Understanding the
Potential Economic Impacts of Climate Resilience Investment Scenarios in New Jersey
With 76% public support, a $3B climate resilience investment could generate up to 45,000 jobs across New Jersey, according to a new report from Rebuild by Design and AECOM.
OVERVIEW
Over the past decade, communities across New Jersey have faced the impacts of climate change. Between 2011 and 2024, New Jersey experienced fourteen federally declared climate disasters. Considering the scale of the need and the limitations of current federal funding, it is critical that New Jersey explore new sources of funding for climate mitigation and resilience. Such investments are not just an upfront cost – they can result in cumulative benefits to residents and businesses alike through avoided damages and co-benefits, such as job opportunities and healthier ecosystems in communities. A recent study conducted by the United States Chamber of Commerce found that resilience investments have notable impacts in local economies, with every dollar invested yielding a return of thirteen dollars in avoided costs following a climate disaster.
AECOM, working in collaboration with Rebuild by Design, evaluated the economic impacts associated with potential investment scenarios in resilience in New Jersey. The analysis modeled two potential investment scenarios, 1) $3 Billion, and 2) $9 Billion, along with assumptions on leveraged funding.
The analysis estimated that a $3 billion investment scenario could support 26,000 jobs, and a $9 billion investment scenario could support 77,000 jobs across New Jersey. Should projects funded by such investments leverage additional funding from federal sources by providing local matches, a $3 billion investment scenario could support $2.2 billion in additional spending and 45,000 jobs, and a $9 billion investment scenario could support $6.6 billion in additional direct spending and 134,000 jobs.
Two MODELED INVESTMENT Scenarios
$3 BILLION
Without leveraged funding, projects are expected to support 25,500 jobs, 13,400 of which are direct jobs (see Methodology for explanation on direct, indirect, and induced). When considering leveraged funding, projects associated with these categories could support an additional 19,000 jobs. The potential $3 billion investment scenario is expected to support a number of industries, largely the construction, professional services, and administrative support sectors. The construction and the professional services sectors contribute to about 30 percent and 20 percent of the jobs supported by the potential investment, respectively.
Source: AECOM Analysis
Note: Totals may not add due to rounding
$9 BILLION
The $9 billion investment scenario applies the same proportions of funding as the $3 billion investment scenario. Without leveraged funding, projects associated with these categories are expected to support 76,600 jobs, 40,200 of which are jobs directly related to the projects themselves. When considering leveraged funding, projects associated with these categories can be expected to support an additional 56,900 jobs. The $9 billion investment scenario is expected to support a number of industries, largely the construction, professional services, and administrative support sectors.
Source: AECOM Analysis
Note: Totals may not add due to rounding
MODELED Investment Distribution
AECOM and Rebuild by Design, with input from the New Jersey Department of Environmental Protection (NJDEP), conducted a high-level review of existing programs and priorities in New Jersey, along with other statewide efforts across the United States. This review included the Climate Change Resilience Strategy, Priority Climate Action Plan (PCAP), and Extreme Heat Resilience Action Plan, as well as the New York State Environmental Bond Act. Through this review, AECOM and Rebuild by Design adopted three broad categories that a potential investment could impact: Flood Risk Reduction and Restoration, Water Infrastructure, and Climate Resilience. The chart below shows the allocation of funds across these three categories.
1. Flood Risk Reduction and Restoration
Flood Risk Reduction and Restoration is of particular importance to New Jersey, as the state ranks second in severe repetitive loss properties, according to the National Flood Insurance Program. The funding allocated to Flood Risk Reduction and Restoration could support various projects related to mitigation and protection (such as structure elevation), restoration (such as coastal rehabilitation and shoreline restoration), and voluntary property buyouts. This funding could supplement existing NJDEP programs such as the Shore Protection Grants and Blue Acres program. This category also aligns with ongoing initiatives across New Jersey, such as Resilient NJ, which provides municipalities with assistance in comprehensive resilience planning processes.
