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
Category Archives: Impacts Observed & Projected
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
11 November 2017, New York Times: Lessons From Hurricane Harvey: Houston’s Struggle Is America’s Tale. The Texas city’s response to a powerful storm says much about polarized visions of the country and diverging attitudes toward cities, race, liberty and science. HOUSTON — The mayhem that Hurricane Harvey unleashed on Houston didn’t only come from the sky. On the ground, it came sweeping in from the Katy Prairie some 30 miles west of downtown. Houston has grown to be as big as Chicago, Cleveland, Detroit and Philadelphia combined, a giant spread of asphalt smothering many of the floodplains that once shuttled water from the prairies to the sea. When finished, the newest road to ring the city and propel its expansion, called the Grand Parkway, will encircle an area equivalent to all of Rhode Island. For years, the local authorities turned a blind eye to runaway development. Thousands of homes have been built next to, and even inside, the boundaries of the two big reservoirs devised by the Army Corps of Engineers in the 1940s after devastating floods. Back then, Houston was 20 miles downstream, its population 400,000. Today, these reservoirs are smack in the middle of an urban agglomeration of six million. Read More here
10 November 2017, Climate News Network: Geo-engineering can work – if the world wants it. Geo-engineering can stop the Earth warming, at least in theory, scientists say, but doubts persist over the possible risks. Climate scientists now know that geo-engineering – in principle at least – would halt global warming and keep the world at the temperatures it will reach by 2020. It is simple: inject millions of tons of sulphate aerosols into the stratosphere at carefully chosen locations, and keep on doing so for as long as humans continue to burn fossil fuels and release greenhouse gases into the atmosphere. The desired effect: global temperatures will be contained because the pollutants in the upper atmosphere will dim the sun’s light and counteract the greenhouse effect of all the carbon dioxide pumped from power stations, vehicle exhausts, factory chimneys and burning forests. It won’t be the perfect answer. The oceans will go on becoming more acidic, and the skies will become subtly darker. Rainfall patterns could be affected. Repairs to the ozone layer – an invisible shield against dangerous ultraviolet radiation – would be slowed.The volumes of sulphate aerosols that would need to be flown to stratospheric heights and released each year would continue to grow as humans went on burning ever more fossil fuels. The technical and energy demands of such an operation would be colossal. There could be serious geopolitical problems about the impacts and responsibility for such decisions. But, at least in principle, researchers now believe geo-engineering could be made to work. “For decision makers to accurately weigh the pros and cons of geo-engineering against those of human-caused climate change, they need more information,” said Ben Kravitz, of the Pacific Northwest National Laboratory, and one of a consortium which has published a succession of five studies in the Journal of Geophysical Research – Atmospheres. “Our goal is to better understand what geo-engineering can do – and what it cannot.” Read More here