According to research, the Earth’s annual average near-surface temperature for each year between 2022 and 2026 is predicted to be between 1.1°C and 1.7°C higher than pre-industrial levels (the average over the years 1850-1900).

In 2015, some 196 representatives from almost all nations agreed to adopt the Paris Climate Agreement to limit and mitigate the effects of global warming.

Climate change clearly holds major consequences for the inhabitants of this planet. And you might be surprised to know it can also have an impact on one’s finances, even though this might not be felt directly by most people, or even widely thought about.

Here are six ways climate change could affect your finances today and in the future.

1. Higher power bill

Do you think your electricity bills are high now? As global temperatures continue to rise and the weather gets even hotter, you could be spending more money trying to cool down.

The greater demand for power would perpetuate the vicious cycle as generating more electricity would lead to quicker depletion of fossil fuels and increased greenhouse-gas emissions.

Soberingly, average temperatures on Earth have risen by at least 1.1°C since 1880. By 2100, some scientists have projected temperatures could rise fivefold.

Does 1°C make a big difference? Try asking your older friends or parents how cold Cameron and Genting Highlands used to be in their younger years, compared with today.

2. Damage to assets

As temperatures increase, floods and severe storms are becoming more commonplace all over the world. Of note were the once-in-100-year floods in Malaysia at the end of last year.

According to the World Meteorological Organisation, the number of disasters rose by a factor of five from 1970 to 2019, costing damages of US$203 million (RM944 million) per day.

Social media images and footage of cars being submerged and the damage caused to properties are big reminders of the costs these natural disasters incur thanks to climate change.

3. Increased premiums

With more frequent natural disasters leading to more people seeking protection for property damages, insurers will have to raise premiums to compensate for higher environment-related risks.

In its report on property insurance, Swiss Re forecasted that premiums will rise 22% by 2040 owing to weather-related catastrophes.

Furthermore, climate change affects personal health. Higher temperatures could lead to heatstroke, infectious and respiratory diseases, as well as mosquito-borne illnesses.

4. Higher taxes

When you see potholes on the road or broken electricity lines, you might assume the council should step in and repair these damages. Remember, though, that this is done with taxpayers’ money.

In that regard, when storms and floods occur often, damage to infrastructure requires the government to spend more money on repairs.

As it is, a great amount of money is being spent to repair and upgrade drainage systems in Kuala Lumpur and Selangor.

5. Job or income loss

While climate change affects most, if not all, industries, it will have an impact on ecotourism and agriculture in a more pronounced way.

Malaysia’s east coast marine parks, for instance – estimated to be worth RM7.8 billion in economic value – will be affected by rising temperatures that threaten Malaysia’s coral reefs.

In the agriculture sector, which accounts for about 7.5% of GDP, uncertain weather conditions could negatively impact yield.

Those in these industries could find themselves out of a job if climate change continues to worsen.

6. Higher living costs

With a decline in agricultural yield, essential food products would be in short supply, leading to higher prices.

This year alone, Malaysians have suffered the brunt of high food prices owing to the Russia-Ukraine conflict that affected global food prices such as wheat and soybean, which in turn had the effect of raising chicken prices.

Furthermore, crops that require a colder climate, such as those produced in Cameron Highlands, might not grow as well, leading to a shortage.

What can be done?

Change happens not by one person doing a great deed but by many people doing small deeds. You can start with trying to lead a more sustainable zero-waste lifestyle.

To that end, Zero Waste Malaysia is holding a 30-day challenge all this month, where you can sign up and do your part in reducing your carbon footprint.

This article was written by Su-Wei Ho for MyPF. To simplify and grow your personal finances, follow MyPF on Facebook and Instagram.