international exporter. From high-tech to Hollywood, California is a hub of innovation that supports cutting edge industries and leading multinational companies. For decades, the state has led the way on new economic growth models, new technologies, and creative solutions to policy challenges.
Today, California faces a new set of challenges and opportunities in the form of climate change. The state’s vast and varied topography—from the Redwood Coast to the fertile Central Valley, and from the Mojave Desert to the Sierra Nevadas—provides a glimpse into the significant and varied risks the state faces if we stay on our current climate course.
Along the coast, rising sea-levels will likely put billions of dollars of property and infrastructure at risk. Further inland, increasingly warm and dry conditions threaten the productivity of one of the richest agricultural regions in the world. Eastern California, a haven for natural recreation and tourism, will be permanently marked by warming temperatures and shifting precipitation patterns. And across the state, extreme heat will fuel large and costly wildfires, endanger water resources, drive up energy costs, exacerbate air pollution, and threaten human health.
The mission of the Risky Business Project is to quantify the economic risks to the United States from unmitigated climate change. Our inaugural report, Risky Business: The Economic Risks of Climate Change in the United States, highlighted these risks across every region of the country, with a focus on three sectors: agriculture, energy demand, and coastal infrastructure. We also looked at overarching issues such as changes in labor productivity and heat-related mortality.
This follow-up report focuses on California and explores some of the likely economic consequences to the state of continuing on our current greenhouse gas emissions pathway,1 with no significant new national policy or global action to mitigate climate change.
Our research combines state-of-the-art climate science projections through the year 2100 (and beyond in some cases) with empirically-derived estimates of the impact of projected changes in temperature and precipitation on the California economy. We analyze not only those outcomes most likely to occur, but also lower-probability, higher-cost climate impacts. These “tail risks” are most often expressed here as the 1-in-20 chance events.
Our findings show that if we stay on our current global emissions pathway, California will likely face multiple and significant economic risks from climate change. However, if policymakers and business leaders act now to reduce emissions and adapt to a changing climate, we can significantly reduce these risks.
Given California’s diverse geography and economy, the risks posed by climate change vary significantly by region. These risks include:
- A dramatic increase in extreme heat across the state, especially in the San Joaquin Valley and Inland South regions
- By the end of this century, summers in California will likely be hotter than summers in Texas and Louisiana today, and the average number of extremely hot days each year—with temperatures above 95°F—will likely double or even triple.
- By mid-century, the San Joaquin Valley, which accounts for more than half of the state’s agricultural output, will likely experience 63 to 85 days over 95°F each year compared to an average of 44 such days per year over the past 30 years. By the end of the century, the number of extremely hot days will likely increase to three to four full months per year.
- Meanwhile, a likely 60% to 90% decline in the annual average number of days below freezing statewide is expected to reduce snowpack, affecting state water supplies along with winter tourism and recreation.
- Changes in the timing, amount, and type of precipitation in California, which could lead to increased drought and flooding and put the reliability of the state’s water supply at risk
- Warming temperatures will cause California to see a shift in precipitation from snow to rain, as well as a change in the timing of snowmelt.
- Most regions in California will likely see a decrease in fall and spring precipitation. The majority of precipitation will continue to fall during the winter, but increasingly more as rain than snow.
- These changes will impact California’s snowpack—a major water reservoir for the state—and affect the freshwater supply for multiple industries and communities.
- California should also expect to see more heavy storms, which could increase the number and severity of floods in parts of the state, and longer dry spells between storms. The risk of drought could increase as well, especially given more extreme temperatures.
- Changes in precipitation, combined with rising temperatures, could also have serious consequences for California’s water quality.
- Widespread losses of coastal property and infrastructure due to sea-level rise along the California coast
- If we continue on our current path, between $8 billion and $10 billion of existing property in California will likely be underwater by 2050, with an additional $6 billion to $10 billion at risk during high tide.
- By 2100, $19 billion in coastal property will likely be below sea-level, with a 1-in-100 chance of more than $26 billion at risk.
- In San Francisco, mean sea-level will likely rise 0.7 to 1.1 feet by 2050 and 1.8 to 3.3 feet by 2100. Meanwhile, San Diego will likely see sea-levels rise 0.8 to 1.2 feet by 2050 and 1.9 to 3.4 feet by 2100.
- Rising tides could also damage a wide range of infrastructure, including water supply and delivery, energy, and transportation systems.
- Shifting agricultural patterns and crop yields, with distinct threats to California’s varied crop mix of fruits, vegetables, nuts, and other highly valuable commodities
- In 2012, California produced one-fifth of the nation’s supply of dairy, nearly two-thirds of its fruits and nuts, and over one-third of its vegetables.
- California’s major crops, livestock, and dairy operations face distinct threats from climate-driven temperature variation across the state, which could have major repercussions on local and global markets.
- Without significant adaptation by farmers, several regions will likely see yield losses for heat-sensitive commodity crops like cotton and corn, with potentially high economic costs. For example, the Inland South region will likely take an economic hit of up to $38 million per year due to cotton yield declines by the end of the century.
- Climate-driven changes in water availability, quality, and timing could have a significant impact on California’s agricultural economy, which is heavily dependent on irrigation.
- Changing climate conditions are expected to increase the spread of invasive pests and plant species and threaten livestock productivity.
- Increasing electricity demand combined with reduced system capacity, leading to higher energy costs
- Rising temperatures will likely increase electricity use for residential and commercial cooling, driving up demand across the state.
- Increasing heat, drought, and wildfires will stress California’s electricity infrastructure, decreasing the efficiency of the state’s centralized natural gas and nuclear power plants, jeopardizing hydropower generation, and disrupting transmission.
- Building new capacity to meet additional electricity demand will result in significant increases in energy costs in some parts of the state. The Inland South region will be the hardest hit, with total energy costs likely to increase by up to 8.4% in the short term and as much as 35% by end of century.
- Higher heat-related mortality, declining labor productivity, and worsened air quality
- California will likely see up to 7,700 additional heat-related deaths per year by late century—more than twice the average number of traffic deaths annually in the state today.
- With 30% of California workers in “high risk” industries that are vulnerable to high temperatures, labor productivity is likely to decline across the state, most notably in the Sacramento and San Joaquin Valley regions.
- Higher temperatures and more frequent wildfires will exacerbate ozone and particulate pollution in areas that already suffer from poor air quality, worsening respiratory health problems and increasing hospitalizations, emergency room visits, and absences from work or school.
California is already taking aggressive action to address climate change. By fully understanding the climate risks the state faces if we stay on our current emissions path, California businesses and policymakers have the opportunity to become models of climate risk mitigation and resilience for the nation and the world.