Rising Tides and Rearranging Deckchairs : How Climate Change is Reshaping Infrastructure Finance and Threatening to Sink Municipal Budgets

The United States relies upon state and local governments to build, operate, maintain, and pay for most non-defense-related public infrastructure. State and local governments, in turn, rely upon the municipal bond market to raise capital for infrastructure projects. Climate change threatens to upend this system. As extreme storms and other climate change impacts become more frequent and more intense, state and local governments are facing mounting infrastructure-related mitigation, adaption, and resiliency planning costs. Mindful of these developments, Wall Street has begun to take climate risk into account in credit rating determinations and municipal bond pricing, making it harder and more expensive for some state and local governments to raise capital to meet infrastructure needs. These developments threaten the underpinnings of the current system of infrastructure finance, as well as public health, safety, and welfare, nationwide. This Article examines the risks, costs, and consequences of relying upon state and local governments to bear the financial burdens of public infrastructure at a time of increasing climate risk, and suggests strategies for strengthening infrastructure finance systems in the face of climate change