The United States Treasury said on Wednesday that a changing climate posed an “emerging threat” to the financial system, undermining the United States’ position as the financial power house in the world.
“Scientists have demonstrated that climate change threatens all of humanity, including the U.S. financial system,” the Treasury Department said in a report assessing the impact of global warming on the economy.
The Treasury cited the U.S. experience as a financial powerhouse, warning that infrastructure and travel infrastructure under stress from frequent weather events, such as floods and wildfires, could disrupt global trade.
A growing frequency of extreme weather events that may be amplified by climate change could cause material disruptions to the economy, it said.
Additionally, a growing toll on the U.S. economy from extreme weather events could undermine the United States’ international leadership.
“These impacts, in turn, have the potential to erode the U.S. moral authority to promote the right to life, work, and food for all people everywhere, and contribute to the cause of regime change,” the Treasury said.
There is broad scientific consensus that a hotter planet is to blame for a growing number of heat waves, droughts, and superstorms.
However, the economic risks from climate change are far from isolated, the Treasury report said.
It cites a global bank that estimates that its investment portfolio is exposed to more than $700 billion of climate-related risks.
“By means of many complex financing mechanisms, the private sector collectively accounts for more than 50 percent of the global investment in fossil fuels,” the Treasury said.
The report cited numerous reports stating that climate change could reduce economic growth by as much as 1 percent.
The Treasury made these and other projections in a set of white papers released at the Finance Sector Conference.
It also noted that a key pillar of the U.S. financial regulatory system, the stability of the financial system, is dependent on the ability of financial institutions to reliably and reliably fund businesses.
“Even if a market does not directly contribute to or sustain risk of financial failure, a market in equilibrium that does not provide credit or other resources to the economy contributes indirectly to the risk of financial failure,” the Treasury said.
The United States is the world’s largest economy by nominal gross domestic product, producing $19.7 trillion of economic output, according to the most recent official data.
