Why climate change is costing U.S. households hundreds of dollars a year 07APR2026 MIT Sloan Office of Communications mitsloan.mit.edu/press/why-c… From insurance premiums to energy bills, a new study from MIT Sloan School of Management shows how Americans are already paying the price of climate change, and climate inaction, driven by extreme weather. Key MIT Sloan Findings MIT Sloan School of Management faculty members Catherine Wolfram and Christopher Knittel have found the price of climate change is already showing up in annual household budgets across the country, over $1,000 annually in some regions. Read their opinion piece in WBUR’s Cognoscenti. The costs households already face from climate change may rival, or even exceed, costs of policies like carbon pricing, suggesting the price of climate inaction may ultimately be higher. Costs are especially concentrated in parts of the West, Midwest, and Southeast, including wildfire-prone areas like California, Gulf Coast states vulnerable to flooding, and tornado-prone regions in the middle of the country. Lower-income households tend to feel added costs most acutely since the expenses make up a larger share of their budgets. Featured Experts Christopher Knittel & Catherine Wolfram CAMBRIDGE, Mass., April 7, 2026 – As extreme weather becomes more frequent, climate-related costs are creeping into everyday expenses, adding hundreds of dollars a year to U.S. household expenses. From higher insurance premiums to rising utility bills and disaster-related income losses, climate change contributes to expenses at a time when Americans are already worried about rising food and energy costs. In “Who Bears the Burden of Climate Inaction?,” a paper published in the Brookings Papers on Economic Activity, MIT Sloan School of Management professors Christopher Knittel and Catherine Wolfram, along with UCLA School of Law professor Kimberly Clausing, estimate and break down the major sources of these costs and examine how they differ across geographic regions and income groups. The impacts are not evenly distributed. Where you live and your income level both play a major role in how much the costs are affecting you. Catherine Wolfram & William Barton Rogers Professor in Energy “A lot of the ways in which we discuss climate now are kind of abstract and in the future — maybe these impacts happen in 2050 or 2100 — but we really wanted to emphasize that this is already occurring and it’s having negative financial implications for households,” said Wolfram. Their findings carry implications for climate policy, too. The researchers note that the costs households already face from climate change may rival, or even exceed, costs of policies like carbon pricing, suggesting the price of inaction may ultimately be higher. “Policymakers are often focused on the price of taking action,” Wolfram said. “But these findings highlight that there are also real and growing costs to doing nothing.” Bottom line: Climate change can cost households over $1300 annually.