Unpriced physical climate risks pose a direct challenge to the stability of the municipal bond market, echoing the financial crisis of 2008—but with potentially permanent consequences
The challenge is having “approved” projects in hand that the bond issues can fund.
The “kick the climate can down the road” has yet to merely acknowledge there is an issue.
The clear result is that definitive planning and approval processes to address the flooding issues have not even been started and will require years to complete once they are. Or, if they have, the proffered solution’s effectivenesses are at best understated because of poor risk/cost assessments biased by unfounded beliefs that things could not be as bad as the scientific community is projecting.
The Netherlands took about five years to define and design their flood control systems starting 1953, and nearly 40 years to complete construction. The Netherlands scientists and engineers looked forward to what could happen and planned accordingly. American politicians are now tending to ignore the scientists and engineers and use rearview mirrors to do most things, if they elect to do anything at all. More important political concerns are corporate earnings growth and share price increase publicity tied to Pollyanna environmental outlooks mislead and delude the public into inaction.
Given that the AMOC has already begun switching states and that storm intensity and volatility has continued to increase as the planet has warmed, the time for action may have passed.
Finally, the municipal bond market mavens will wake up concurrently with the people and price these risks in accordingly.
The challenge is having “approved” projects in hand that the bond issues can fund.
The “kick the climate can down the road” has yet to merely acknowledge there is an issue.
The clear result is that definitive planning and approval processes to address the flooding issues have not even been started and will require years to complete once they are. Or, if they have, the proffered solution’s effectivenesses are at best understated because of poor risk/cost assessments biased by unfounded beliefs that things could not be as bad as the scientific community is projecting.
The Netherlands took about five years to define and design their flood control systems starting 1953, and nearly 40 years to complete construction. The Netherlands scientists and engineers looked forward to what could happen and planned accordingly. American politicians are now tending to ignore the scientists and engineers and use rearview mirrors to do most things, if they elect to do anything at all. More important political concerns are corporate earnings growth and share price increase publicity tied to Pollyanna environmental outlooks mislead and delude the public into inaction.
Given that the AMOC has already begun switching states and that storm intensity and volatility has continued to increase as the planet has warmed, the time for action may have passed.
Finally, the municipal bond market mavens will wake up concurrently with the people and price these risks in accordingly.
Nicely done. Also seems applicable to poor countries with low sovereign ratings and high climate risk.
Great analysis
Important