Center for American Progress

RELEASE: Climate Change Introduces Unprecedented Risk Into the Municipal Bond Market
Press Release

RELEASE: Climate Change Introduces Unprecedented Risk Into the Municipal Bond Market

Washington, D.C. — A new issue brief from the Center for American Progress looks at the ways that climate change could wreak havoc on the municipal bond market.

While many state and local governments are starting to include climate risk disclosures in their bond issuances, not all do. And when municipal governments do disclose climate information, they often don’t include enough information to give investors a picture of how climate change will affect their ability to pay over time.

As impacts of climate change escalate in the coming years, the brief calls on federal regulators to require state and local issuers to provide investors with robust climate risk disclosures. Comprehensive disclosure of climate risk will help ensure that the municipal market continues to enjoy accurate risk-based pricing and a high degree of liquidity.

The brief focuses on bond issuances in Miami-Dade County and Puerto Rico to demonstrate the risks that climate change can place on a bond issuer’s ability to repay investors.

“Much like the coronavirus pandemic, the compounding impacts of climate change will be an unprecedented event in human history. In the coming years and decades, cities and states will deal with unexpected fluctuations in both revenue and expenditures as they grapple with long-term environmental changes and an increase in catastrophic events,” said Kevin DeGood, director of Infrastructure Policy at CAP and author of the brief. “Federal regulations should require issuers to include comprehensive and, to the greatest extent possible, quantitative scenario-based climate risk disclosures to account for these fluctuations and to preserve the liquidity of the municipal bond market.”

For more information on this topic or to speak to an expert, contact Julia Cusick at