Economic Perils and Opportunities of Extreme Weather

While the causes of climate change may be for up for debate, its impact on our economy and potential adjustments to business models are not.

For example, rampant coastal flooding in South Florida has prompted at least one research institute to predict insurers will stop offering homeowners policies in the region. As a result, the institute says, banks will stop offering 30-year mortgages. To retain residents and attract new people to the region, the greater Miami area has invested heavily in mitigation and adaptation efforts to literally stem the tide. Of course, these efforts lend themselves to new jobs and infrastructure spending, which help stimulate the local economy.1

While extreme weather may not deter you from buying the home of your dreams, it is worth considering a few defensive moves to help reduce your financial risk when considering a home purchase.2

  • Check whether the home is in a flood zone and has suffered any damage in the past
  • Shop for homeowners insurance coverage before you buy a property to make sure you can budget for it long term
  • Find out what materials and techniques were used in construction to see whether they meet current building codes

Regardless of where you live, it’s important to separate your housing security from your long-term financial future. This means taking precautions, including having adequate homeowners insurance, to help ensure that property losses will not affect your retirement income. And if you’d like assistance in assessing your retirement income strategy, we’re here to help.

Florida is not the only state suffering from the effects of severe weather. In fact, Washington, D.C., recently experienced 4 inches of rain in just one hour, triggering flash flooding in the metro area.3 Meanwhile, wildfires in the western U.S. are worsening, burning twice as many acres each year since 2000 than they did in the 1990s.4

There are a couple of different ways to view growing instances of extreme weather. First, there’s the negative impact. One study concluded higher temperatures could cost the nation $520 billion each year among 22 different sectors, including agriculture and infrastructure.5

However, another way to look at combating climate change is through opportunity for economic growth. For example, Iowa’s investments in wind farms have resulted in $58 million in state and local tax payments and $20 million to $30 million in lease payments to private landowners. Nearly 10,000 Iowans have wind-related jobs in the No. 2 state for both wind power capacity and share of total electricity generation.6

Nationwide, the solar industry employs more than 240,000 workers and contributed $17 billion to the American economy in 2018. In the past 10 years, solar energy has averaged 50 percent annual growth in the U.S.7

A provision in the Tax Cuts and Jobs Act of 2017 offers another economic boost. Investments made in specific low- and moderate-income communities — dubbed Opportunity Zones, or OZones — qualify for capital gain tax deferral, partial forgiveness of tax on capital gains and forgiveness of additional gains on those investments. The initiative is expected to yield $200 billion to $300 billion worth of investment in the nation’s 8,700-plus OZones, including green economy projects.8

Our firm assists retirees and pre-retirees in the creation of retirement strategies utilizing investment and insurance products. Advisory services offered through B.O.S.S. Retirement Advisors, a Registered Investment Advisory firm.. Insurance products and services offered through B.O.S.S. Retirement Solutions. Marketing materials provided by Infinity Marketing Services.

1 Theresa Pinto. Miami Beach Times. May 30, 2019. “Experts Say Sea Level Rise May Kill the 30-year Mortgage in Florida.” Accessed Aug. 19, 2019.

2 Natalie Campisi. Bankrate. April 24, 2019. “Rising tides, intense storms and floods wake-up call for homeowners, homebuyers.” Accessed Aug. 19, 2019.


5 Renee Cho. The Earth Institute at Columbia University. June 20, 2019. “How Climate Change Impacts the Economy.” Accessed Aug. 19, 2019.

6 Sen. Chuck Grassley. Newton Daily News. Aug. 15, 2019. “Wind powers big opportunity.” Accessed Aug. 19, 2019.

7 Vallejo Times-Herald. July 25, 2019. “Thompson, others, introduce Renewable Energy Extension Act.” Accessed Aug. 19, 2019.

8 Julia Parzen and Graham Richard. GreenBiz. Aug. 14, 2019. “Opportunity zones could provide major boost for clean energy, sustainable development.” Accessed Aug. 19, 2019.

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