Treasury Secretary Janet Yellen on Tuesday warned that climate change is already taking a significant economic toll and could cause extensive losses to the U.S. financial system in the coming years.
Yellen made the remarks during the first meeting with the Climate-related Financial Risk Advisory Committee (CFRAC), an advisory board that was set up last year by the Financial Stability Oversight Council in an effort to bolster U.S. action to minimize climate risk to the economy.
“As climate change intensifies, natural disasters and warming temperatures can lead to declines in asset values that could cascade through the financial system,” she said during the meeting.
“A delayed and disorderly transition to a net-zero economy can lead to shocks to the financial system as well.”
Climate-related disasters have caused economic losses through infrastructure damage, disruptions in critical services and losses in property values, according to a federal government report released last year.
The U.S. experienced an average of nearly eight $1 billion disasters every year over the past four decades. In the past five years, that number has jumped to nearly 18 events annually.
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