Climate change is stressing the economic welfare of American cities, but investments in renewable infrastructure could boost jobs and revenues for communities at risk.
About a 25% of critical infrastructure in the US is at serious risk from flooding, along with 14% of American homes and 25% of American roads, according to an exhaustive survey conducted by the First Street Foundation.
That flood risk has implications for how cities raise money and how they provide services to citizens.
Most cities in the US borrow money by issuing municipal bonds to pay for infrastructure projects. These loans have payback periods of around 20 to 30 years and typically are subject to steady interest rates.
Climate change puts governments at risk of defaulting on loans by stretching coffers to the breaking point with nearly annual payouts for what are supposed to be once-in-one-hundred year weather events.
“It is clear (climate) is a risk factor” in the municipal debt market, said Peter DeGroot, head of municipal bond research at JPMorgan, told The Financial Times. “The increasing frequency and intensity of weather events is a costly and complex issue for the federal government — and for state and local governments as well.”
One potential solution to both the long-term climate risks cities face and a way to shore up the tax base in local areas is to invest in renewable infrastructure, according to a report from the World Resources Institute.
Every $1 million spent on green investments and infrastructure yields at least as many if not more jobs than their fossil fuel counterparts, according to the WRI study.
Governments around the world missed an opportunity to start the process of investing in a greener economy during the pandemic. Over the past year, governments spent $276 billion on clean energy, sustainable transport, and other “green” infrastructure. But $334 billion on support for fossil fuels, roads, internal combustion vehicles over the same period more than offset the positive impact of those new projects.
Chart showing fossil fuel investment far outpacing renewable spending in power generation, buildings, fuels, transportation, and other industrial sectors. Image Credit: World Resources Institute
The WRI noted that things are beginning to change.
“Government rescue spending in the first few months of the pandemic was especially likely to bail out traditional fossil fuel–based industries, but as the crisis goes on there has been a shift toward more climate-friendly investments,” the organization wrote.
Going forward there needs to be even more emphasis on green financing if the world is to meet the targets set to avoid a climate catastrophe.
“We haven’t had enough investment,” Rep. Ro Khanna (D-Calif.), a progressive climate hawk who has called for ending tax breaks for fossil fuels told Poliltico. “We have to have massive investment on electric vehicles and solar, wind and battery storage.”