By The Real Deal (South Florida Real Estate News)
Credit rating agency Moodyâ€™s Investor Services Inc. warns that it may downgrade the ratings of U.S. states and cities that fail to prepare for the impact of climate change.
Moodyâ€™s is the first of the three largest credit rating agencies in the nation to publicly announce how its assessment of vulnerability to climate change will affect its state and municipal credit ratings.
Moodyâ€™s says in a new report that it will assess vulnerability to a hurricane and other types of short-term â€œclimate shocksâ€ as well as a long-term â€œincremental climate trendâ€ such as sea-level rise.
Credit rating agencies play a big role in determining interest rates on bonds that states and cities issue.
So, Moodyâ€™s announcement creates â€œa direct economic incentiveâ€ to protect against climate change, Rachel Cleetus, lead economist and climate policy manage at the Union of Concerned Scientists, told the Wall Street Journal.
According to the Moodyâ€™s report, the credit rating agency has designated seven â€œclimate regionsâ€ in the United States, which will provide a basis for assessing climate-change risks.
Moodyâ€™s analysts have started asking cities, counties and states that face serious climate-change risks to explain how they are mitigating the risks.
For example, Broward County has responded to surveys from Moodyâ€™s inquiring about actions to mitigate the risk of sea-level rise, according to Jennifer Jurato, the countyâ€™s chief resilience officer.
Jurato told National Public Radio (NPR) that Broward and other jurisdictions in South Florida are bracing for the impact of climate change by putting properties on higher elevations and carrying out flood-mitigation programs, among other actions. Broward and other counties are members of the South Florida Regional Climate Compact, which was established to help communities brace for climate change.
Jurato also told NPR that Moodyâ€™s emphasis on vulnerability to climate change creates a new political incentive â€œto make the smart investments that weâ€™ve been arguing for.â€ [NPR] â€“Â Mike Seemuth Î¦
This article appeared at The Real Deal on December 3.