When Climate Hits Your Pocketbook: How Much Is the Heat Costing You?

Your input needed on the personal cost of climate change

Photo by rc.xyz NFT gallery on Unsplash

While everyone knows that this summer has been a banner year for heat, few are thinking yet about the cost of that heat on our personal pocketbooks. I’m on a mission to find out. So, be forewarned… at the end of this article, I am asking for your input on the increased costs you have experienced with climate change. Before we get there, however, here are some of the very real costs associated with extreme heat. These costs amount to increases in the cost of living, even if they are not always inflationary price increases, per se, and many of them affect everyone, not just those in the areas experiencing the heat. Let’s take a look.

The cost of cooling with electricity—going up substantially

The increased cost of cooling has three components. First, electricity prices are increasing at a time of increased demand. In the US, electricity prices are estimated to rise 11.7% in 2023This is driven mostly by the challenges of getting lower-cost sources of electricity, like wind and solar, online. Grid engineering is creating a bottleneck, as are regulations. FERC, the Federal Energy Regulatory Commission, just approved new rules to help speed up the process, but the rules are only part of the problem. The net effect is reliance on more expensive forms of electricity, and that always gets passed on to ratepayers.

Increased costs are not limited to the US, however. Italy, for example, which is one of the countries most hard hit by the extreme heat, has seen electric rates nearly double recently.

Graphic from Statista.com

The second component is the number of days requiring AC to keep cool. Just today, for example, Phoenix, AZ ended its longest-ever 31-day streak of highs over 110°F by posting a high of 108°F, and EL Paso, TX is still extending its streak of 38 straight days with highs over 100°F. To some extent, heat like this is expected in the summer, but there was also the April heat wave that broke temperature records in over 100 US cities, including La Crosse, WI which hit 90°F—whereas its old record was 80°F. Those ten degrees got a lot of people to flip on the air conditioning—incurring expense they normally wouldn’t incur at that time of year. The combination means that more people have more days to run—and pay for—air conditioning.

The third component is how long the air conditioning needs to run to stay cool. The highs make the news, but the biggest challenge is cooling down at night. Without air conditioning, it is pretty tough to cool down when the night temperature only decreases to 100°F or 95°F or even 90°F. In many areas, people usually turn off the AC at night and open a window. But in heat like this, the AC stays on all night.

In other words, we are cooling ourselves and our homes for more days, longer hours, and higher electricity prices. It is a triple-whammy that will hit you in your pocketbook. As one study for Tampa Bay showed, the average cost of cooling is $25 a day, or $750 per month. Add that up and it amounts to $9,000 per year in those warm weather areas of the US. Other countries will have different dynamics, but in almost all cases, the heat is adding to cooling costs. Put another way, if electricity is 10% more expensive and you use air conditioning for 10% more days and 10% longer on those days, that creates a 30% increase in cooling costs. I’m betting many people are experiencing increases in all three categories that are higher than 10%. It’ll be interesting to see what folks share about their own locations in the comments.

Cooling equipment failures and repairs

Closely related to the cost of electricity for cooling is the cost of repairs and maintenance for overworked equipment. Air conditioners and heat pumps are not meant to operate at such high ambient air temperatures. One that I bought this summer from Midea has an ambient air temperature spec of 108°F. There is a good chance it will function at temperatures above that level, but for how long and at what cost to the unit? In my area, just to get an AC tech to the door is $80. Then they start the work. It seems like no matter how simple it is, the cost is always $500-1,000 for service. This adds to the high cost of heat, too.

The cost of treating heat illnesses

Have you ever called an ambulance? Several years ago, I had cause to call ambulances to my house for my sick wife at the time. The hospital was a mile or so away, but she needed the paramedics and EMTs. Know what that ambulance costs? $1,600 every time. She hadn't even seen a doctor yet. Even if your illness doesn't require an ambulance ride, however, the Center for American Progress indicates that an average ER visit for heat illness is $757, whereas hospitalization averages $14,900. These expenses won’t hit everyone, but if you are unlucky enough to end up with a heat illness, the extra expense to you and your family will not be small.

