Climate change could end cheap credit for Georgia, local governments, Moody’s reports

By David Pendered

Climate change could mark the end of low credit rates for Georgia’s state and local governments if their plans to recover from natural disasters are deemed inadequate by Wall Street analysts, according to a new report by Moody’s Investors Service.

Irma, River Street

Future credit ratings that Wall Street will award to Georgia and local governments are to include the ability to recover from events related to climate change. The remnants of Hurricane Irma caused heavy inundation in Savannah, where this car was nearly submerged along River Street. Credit: wpde.com

Environmental advocate David Kyler applauded Moody’s report for highlighting the economic implications of climate change. People tend to pay attention to Wall Street types when they talk about economic implications. Kyler serves as director of the Center for a Sustainable Coast, based on St. Simon’s Island.

“I think this is a significant threshold and will undoubtedly raise awareness and credibility for the climate change issue,” Kyler said in an email. “Although adaptation and resilience are needed, it would be a mistake to limit response to only those activities. It is important – indeed, crucial – that we move rapidly to reduce the cause of climate change, emission of greenhouse gases.”

This report by Moody’s is anything but light reading.

The word “Armageddon” doesn’t appear. But the notion of the end of time does seem to appear in portions of the report.

Consider the people who are forecast to struggle to work, or even die, in the rising heat associated with climate change.

Folks who work outdoors, or anyplace without adequate air conditioning, will become less productive because they can’t keep up their pace in higher temperatures. Lower production means less revenue for governments to tax and use the proceeds to pay lenders who purchased bonds issued by a government.

wildfire, north georgia

Smoke covered portions of Fannin County in 2016 as the Rough Ridge wildfire burnt the forest. The county’s ability to recover from such disasters will factor into its credit rating in the future. Credit: inciWeb via wildfiretoday.com

Heat-related deaths are forecast to increase over the course of the 21st century in Georgia and 10 surrounding Southeastern states. Then analysts remind of the serious consequences of extremely hot weather. A heat wave in Chicago killed 730 people in July 1995, a figure the report attributes to one issued by the Centers for Disease Control and Prevention.

Storm surges and nuisance flooding will occur more frequently as sea levels rise along the Southeastern coast and, particularly, the Gulf of Mexico. That’s even without a direct hit from a major hurricane. Then analysts bring up Hurricane Sandy.

Sandy’s devastation was enhanced by sea levels that have risen by more than a foot since the mid 1800s, according to a report by the National Oceanic and Atmospheric Association cited in Moody’s report.

In Georgia, a 3-foot rise in sea level is forecast by 2110 near Savannah’s Fort Pulaski, according to a report by the Georgia Conservancy. Moody’s report predicts a sea level rise of up to 3 feet by 2100 along Georgia’s coast, citing a book titled, Economic Risks of Climate Change: An American Prospectus, published in 2015 by Columbia University Press.

The report divided the nation into seven regions and provides a snapshot of each of them. Here’s the forecast for Georgia and 10 surrounding Southeastern states:

  • irma, savannah

    Tybee Island was inundated by the remnants of Hurricane Irma. In the future, the city’s credit rating will reflect the ability to recover from such disasters. Credit: AP via usnews.com

    “The Southeast is forecast to be among the US regions most affected by higher temperatures. On the current emissions pathway, increased temperatures are expected to reduce labor productivity and drive up heat-related mortalities over the course of the current century. Emissions consistent with the Paris agreement are still projected to increase heat-related mortalities, though such incidents could be significantly lower. Rising sea levels are also forecast to drive an increase in water damage to property and infrastructure as a result of storm surges or nuisance flooding, and could also damage coastal infrastructure. Major cities such as New Orleans are below sea level, while others such as Miami are vulnerable to inundation.”

Moody’s analysts noted that their rating methodologies don’t explicitly address climate change as a credit risk. Rather, the risks of climate changes are baked into the typical array of credit factors – strength of the economy, fiscal governance, capital asset management, and so forth.

Governments that are at risk for higher risks of climate shock are asked to explain how they are prepared to deal with the weather events associated with climate shocks.

That could include coastal towns that could be inundated, as was Georgia’s coast during Hurricane Irma, and mountain communities, as were those in North Georgia when wildfires in the autumn of 2016 burnt across great swaths of federal land, sending smoke deep into South Georgia.

 

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

3 replies
  1. Mark says:

    When homes and businesses along the coast can’t get insurance, they may well begin to pay attention to climate change. But it may be too late. No one will be spared the consequences of a warming earth.Report

    Reply
  2. Jeff Joslin says:

    Thanks for this article. Too many GA politicians deny or minimize climate change. There’s so much we can do to both slow climate change and promote resilience. Supporting Georgian’s efforts (like Citizens’ Climate Lobby) to influence policy makers is vital for the well being of our state and future generations. Climate change is real, it’s now, it’s us and most importantly there’s hope.Report

    Reply
  3. Richard Boger says:

    Change the term “Climate Change” to “Natural Disasters” and you shift the focus to where it belongs: state and local governments failing to budget to reality and being disingenuous with taxpayers for how they allocate their tax revenue. It could also be a conscious decision that “someone will bail us out” so ignore the reality of the situation.Report

    Reply

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