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5 ways climate change makes life more expensive (and what to do about it)

Spoiler alert: It's already costing you.

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This story is part of The Cost of Climate Change, CNET's coverage of how the changing climate impacts a range of financial issues.

As temperatures heat up and severe storms swell, some more visibly damaging effects of the climate crisis take their toll on our everyday cost of living. From groceries to gas to insurance, here are five of the biggest categories where extreme weather events are fueling price hikes -- and what we can do about it.

1. Food prices

We may be experiencing sticker shock at the supermarket, and climate change is partially to blame. Extreme weather events from the past year (flooding, frosts and droughts) have devastated farms and crop production and, in turn, the food supply chain -- which was already reeling from labor shortages and bottlenecks related to the pandemic. This is all furthering food inflation globally: Year-over-year prices were up 33% in September.

Coffee prices have been among the hardest hit. Droughts and extreme temperatures in Brazil, one of the world's largest food suppliers, have wiped out much of the country's Arabica crop. Bean prices nearly doubled to the highest in seven years, prompting many coffee distributors and shops to to raise prices.

In the US, wheat production has been under attack from droughts, with the US Department of Agriculture finding that only 11% of spring wheat from 2020 was in good condition. Production projections are at a 33-year low, which could raise the cost of flour -- and down the chain, products like bread and cereal.

Ways to save: While we can't do much to control prices at the grocery store, we can reduce our personal costs by eyeing sales and buying in bulk when possible to secure lower unit prices. "Don't hoard, but if you do see a deal, buy it," says Phil Lempert, founder of The Supermarket Guru. Joining a local food cooperative can be a way to support local farmers while saving on produce and seasonal items, too. Maybe also consider purchasing a stand-alone freezer, a worthwhile investment for households with the space, to stock up on food essentials. And finally, "Don't waste food. Forty percent of all food waste comes from our homes," says Lempert. "Buy the right amount. If you have leftovers, make sure to use them. Be as smart and frugal as possible."

2. Health care expenses

It's no secret that fossil fuel emissions, one of the main causes of global warming, can damage our health. A Natural Resources Defense Council report in May found that pollution can worsen asthma as well as the cardiovascular, metabolic, nervous system and reproductive processes. This all can lead to potentially higher out-of-pocket medical expenses, which then makes it more challenging to save and make ends meet.

Ways to save: Central to this issue is where you live. Is it sustainable for your health? Could you consider relocating? If not, would investing in certain home upgrades mitigate risks to your health? Depending on the type of climate or environmental extremity, items like air purifiers and water filtration systems may be well worth the investment.

Also, we may benefit from enlisting the help of medical providers for their advice and suggestions for accessing more affordable health care options. Physicians have a fiduciary responsibility to act in our best interest, including our financial needs. If a procedure or medication is out of budget, request effective and affordable alternatives if possible. Websites such as HealthCareBlueBook.com share fair pricing estimates for common procedures and surgeries, which you can then use to request a lower out-of-pocket expense than what was estimated.

3. Energy bills

Higher temperatures may lead to power and utility disruptions, which can lead to ballooning energy bills. The need for air conditioning during heat waves is another reason why cooling costs may escalate. 

In Florida, for example, researchers estimate that paying for air conditioning will become a greater financial stress without climate action: Floridians could face an additional $122 in electricity bills every year until 2040.

Ways to save: Reducing our home's dependence on non-renewable energy is key. Solar panels, electric or hybrid vehicles and energy-efficient home appliances are investment that may reduce how much we spend on utilities in the long run. Also, utility or energy companies may offer free home energy audits and provide simple suggestions to weather-proof and make a home more efficient.

4. Disaster insurance and home repairs

As the onslaught of severe weather leads to more property damage, insuring a home may become harder and more expensive. "Some of the major risks I see [related to climate change] is in insurance premiums," says Sanjay Patnaik, director of the Brookings Institute's Center of Regulation and Markets. Patnaik's research focuses on climate policies: "Especially in areas where you have increased extreme weather events like wildfires in California or hurricanes in Florida, you will see a spike in insurance premiums."

This has already become reality for property owners in these regions. Insurance companies have reportedly dropped some policyholders or raised premiums several times in one year, according to The New York Times. Many providers are even reducing coverage, expecting homeowners to pay out of pocket for things that were previously covered like fire mitigation or roof damages.

Ways to save: Existing owners worried about rising rates may want to preemptively call their insurer and ask about ways to 'fortify' their homes to keep a lid on premiums. Prospective homebuyers should be mindful of a location's climate risks: Before getting too deep into the process, survey the area and determine if the homes are easy to insure by speaking with trusted realtors, existing homeowners in the area and contacting insurers on your own. FEMA's flood maps can identify if a home is in a flood-prone area. 

Many states also offer insurance for homeowners who are having trouble finding coverage. The National Flood Insurance Program provides federally backed flood insurance for eligible homeowners, too. If an area's been hit with flash floods but you're not in a technical "flood zone," you can still purchase flood insurance -- despite what you may have heard. "It's a big misnomer," says Loretta Worters of the Insurance Information Institute.

Pro tip: Learn about the fire department in the town you're seeking to live in. "Insurance companies prefer homes that are in areas with professional fire departments, as opposed to volunteer firefighters," says Worters. 

5. Mortgages and credit

Beachfront homes might become harder to attain: This Swiss Finance Institute study explains how banks may impose higher interest rates on mortgages backed by properties in higher sea levels. The riskier a home's location, the more worried a bank may become about its sustainability -- or of a homeowners's ability to make payments during a climate disaster.

At the same time, extreme climate conditions and new policies can lead to major devaluations of certain asset classes, which can further weigh on bank balance sheets. The trickle-down may be a tighter lending market where access to credit falls and interest rates go up.

Ways to save: The most important step to ensuring the best access to credit, whether it's a loan, credit card or mortgage, is a stellar credit score. A higher score means potentially smaller interest rates and more savings for you. If you've yet to focus on your personal credit health, you can start now: Download your free credit report and ask your bank for a free look at your most recent credit score. 

In summary: Climate change brings weather extremities, and the damages those cost carry high costs for the environment and our everyday lives. Cost-cutting measures are key, as is building a general cash cushion for emergencies. "The imperative to save a lot of money... is at an all-time high," says Hilary Hendershott, founder of Hendershott Wealth Management in California. "Without assets you have agency over, you are likely to have significantly fewer options. Money solves so many problems." If you live in a particularly vulnerable part of the country, paring down expenses to help shore up funds may help mitigate these and other financial shocks.