28 November 2017, Moody’s Investor Service, The growing effects of climate change, including climbing global temperatures, and rising sea levels, are forecast to have an increasing economic impact on US state and local issuers. This will be a growing negative credit factor for issuers without sufficient adaptation and mitigation strategies, Moody’s Investors Service says in a new report. The report differentiates between climate trends, which are a longer-term shift in the climate over several decades, versus climate shock, defined as extreme weather events like natural disasters, floods, and droughts which are exacerbated by climate trends. Our credit analysis considers the effects of climate change when we believe a meaningful credit impact is highly likely to occur and not be mitigated by issuer actions, even if this is a number of years in the future. Climate shocks or extreme weather events have sharp, immediate and observable impacts on an issuer’s infrastructure, economy and revenue base, and environment. As such, we factor these impacts into our analysis of an issuer’s economy, fiscal position and capital infrastructure, as well as management’s ability to marshal resources and implement strategies to drive recovery. Extreme weather patterns exacerbated by changing climate trends include higher rates of coastal storm damage, more frequent droughts, and severe heat waves. These events can also cause economic challenges like smaller crop yields, infrastructure damage, higher energy demands, and escalated recovery costs. Read More here
Tag Archives: Extreme Events
13 November 2017. Bloomberg, Big Insurers Brace for Perilous Future as Climate Risks Escalate. After one of the worst Atlantic hurricane seasons in history, the world’s biggest insurers say the industry needs to get its act together if it wants to survive climate change. Insuring against weather natural disasters could reach unaffordable levels for households and companies, while the potential damage is so unpredictable it may be impossible to model — an unacceptable risk to insurers. “Sometime in the future there will be the situation where people cannot afford any longer to buy catastrophe insurance — this is what we want to avoid,” Ernst Rauch, the head of the Corporate Climate Centre at Munich Re. The world’s largest reinsurer suffered a 1.4 billion-euro ($1.63 billion) loss after hurricanes Harvey, Irma and Maria sent claims soaring. Contrary to Warren Buffett’s view that climate change will spur demand for coverage and boost profit at his insurance companies, the risk is the opposite unfolds as shifting weather patterns render disaster-prone areas uninsurable. Finding ways to prevent this is on the agenda of United Nations-backed climate talks in Bonn, Germany this week. The onus of bearing the expense of rebuilding after hurricanes, floods and earthquakes already falls disproportionately on governments. Insurers are on the hook for only about 10 percent of $75 billion of damage in Texas caused by flooding after Hurricane Harvey, according to AIR Worldwide. That’s because most standard U.S. home insurance policies don’t cover flooding. It’s a similar story in Fiji, hit last year by its worst cyclone ever, where less than one in ten people own insurance. “It’s a big concern of Swiss Re that there’s such a huge gap between the economic losses and what is insured,” said Peter Zimmerli, the head of atmospheric perils at Swiss Re, the second-biggest reinsurer. “Some of the signals of global warming are just there — they can’t be debated any more.” Read More here
18 October 2017, Media Matters, California newspaper editorials connect the dots between climate change and wildfires. When hurricanes Harvey and Irma hit the U.S. earlier this year, conservatives including Environmental Protection Agency chief Scott Pruitt and Fox News personalities argued that it wasn’t the right time to talk about climate change. But a number of local leaders and journalists in the storm-hit states of Texas and Floridadisagreed. They called for attention to the fact that climate change is making disasters worse, even as they worked to address and report on the immediate needs of their affected communities. Now many political leaders and newspapers in California are following the lead of those in Texas and Florida — demanding that we recognize the threat of climate change and how it’s exacerbating weather events like the wildfires that have been blazing through parts of Northern California for the last week and a half, the most deadly and destructive fires in the state’s history. Many scientists have pointed to climate change as a significant factor that’s intensifying fires like those in California. Columbia University bioclimatologist Park Williams, who co-authored a study last year that foundclimate change was markedly worsening wildfires in the American West, talked to McClatchy about the California fires last week: “The fingerprint is definitely there,” Williams said. “The connection between temperatures and fire is one we see again and again in the correlation analyses we do.” California Gov. Jerry Brown emphasized the connection last week: “With a warming climate, dry weather and reducing moisture, these kinds of catastrophes have happened and will continue to happen,” he said. Read More here
13 October 2017, UN, Climate change is a threat to rich and poor alike. From Miami and Puerto Rico to Barbuda and Havana, the devastation of this year’s hurricane season across Latin America and the Caribbean serves as a reminder that the impacts of climate change know no borders. In recent weeks, Category 5 hurricanes have brought normal life to a standstill for millions in the Caribbean and on the American mainland. Harvey, Irma and Maria have been particularly damaging. The 3.4 million inhabitants of Puerto Rico have been scrambling for basic necessities including food and water, the island of Barbuda has been rendered uninhabitable, and dozens of people are missing or dead on the UNESCO world heritage island of Dominica. The impact is not confined to this region. The record floods across Bangladesh, India and Nepal have made life miserable for some 40 million people. More than 1,200 people have died and many people have lost their homes, crops have been destroyed, and many workplaces have been inundated. Meanwhile, in Africa, over the last 18 months 20 countries have declared drought emergencies, with major displacement taking place across the Horn region. For those countries that are least developed the impact of disasters can be severe, stripping away livelihoods and progress on health and education; for developed and middle-income countries the economic losses from infrastructure alone can be massive; for both, these events reiterate the need to act on a changing climate that threatens only more frequent and more severe disasters. Read More here