SAN FRANCISCO (Standard & Poor's) May 20, 2014--Climate-related disasters have the potential to erode some U.S. local governments' credit quality, Standard & Poor's Ratings Services said in a report published today.
"Thus far, such disasters have not affected many state or local governments' credit quality," said Sarah Sullivant in "Limited Visibility For Climate Change's Effects On U.S. State And Local Government Credit Quality". But "the major threats are depressed economic growth, increased costs for recovery and infrastructure at a time of lower revenues, and federal support not keeping up with changing risks."
A few states and localities are developing plans to mitigate the impact of weather-related disasters, which could be costly and potentially divert resources from other capital spending projects, particularly if shared revenues are insufficient and limitations on tax-supported debt come into play. If federal support falls short in the future, the costs of not preparing for climate change could also mount and affect credit quality over time, especially in disaster-prone areas.
