Uneven Impact: The disproportionate effect of severe climate events on low-income counties in California

BlackRock investment teams have made a major investment over the past few years to incorporate geospatial data directly into their investment processes. The resulting set of alpha insights incorporate timely National Aeronautics and Space Administration (NASA) and Federal Emergency Management Agency (FEMA) data directly into portfolios. These alpha insights are designed to help deliver portfolios that are more resilient to the effects of climate change.

This paper uses this satellite data to analyze the interactions between extreme weather events and the local economic impact within California. The objective is to improve the public awareness of the relationship between the climate, economy and low-income communities in a state where the firm has a large and longstanding operating presence. We investigate county level economic effects of four climatological events — heat waves, droughts, wildfires, and floods — and have found that:

• Extreme weather events have a disproportionately large economic impact on counties with lower-than average levels of income
• Extreme heat and wildfires tend to occur more frequently in lower income counties
• Economic impacts are exacerbated by the temperature sensitive industry mix in low-income counties

By providing actionable, county-level findings, we hope to elevate the public discourse on climate change and to assist in targeting future adaptation grants to those communities most in need.

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Recommended citation: Becker, T., Covert, A., Daverman, T., Pensky, M., Ren, H. Uneven Impact: The disproportionate effect of severe climate events on low-income counties in California (2022). BlackRock White Paper.