The Economic Impacts of Climate Change and the Costs of Inaction

The range of climatic changes anticipated in the United States – from rising sea levels to stronger and more frequent storms and extreme temperature events – will have real impacts on the natural environment as well as human-made infrastructures and their ability to contribute to economic activity and quality of life. These impacts will vary across regions and sectors of the economy, leaving future governments, the private sector and citizens to face the full spectrum of direct and indirect costs accrued from increasing environmental damage and disruption.

Several studies from CIER look at the economic impacts of climate change: one focuses on all regions of the US , others examine individual states. On a series of state studies, CIER collaborated with the National Conference of State Legislatures (NCSL) which adapted the studies for their members by creating short summary reports from the full CIER studies. In addition, CIER has examined Maryland 's economic impacts from climate change for the State which is Chapter 3 of the Maryland Climate Action Plan.

“The true economic impact of climate change is fraught with hidden costs...”

In our regional study, US Economic Impacts of Climate Change and the Costs of Inaction, we found that the direct costs of not taking on the challenges posed by climate change are often neglected – and typically not calculated.  The indirect effects are considered even less frequently, yet can be substantial. The effects will be felt by the entire nation:

  • All sectors of the economy will be affected.

  • Essential infrastructures for reliable services and high standards of living and health (such as water supply and water treatment) will be impacted.

  • Ecosystems, on which quality of life relies (such as forests, rivers and lakes), will suffer.

This first study presents an overview of climate impacts on various economic sectors in the US, organized by region. 

Five Key Lessons

  1. Economic impacts of climate change will occur throughout the country.
  2. Economic impacts will be unevenly distributed across regions and within the economy and society.
  3. Negative climate impacts will outweigh benefits for most sectors that provide essential goods and services to society.
  4. Climate change impacts will place immense strains on public sector budgets.
  5. Secondary effects of climate impacts can include higher prices, reduced income and  job losses.


A national policy for immediate action to mitigation emissions coupled with efforts to adapt to unavoidable impacts will significantly reduce the overall costs of continued climate change.

Because improved understanding of climate impacts, and the costs and benefits of these impacts, is in the national interest, the federal government should organize and finance a set of region-and sector-specific studies that help guide climate policy and investment, using appropriate methodologies.

Released July - September, 2008

Climate Change Impacts on Maryland and the Costs of Inaction (Full) (Summary)
Published in the Maryland Climate Action Plan

Economic Impacts of Climate Change on:

(Summary studies developed by The National Conference of State Legislatures (NCSL))

News Release September 24, 2008
News Release July 23, 2008

Released October 2007


Full Report
(3 MB)

Download Executive Summary
(2 MB)

Download Regional Summaries
(<1 MB)

News Release
Hidden Costs of Climate Change:
Major, Nationwide, Uncounted
Says UMD Research
(October 16, 2007)

View news coverage


Regional and State Economic Impacts

Climate impacts will affect every area of the country and all sectors of the national economy. The specific effects, though, will vary by US regions as described in the summaries linked in the map below (see full US report above) . In addition, a series of state studies are also available and linked below


Support for this research was provided by the Environmental Defense Fund .