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climate impact on household finances – REPORT FROM THE US Treasury

Black and Latine adults are less able to pay their bills and are more impacted by natural disasters. Living paycheck to paycheck makes any disruptions caused by climate change far more devastating. Under President Biden’s Executive Orders, the US Treasury Department was required to “analyze and understand the impact of climate change on the financial wellbeing of vulnerable populations.”1 While they identified climate-induced burdens on households with lower incomes, they stopped short of identifying how financial systems contribute to these inequities and recommending solutions. Our brief discusses important missing links between financial institutions themselves and the inequities in climate change impacts on people of color and low-income households. 

Read the full brief here.

In September 2023, the US Treasury released a report titled The Impact of Climate Change on American Household Finances which documents how household finances are affected by climate change. The Treasury report identified 8 ways climate disasters impact household finances:. 

  1. Property damage and destruction
  2. Loss of earnings and benefits
  3. Health care access and expenses
  4. Increased spending on energy 
  5. Transportation access and cost
  6. Higher prices for consumer products
  7. Limit access to public benefits programs
  8. Disruptions to dependent care

Treasury’s use of vulnerability as an indicator of inequities, as a response to Executive Order 13985, identifies how climate financial risks affect low-income, communities of color, and female-headed households, however they stop short of identifying equitable solutions or make policy recommendations to address inequitable climate burdens on household finances. For example, they identified the following three financial vulnerabilities, but did not provide solutions.

  1. Challenges Accessing Funds
  2. Reduced Availability and Increased Cost of Credit
  3. Growing Insurance Gaps

In addition, the report misses discussing other elements of climate change financial resources such as federal disaster assistance programs, which are not equitably distributed. In our full analysis, we specifically discuss FEMA’s Individual & Household Program (IHP) and the Building Resilient Infrastructure and Communities (BRIC) programs which have been undeserving low-income and communities of color.

Overall, the US Treasury report does well in merging into one document the several ways that low-income and communities of color are disproportionately impacted financially by climate impacts. However, it completely underdelivers in developing a meaningful synthesis on why and how financial institutions contribute to the inequities of climate impact on household finances.This is a missed opportunity to implement towards equitable financial solutions under Biden-Harris executive orders to push for environmental justice in frontline communities while there is congressional support.


  1. https://home.treasury.gov/system/files/136/Climate_Change_Household_Finances.pdf ↩︎