Can climate change contribute to inflation, causing higher prices for food, energy, insurance and more? That’s what is meant by climateflation, a.k.a. ecoflation or fossilflation.
Recent Bloomberg reports have highlighted real-world climate change impacts. For example, in 2022, a heatwave in Europe is credited with raising food prices by 0.7% and contributing 0.3% to overall inflation. A 2024 report cites damage from a heatwave to cocoa plantations, contributing to a 280% increase in prices that year.
Defining Climateflation
Are what Bloomberg is reporting climateflation? At a Frankfurt conference in 2022, Isabel Schnabel, on the board of the European Central Bank, introduced the term, climateflation, describing it as the inflationary pressure caused by the physical effects of climate change on food, energy, materials and services.
The following year, OMFIF, an independent think tank and advisory body of global central bankers, economists, and private and public sector investors, invited the financial community to a virtual roundtable dedicated to climateflation and its macroeconomic impacts. Today, among financial experts, bankers, and economists, climateflation and climate-induced supply shocks are widely being described.
For the reinsurance industry, the companies that underwrite primary insurers, climate-induced risks are seen as structural drivers of inflation. Climateflation is causing higher risk valuations and leading to primary insurers raising prices or withdrawing policy coverage. By 2030, global reinsurers estimate climate-induced losses will reach US$ 6.9 trillion annually, with $3.4 to $4.1 trillion representing the uninsured portions.
Climateflation, therefore, represents more than a shock to large institutions and governments. It is now a kitchen table issue.
Why Talk About Climate Change Around the Kitchen Table
For those of us who find so much of what is going on geopolitically in the world a distraction from the existential global warming crisis we face, talking about climate change at the kitchen table has been a non-starter of late. Except for the weather, unless you are a farmer, a fisher, a meteorologist or a climatologist, climate change is likely not first of mind in everyday conversation.
In my work for the past dozen years with the Liberal Party of Canada as a Policy Chair for local electoral districts, I have held numerous group discussions on climate change. Before COVID-19 and Donald Trump, global warming was “hot.”
Now, discussions focus on threats to Canada’s economy and sovereignty from our southern neighbour. Yet, climate change waits for no one, and the impacts are happening around us and globally.
Since 2020, we have experienced climate-related damages to the Canadian economy from wildfires, floods, extreme heat, crop losses, fishery decline and more. The estimated annual GDP growth rate has declined by half.
Going About Kitchen-Table Climate Talks
You don’t think of climate change conversations as kitchen table fare. But with clmateflation, climate change is hitting our pocketbooks.
Consider what follows a roadmap to begin discussions.
- Talk about the weather. Ask about memories of past weather and how today compares. Need some words? Try these:
“Before we start eating, can we talk about what you notice about changes to the weather, and what stories you see or read in the news that bother you?”
- Talk about the cost of food and other consumables you purchase regularly. Are prices going up? Invite opinion on the causes? Need some words? Try these:
“Are you noticing how food prices are going up and that stuff is getting more expensive? Could climate change be impacting farming, affecting harvests and the price of food? Could the rise in price on other things we buy be affected by a changing climate?”
- Ask about the daily choices you make. Are they good for the environment? Do they contribute to pollution and climate change? Need some words? Try these:
“If we use less energy to heat and light the house, do you think we can contribute less to climate change? What else can we do together here at home?”
- Ask what one thing or habit each person at the table would be willing to correct to reduce climate change impacts? Need some words? Try these:
“If we waste less food, plant a vegetable garden, eat more vegetables and fruit and less red meat, do you think that would help with climate change?”
- Ask the adults and children at the table about what they think where we live will look like in 20 years? What do you think will be better? What do you think will be worse? Need some words. Try these:
“What if we begin campaigns such as planting more trees in our neighbourhoods, putting in dry ponds to stop extreme rainfall flooding, making more bicycle-friendly roads, and converting public transit to electric? Can you think of any other local actions to help keep where we live and the planet from overheating?”
A Climateflation To-Do List
The answers to cutting climateflation exist. Consider this action to-do list:
- We can make our homes more energy efficient through energy and climate change retrofits: heat pumps to replace gas-powered furnaces, smart thermostats, LED lighting, and automatic shut-offs for appliances during periods of low usage.
- We can use government grants and no-interest or low-interest loans, and manufacturers’ rebates to reduce insurance risks and save money for retrofits.
- If your home roof is suitable, rooftop solar panels can reduce energy grid reliance and save money.
- If the local community has accessible and reliable public transit, you can make the switch from using the car.
- We can create emergency savings as a weather insurance fund rather than pay for increased premiums.
- We can grow some of the food we eat. In World War II, we called them victory gardens.
- We can lobby governments to pass climate change legislation, and we can vote for candidates who are serious about climate change.
- We can do business with companies equally committed to addressing climate change, an expression of solidarity in sustaining the environment.
