Why Municipal Bonds Might Not Be Protected From Climate Risk Forever - Barron's
Why Municipal Bonds Might Not Be Protected From Climate Risk Forever | Barron's
Why Municipal Bonds Might Not Be Protected From Climate Risk Forever
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An aerial view of a neighborhood destroyed by the Camp Fire in 2018 in Paradise, California. Justin Sullivan/Getty Images
Three months ago, the redevelopment agency of Paradise, California—the town nearly wiped out by wildfires in 2018—missed payments for its municipal bonds issued in 2009. The funds were raised to develop the city’s commercial neighborhood and backed by incremental tax revenue from the areas. As economic losses from the fire drained the agency’s cash reserves and no new revenue came in, a default ...
Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”