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A coal-burning power plant steams behind wind generators inGermany during the UN climate talks in Bonn, Germany. Photo: Martin Meissner / AP

A report by Moody's Investors Service, out today, looks in-depth at how the ratings agency assesses climate change risks — such as extreme heat, rising sea levels, extreme weather events, "nuisance" flooding and more — for state and municipal governments that are becoming more severe over time.

Why it matters: The report — which explores both underlying trends and climate "shocks" from extreme events — offers a window into how specialists view the long-term fiscal risks from climate change.

How it matters: The report catalogs different effects, such as how climate "shocks" can weaken a region's economic output and the valuation of its tax base. Also, emergency response costs can challenge a local government's fiscal flexibility. Another example: Local governments may face increased debt burdens to finance the repair and replacement of infrastructure.

Key quote: "This will be a growing negative credit factor for issuers without sufficient adaptation and mitigation strategies," they note in a summary.

Bottom line: "The interplay between an issuer's exposure to climate shocks and its resilience to this vulnerability is an increasingly important part of our credit analysis, and one that will take on even greater significance as climate change continues," the report states.

"We are always seeking to be as transparent as we possibly can with respect to how we go about reaching our ratings conclusions," Michael Wertz, a senior analyst with Moody's, tells Axios.

In their words:

  • "Long-term climate changes, including rising global temperatures and sea levels, are forecast to drive increased extreme weather patterns and other vulnerabilities like flooding that might put negative credit pressure on US issuers. Extreme weather patterns exacerbated by changing climate trends include higher rates of coastal storm damage and more frequent and severe droughts, wildfires and heat waves."
  • "In addition to loss of life and threats to public health and safety, these events present a multitude of challenges in the form of compromised crop yields, economic disruption, damage to physical infrastructure, increased energy demand, recovery and restoration costs, and the cost of adaptive strategies for prevention or impact mitigation."

Go deeper

UN poll: Most see climate change as global emergency amid pandemic

Swedish climate activist Greta Thunberg (C) fronts a Fridays For Future protest at the Swedish Parliament in Stockholm in September. Photo: Jonathan Nacksrtrand/AFP via Getty Images

64% of people from around the world say climate change is a global emergency, a United Nations poll published Wednesday finds.

Why it matters: It's biggest global survey on climate change ever conducted, with some 1.2 million participants from 50 countries — including the U.S. where 65% of those surveyed view climate change as an emergency.

Collins helps contractor before pro-Susan PAC gets donation

Sen. Susan Collins during her reelection campaign. Photo: Scott Eisen/Getty Images

A PAC backing Sen. Susan Collins in her high-stakes reelection campaign received $150,000 from an entity linked to the wife of a defense contractor whose firm Collins helped land a federal contract, new public records show.

Why it matters: The executive, Martin Kao of Honolulu, leaned heavily on his political connections to boost his business, federal prosecutors say in an ongoing criminal case against him. The donation linked to Kao was veiled until last week.

How cutting GOP corporate cash could backfire

Illustration: Aïda Amer/Axios

Companies pulling back on political donations, particularly to members of Congress who voted against certifying President Biden's election win, could inadvertently push Republicans to embrace their party's rightward fringe.

Why it matters: Scores of corporate PACs have paused, scaled back or entirely abandoned their political giving programs. While designed to distance those companies from events that coincided with this month's deadly siege on the U.S. Capitol, research suggests the moves could actually empower the far-right.