Moody's To Coastal Cities: Start Dealing With Sea Level Rise Or Face Debt Downgrades
Coastal communities from Maine to California have been put on notice from one of the top credit rating agencies: Start preparing for climate change or risk losing access to cheap credit. In a report to its clients Tuesday, Moodys Investors Service Inc. explained how it incorporates climate change into its credit ratings for state and local bonds. If cities and states dont deal with risks from surging seas or intense storms, they are at greater risk of default.
"What we want people to realize is: If youre exposed, we know that. Were going to ask questions about what youre doing to mitigate that exposure," Lenny Jones, a managing director at Moodys, said in a phone interview. "Thats taken into your credit ratings."
In its report, Moodys lists six indicators it uses "to assess the exposure and overall susceptibility of U.S. states to the physical effects of climate change." They include the share of economic activity that comes from coastal areas, hurricane and extreme-weather damage as a share of the economy, and the share of homes in a flood plain.
Based on those overall risks, Texas, Florida, Georgia and Mississippi are among the states most at risk from climate change. Moodys didnt identify which cities or municipalities were most exposed. Bond rating agencies such as Moodys are important both for bond issuers and buyers, as they assign ratings that are used to judge the risk of default. The greater the risk, the higher the interest rate municipalities pay.
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https://www.bloomberg.com/news/articles/2017-11-29/moody-s-warns-cities-to-address-climate-risks-or-face-downgrades