A new report from Moody’s outlines how the credit rating agency will evaluate the impact of climate change in its ratings for state and local bond issuers. The report warns cities and states to prepare for climate change or face increased difficulty maintaining or obtaining higher credit ratings.
Ratings from Moody’s also help determine interest rates on bonds issued by cities to fund roads, buildings and other civic projects. Cities not adequately preparing for climate change, then, may face higher rates.
“The interplay between an issuer’s exposure to climate shocks and its resilience to this vulnerability is an increasingly important part of our credit analysis, and one that will take on even greater significance as climate change continues,” the report notes.
Moody’s uses six indicators to assess exposure to the physical climate change, including hurricanes and extreme-weather damage as a share of the economy, and the share of homes in a flood plain.
Moody’s identifies Florida, Georgia, Mississippi and Texas as the states most at risk for damage from climate change. It says it will assess both a city’s ongoing risk from climate trends and climate shock from extreme weather events such as natural disasters, floods and droughts.
“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,” said Lenny Jones, a managing director at Moody’s. “That’s taken into your credit ratings.”
Mayors Sign Climate Charter
More than 50 North American cities signed the Chicago Climate Charter Tuesday during the North American Climate Summit in Chicago, where former President Barack Obama spoke, calling cities, states and nonprofit groups “the new face of leadership” on climate change.
“Obviously we’re in an unusual time when the United States is now the only nation on Earth that does not belong to the Paris agreement,” Obama said. “And that’s a difficult position to defend. But the good news is that the Paris agreement was never going to solve the climate crisis on its own. It was going to be up to all of us.”
The mayors, who attended the summit hosted by Chicago Mayor Rahm Emanuel, hailed from citiesacross North America, including Mexico City, San Francisco and Phoenix.
“Climate change can be solved by human action,” said Emanuel (subscription). “We lead respectively where there is no consensus or directive out of our national governments.”
The charter calls for mayors to achieve a percent reduction in carbon emissions at least as stringent as the Paris Agreement; to quantify, track and report emissions; to support flexibility for cities to take action on climate issues; and to incorporate climate issues into emergency planning, among other provisions.
The charter also calls for cities to work with scientific and academic experts to find solutions. Some mayors have specifically agreed to commitments to expand public transportation and invest in natural climate solutions such as tree canopy and vegetation.
Study: Melting Arctic Sea Ice Will Lead to Increased Drought in California
Scientists have linked rapidly melting Arctic sea ice to warmer ocean temperatures and higher sea levels. Now new research shows it could also reduce rainfall in California, worsening future droughts in the state. By mid-century, according to a study by Lawrence Livermore National Laboratory published Tuesday in the journal Nature Communications, loss of ice in the Arctic and warming temperatures there could drop California’s 20-year median for rainfall by as much as 15 percent.
“Sea-ice loss of the magnitude expected in the next decades could substantially impact California’s precipitation, thus highlighting another mechanism by which human-caused climate change could exacerbate future California droughts,” the study says.
The authors describe a series of meteorological events that lead to formation of storm-blocking air masses in the North Pacific—masses similar to the so-called Ridiculously Resilient Ridge, a nickname given to the persistent region of atmospheric high pressure that occurred over the Northeastern Pacific Ocean that kept rain from making landfall during California’s 2012–2016 drought. Although the study doesn’t attempt to explain that drought, its lead author, climate scientist Ivana Cvijanovic said it could help scientists understand future weather patterns.
“The recent California drought appears to be a good illustration of what the sea-ice-driven precipitation decline could look like,” she said.
Previous studies hypothesized that the North Pacific atmospheric ridge is due to increased ocean surface temperatures and heat circulation in the tropical Pacific. The new study elaborates on that understanding by describing the relation of Arctic sea-ice loss and tropical convection.
The authors say large-scale warming of the Arctic surface and lower atmosphere affects the way heat travels from Earth’s lower latitudes into the Arctic, in turn causing circulation changes in the deep tropics that eventually boost the buildup of a giant high-pressure system, like the Ridiculously Resilient Ridge, off the California coast. In normal winters, high and low-pressure systems alternate. But when there’s a ridge, the wet and wintry Pacific storms instead slide north.
“We should be aware that an increasing number of studies, including this one, suggest that the loss of Arctic sea ice cover is not only a problem for remote Arctic communities, but could affect millions of people worldwide,” said Cvijanovic.
The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.