Credit Downgrade Threat as a Non-regulatory Driver for Flood Risk Mitigation and Sea Level Rise Adaptation
Physical Sciences and Mathematics
Public Affairs, Public Policy and Public Administration
Federal policies and regulations with higher standards that respond to flood risk and sea level rise are being rolled back by the current administration. In that void, the threat of credit rating downgrades is expected to be a developing non-regulatory driver to future risk planning and adaptation. Several exposed communities have been downgraded due, in part, to their lost tax base from major disasters. As sea level rise manifests along the coasts, reducing property value, impacts on revenue will present new challenges in servicing debt. Credit rating agencies in the last few years have issued publications giving some notice on how climate change is to be considered in municipal credit ratings. Proactive communities, conducting planning and realizing adaptation practices in the present are likely to be spared the need to increase revenues to counter the higher borrowing costs that are coincident with a bond rating downgrade, due to likely loss of taxable properties, caused by sea level rise in the future. Municipalities that do not engage now in addressing the threats associated with climate change may have to increase taxes to offset the increased bond return demanded by investors.