Moody’s Warns Cities to Address Climate Risks or Face Downgrades

2017-11-30

This action, rarely monitored by the national media and even more rarely reported upon, can have a more significant action on cities (and other government bodies) moving forward to address climate change than any action or inaction by trump or any agency of the federal government. A credit downgrade by Moody’s can have a substantial effect on the rate of interest a city will pay on its bonds or other public debt. Considering that most of that debt is considered general obligation debt, or debt that you and I pay for with our property taxes or other taxes, politicians will be really careful to make sure interest rates are kept as low as possible. If they fail to do what Moody’s (or S&P or other rating agencies) suggest they do, then the debt will be downgraded, and interest rates likely increased.

Again, as I’ve said hundreds of time, money money money speaks louder than petitions and whining and politicians’ speeches.

Excerpt:

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, Moody’s Investors Service Inc. explained how it incorporates climate change into its credit ratings for state and local bonds. If cities and states don’t deal with risks from surging seas or intense storms, they are at greater risk of default.

“What we want people to realize is: If you’re exposed, we know that. We’re going to ask questions about what you’re doing to mitigate that exposure,” Lenny Jones, a managing director at Moody’s, said in a phone interview. “That’s taken into your credit ratings.”

In its report, Moody’s 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. Moody’s didn’t identify which cities or municipalities were most exposed.