Report

The Effects of Weather on Massachusetts Municipal Expenditures: Implications of Climate Change for Local Governments in New England

Abstract: In New England, municipal governments provide a variety of public services that are vital to residents and businesses, such as public works, police and fire services, and general government administration. However, the region and its local governments face an increasing threat from climate change. As recorded by the National Oceanic and Atmospheric Administration, New England states have become hotter and wetter and have experienced an increased number of extreme precipitation events since 1900. Rising temperatures and more frequent extreme precipitation events are projected for the region through the end of this century. These changes in weather conditions could damage public infrastructure, disrupt the delivery of public services, and increase the costs of snow removal, road maintenance, the heating and cooling of public buildings, and other local services. Using Massachusetts data from 1990 through 2019, this report examines how weather affects municipal expenditures. It finds that temperature and precipitation have a significant impact on local spending. Based on the estimated historical relationship between temperature and local spending, the report finds that municipal expenditures will increase considerably in the coming decades as a result of projected rising temperatures. These cost increases could create significant fiscal stress on municipalities and force them to raise taxes and fees. Among the findings highlighted in this report is that during the 1990–2019 period, a 1 degree Fahrenheit increase in average temperature, on average, resulted in a 3.2 percent increase in per capita municipal general-fund expenditures in Massachusetts. During the same period, a 1 per centage point increase in the percentage of days in each year with at least 1 inch of snowfall, on average, led to an increase in per capita municipal expenditures of about 0.4 percent. This report estimates that if global emissions continue to grow at their current rates, resulting in significantly higher temperatures in Massachusetts, per capita annual municipal expenditures will increase 30 percent for the 2090–2099 decade relative to average per capita annual municipal expenditures for the 1990–2019 period. Given the substantial similarities in fiscal structures and weather patterns throughout New England, these findings are likely to apply to other states in the region. This report recommends that municipalities account for climate change in their long-term municipal financial planning, since early policy actions are often more cost effective than later ones. Investing in improvements to the climate resilience of public infrastructure is important, and it is particularly urgent for New England, given how dated the region’s infrastructure systems are.

Keywords: New England; NEPPC; Massachusetts; weather; climate; local government spending;

JEL Classification: H72; Q51; Q54;

Bibliographic Information

Provider: Federal Reserve Bank of Boston

Part of Series: New England Public Policy Center Research Report

Publication Date: 2022-12-01

Number: 22-2