A recent report by Moody’s Investor Service says that coastal states and local governments of cities face increased investment risk from rising sea levels as frequent and severe flooding threaten their economies and infrastructure.
Moody’s climate speciality affiliate Four Twenty Seven estimates that by 2040, increased sea levels will have a significant impact on every coastal state and over 110 cities with a population of more than 50,000.
According to the National Oceanic and Atmospheric Administration (NOAA), in the last two decades, the Atlantic and Gulf coasts experienced anywhere from a 100-150% increase in annual days of high-tide flooding.
Small towns with economies tied to the coasts like tourism, fishing and shipping will be affected the most. The Municipal bond market, which is nearly worth $3.8 trillion, is a huge source of funding from most municipal counties. And now these towns and counties will have to rethink their strategies to find infrastructure fundings to shore up against losses from flooding and storms.
Along with climate impact changes, the Covid-19 has added to the problems faced by these states. Tax revenues have seen a sharp drop with some states even considering furloughing state employees. Such towns are now seen as credit risk over the long-term because of the weaker economy, increased maintenance costs and lost tax revenue, the report states.