Climate Change and Our Pocketbooks

April 21, 2024

by  Ed Maurer

Empty Pocketbook

© Emil Kalibradov on Unsplash

We’ve all heard of greedflation and shrinkflation, but little attention has been paid to prices going up due to climate change. Floods and drought lower agricultural production, and wildfires drive up insurance. The non -representative list below includes just a few items where climate change is already having an effect on our pocketbooks.

  • Food:
    • Cocoa prices are rising due to a climate change induced drought in West Africa. Ivory Coast and Ghana produce almost 80% of the global cocoa harvest, which will drop by almost 11% over the current season. Coffee and bananas are also grown in countries vulnerable to climate change risks as well as to deforestation and biodiversity loss.
    • U.S. soybean production in 2023 was down due to drought, and dry conditions reduced soybean yield in South America.
    • Red meat on the hoof needs to eat and drink, requiring lots of water that is becoming scarce. More than a quarter of Colorado River water is used to irrigate Alfalfa – a cool 3.1 billion cubic meters of water annually, which is more than three times the amount used by municipal, commercial and industrial uses throughout the Colorado River Basin.
  • Home Insurance
    • Eight insurance companies asked California Insurance Commissioner Ricardo Lara to approve of rate increases of at least 20%, effective on March 15, 2024. Folks living in Fire Hazard Severity Zones may be unable to get any insurance at all, except the state’s FAIR plan.
  • Energy
    • Electricity’s cost is rapidly increasing. See our story about the latest CPUC proposal.
    • Gasoline & diesel prices have been going up, probably because of refinery maintenance ahead of the summer driving season. EV drivers are happily exempt from this extra drag on the wallet.
  • Inflation
    • Climate change is exacerbating inflation worldwide by as much as 1 percent every year according to an article in Scientific American on May 30, 2023. Looking at food inflation specifically, the researchers found that future warming could drive up prices by as much as 3 percent. Taking climate change into account, the Fed’s long-term goal of a 2% inflation rate seems to be well-nigh unattainable.