2. Water Infrastructure
The Water Infrastructure category relates to improvements to drinking water, wastewater, and municipal stormwater infrastructure. As water infrastructure across New Jersey continues to age and is put under additional stress with climate change. The funding allocated to this category expands upon existing NJDEP and the New Jersey Water Bank (NJWB) programs, including the Water Quality Restoration Grants and the Drinking Water and Clean Water State Revolving Fund Programs. The Drinking Water State Revolving Fund, which aligns largely with the drinking water infrastructure sub-category, includes a range of projects to ensure compliance with the Safe Drinking Water Act (SDWA), such as addressing water contamination levels and rehabilitating water treatment facilities. Similarly, the Clean Water State Revolving Fund, which largely aligns with the wastewater and stormwater infrastructure sub-categories, includes a range of wastewater, stormwater, reuse, and pollution control projects.
3. Climate Resilience
A broad range of ongoing and proposed initiatives could be supported by the Climate Resilience category would focus on carbon mitigation and reliable energy sources. There is demonstrated need for grid modernization in New Jersey, to develop and implement grid modernization plans to make progress in grid modernization, such as increasing distributed energy resource capacity and improving system resilience and reliability. This goal is also in the Priority Climate Action Plan (PCAP), which includes specific actions, such as improving the hosting capacity of the New Jersey electric distribution system. The green buildings sub-category could support building decarbonization, energy efficiency, and indoor air quality investments in institutional buildings, particularly schools, and residential and commercial buildings. The green communities sub-category could support initiatives to improve heat resilience. For example, the New Jersey Extreme Heat Resilience Action Plan recommends the expansion of the Urban and Community Forestry Program. Wildfire mitigation activities such as firebreaks and other activities included in NJ Wildfire SMART that help protect communities from increasing wildfire risks could be captured in the other related projects sub-category.
Which Industries will BE MOST IMPACTED?
Modeled $3 Billion Investment Scenario Job Impacts
The potential $3 billion investment scenario is expected to support a number of industries, largely the construction, professional services, and administrative support sectors. The construction and professional services sectors contribute to about 30 percent and 20 percent of the jobs supported by the potential investment, respectively.
Modeled $9 Billion Investment Scenario Job Impacts
The potential $9 billion investment scenario is expected to support a number of industries, largely the construction, professional services, and administrative support sectors.
RECOMMENDATIONS
To ensure a livable future, it is crucial that the State of New Jersey secures sustainable, long-term funding for climate adaptation infrastructure. Residents are demanding proactive, comprehensive climate adaptation strategies that would ensure that the next storm will not lead to increased destruction. Though many municipalities have planning efforts underway to address these issues, there are not yet solid funding sources to support these projects. A dedicated state-level funding source could solve this.
#1 We Can Develop a Statewide Ballot Measure ($3B Scenario)
Voters around the country have overwhelmingly supported funding infrastructure measures that address resilience and other climate-related investments. A campaign to pass a Resilient Infrastructure Bond would support a public conversation with voters about prioritizing flood infrastructure while galvanizing the support needed to justify this type of infrastructure spending.
#2 We Can Leverage Insurance to Buy Down Our Risk ($9B Scenario)
Rebuild by Design modeled a modest 2% surcharge on certain lines of property and casualty insurance — excluding workers’ compensation and medical malpractice — and found that, in New Jersey, the surcharge could amount to $9.1 billion in climate infrastructure investments over 10 years.
METHODOLOGY
Economic impacts demonstrate how investments spur economic activity and job creation in a specific region, like New Jersey. As investments are made, their spending ripples through the economy and contributes to value and employment. This ripple effect, also referred to as a multiplier effect, can be quantified into the following categories:
Direct impacts result from spending on the initial project. For example, direct job impacts from a waterfront revitalization project might include designers, engineers, and onsite construction workers.
Indirect impacts result from funds going to the suppliers providing materials and equipment for the project, who in turn can grow and hire more workers.
Induced impacts result from direct and indirect workers spending their earnings on goods and services.
Rebuild by Design thanks AECOM for their contributions to this project.