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Treasury Sec. Janet Yellen warns ‘climate change’ could trigger asset value losses, harming US economy

WASHINGTON, March 7 (Reuters) – Climate change is already having a major economic and financial impact on the United States and may trigger asset value losses in coming years that could cascade through the U.S. financial system, Treasury Secretary Janet Yellen will warn on Tuesday.

Yellen will tell a new advisory board of academics, private sector experts and non-profits there has been a five-fold increase in the annual number of billion-dollar disasters over the past five years, compared to the 1980s, even after taking into account inflation.

“As climate change intensifies, natural disasters and warming temperatures can lead to declines in asset values that could cascade through the financial system. And a delayed and disorderly transition to a net-zero economy can lead to shocks to the financial system as well,” she said in remarks prepared for delivery at the advisory board’s first meeting.

She said severe storms and wildfires in states like California, Florida, and Louisiana, tornadoes across the South and intensifying storms on the West Coast show how climate change is accelerating.

The U.S. government in January reported that 2022 tied 2017 and 2011 for the third-highest number of billion-dollar disasters, with a total price tag of at least $165 billion.

There were 18 weather and climate disasters each costing at least $1 billion in the year, including two tornado outbreaks in the south and southeast in March and April, and massive wildfires across the west.

Yellen said the new Climate-related Financial Risk Advisory Committee, set up last October by the Financial Stability Oversight Council (FSOC), would boost U.S. efforts to mitigate the risks that climate change poses to financial stability.