Your Credit Rating Just Got More Complicated

One of the tricky things about sea level rise is that it’s not happening equally in all places. Lots of people picture the world’s oceans as a sort of huge bathtub: If you add water, say from melting polar ice, then the level should go up evenly everywhere, right? But for a variety of reasons, including ocean temperatures and currents, different coasts experience different levels of rise—or in some cases even a drop—in the water level. (This map from NOAA shows the amount of rise and fall measured at various locations.) That makes predicting future conditions more difficult. And if you’re hoping to borrow money at some point, the consequences of getting it wrong potentially just became a lot more expensive.

Moody’s Investor Services, one of the largest US credit rating agencies, has announced it will begin downgrading cities and states that are not adequately preparing for the effects of climate change. Those effects, it says in a new report, include short-term things like fires, hurricanes, and drought as well as “incremental climate trends” like rising sea levels. If a community is planning to issue bonds—perhaps to pay for upgrades or repairs to infrastructure—a lower credit rating can lead to much higher interest payments.

Complicating things even more, sometimes it isn’t just that the water is rising but also that the land is sinking. John Trotti, former editor of Erosion Control magazine and other Forester publications, pointed me toward this NASA study that shows significant differences in sea level rise along the East Coast and, more alarmingly, tremendous differences in subsidence within a single metropolitan area. Hampton Roads, VA, not only has one of the highest rates of sea level rise in the country, but also has some spots that are subsiding seven to 10 times faster than others.  

Subsidence happens for different reasons. Pumping groundwater faster than it’s being replenished is one of those, and parts of California are sinking more than a foot a year. In Virginia, it seems that some of the faster-than-average subsidence is occurring in areas where material dredged from shipping channels has been deposited. Some of the phenomenon is thought to be related to construction activity. In other cases—well, no one is sure.

NASA researchers are using synthetic aperture radar images from satellites, combined with GPS data, to map what’s happening, and they hope to be able to use these techniques to more accurately map subsidence in more locations. The practical use of the maps will be better land-use planning; if you can predict where the greatest flooding and erosion are likely to be, you won’t build there, the thinking goes. And that should, among other things, go a long way toward helping communities avoid things like the downgrading of their credit rating.

Does your city, county, or state already incorporate effects of climate change into its planning? What do you think of Moody’s new policy? And how should municipalities, investors, and credit rating agencies separate out climate-related phenomena like sea level rise from related effects—like subsidence—that have similar effects but different causes?