Extreme weather events are pressuring local budgets as the $4 trillion market for state and local bonds emerges at the center of the climate change fight, The Wall Street Journal reports.
It’s playing out across much of the South. A city in Texas recently defaulted on debt last month during a drought, while Naples, Florida, looks to higher parking fees at the beach to help repay bonds sold to rebuild the city’s pier after a hurricane. Residents of Texas, Louisiana and Oklahoma will spend the next 20 years chipping away at the multibillion-dollar cost of maintaining power during a 2021 winter storm.
The market for municipal bonds has become a testing ground for the increasing demands of weathering various storms. Investors worry that damaging weather patterns in coming years will continue to put pressure on critical infrastructure in local communities.
The U.S. Senate Budget Committee held a hearing earlier this year titled Safeguarding Municipal Bonds from Climate Risk. Worldwide, climate shifts are expected to lead to tens of trillions of dollars in new debt issuance by 2030, according to a report Wednesday by the Institute of International Finance, a global trade group.