The cost of preventing heat illness

Just because you stay out of the hospital doesn’t mean you escape cost, however. People who like to exercise may find it is just too hot to exercise outdoors, and so join a gym—at extra cost. Workers can lose income from skipping a day of work or being sent home early—something people who work outdoors are more likely to encounter. Likewise, preventing heat illnesses may mean new clothing, repairs to your car’s AC, or even extra cost of commuting. Many trains and buses are not air conditioned and it is likely too hot to bike or walk. So, people drive. They drive to work or take the kids to school instead of putting them on that hot school bus. Extra gas, extra mileage, extra parking costs. All these can add up.

The cost of dead or dying plants—removal and or replacement

Homeowners with landscapes must also confront the increased costs of keeping those landscapes—and I am not talking about manicured lawns that are so easy for some people to loathe. If you skip the lawn and have a saguaro cactus in your yard in Phoenix, you could have quite a mess cleaning up the cactus after it collapses due to the heat. Even the Phoenix botanical garden is seeing saguaro cactuses collapse, with one professional describing them as rotting from the inside out due to the heat.

Extreme weather of all kinds can stretch flora and fauna to the limits of survival. Plants evolve to exist in particular climatic conditions, and when those conditions go outside their survival zone, they die out. Trees in particular can be costly to remove, with elm trees and oaks sometimes costing upwards of $10,000 to remove, especially in an urban environment where utmost care must be taken to prevent damage to nearby houses, garages, powerlines, or other buildings. These costs may not affect everyone, but if you are hit with them, the costs can be substantial.

Food prices soaring where effects are occurring

In addition to heat events that occur right where you are located, your costs are going up because of extreme heat and drought in other parts of the world. Heat is changing ecosystems that were particularly adapted to certain kinds of agricultural production, and as that production is curtailed, prices at the grocery store go up. This is the second year in a row of extreme heat and drought in Spain, which produces 50% of the olive oil on the planet. Spain’s olive production is down by about 60%. At my local store, I noticed it. Olive oil that I used to buy for $6.88 a couple of years ago is now $9.88 a bottle. And people wonder why we have inflation!

These increasing food prices are just beginning. Florida’s coral reefs are bleaching and dying, and with them go productive fisheries. Coffee production is being affected around the world as climate areas change, and one report says to expect coffee production to decline by up to 50% by 2050. As heat, often accompanied by drought, reduces agricultural output and natural harvests like fisheries, food costs will continue their upward climb. When you see food prices increase and your grocery bill is a surprise, you can see the cost of climate change right there on the receipt in your hand.

Insurance

Property and casualty insurance rates are going through the roof in climate-affected areas. In Florida, for example, the average cost of homeowners and building insurance is four times higher than the national average. In California, both Allstate and State Farm have stopped writing property and casualty insurance policies altogether.

There are multiple causes for these increases. First, rebuilding and replacement costs have increased by 55% from 2019 to 2023. Second, an increase in the cost of re-insurance, which is the backup insurance that insurance companies purchase to protect themselves. Typically, small claims are covered by insurance companies, but with large claims, they turn to re-insurance to cover their costs. According to a CBS report, reinsurance rates for property and casualty insurance are going up another 50% this year.

While these challenges hit homeowners in directly affected states like Florida and California, insurance companies also take it out of everyone’s pocket. Across the US, average insurance rates have increased by 12-19% in 2022, and an increase of another 9% is expected in 2023. With a national average premium of $1,899 for a $300,000 home, those increases amount to several hundred dollars of increased costs each year. Given the unpredictability of climate effects, we can be those costs will continue to rise.

So how is the heat hitting you?

These are just some of the increased costs people are confronting, but I am sure personal experience from readers will reveal even more. Both for my information and for the sake of other readers, I'd like to hear your experience in the comments. Please add your thoughts, and if possible, be specific. It would be fascinating to see real numbers if you are willing to share them. Doing so will make us all more aware of the real costs of climate change in our personal lives. Thanks in advance for participating.

Anthony Signorelli