The Cost of Climate Change: A Financial Analysis of Climate Change Strategy Implementation for a Water Utility

Abstract

Climate change is a challenge that society must face not just from an environmental perspective but also from an economic perspective. The goal of this research is to model how implementing climate change adaptation activities can impact the financial health and stability of a water utility located in a coastal community in the southeast United States. To measure financial health of the water utility, two categories of financial models were developed to project the utility’s future financial health, one model without climate change impacts and adaptation and one with climate change adaptation expenses. By comparing the two sets financial models, we can learn about the potential financial implications of climate change adaptation at the local utility level. In addition, this paper, offers suggestions on ways that the utility can improve their financial health as climate change impacts progress and adaptation activities are required. The results of this paper indicate that the utility analyzed has the capacity to pay for climate change adaptation under all of the modeled scenarios. However, the utility should still financially prepare early for climate change adaptation as projecting the financial impacts of executing climate change adaptation activities at the utility level is extremely difficult.