As weather-related climate impacts become increasingly apparent, the financial world has warned that climate change will hit nations’ credit ratings.
A report by Standard & Poor’s Ratings Services shows that rising global temperatures will put downward pressure on sovereign credit ratings and classifies climate change as one of two “global mega-trends” (the other is aging populations). It estimates that countries around the world will suffer from the effects of changing weather patterns, primarily in their economic growth and public finances, and warns poorer countries and nations with low ratings will see the biggest impact.
The analysis used a climate vulnerability index produced by Notre Dame University to consider how vulnerable 116 countries are to sea-level rise and the effects of extreme weather events, which are becoming more frequent and severe thanks to the changing climate.
Among the biggest losers will be Vietnam, Bangladesh, Senegal, Mozambique, Fiji, the Philippines, and Indonesia. Many of these countries have already borne the brunt of climate change’s present-day impacts—including rising tides and devastating typhoons. Soon, these countries may be further disadvantaged by a shrinking ability to borrow money.
While Standard and Poor’s has yet to downgrade a country due to climate-related factors, the world is already showing signs it is struggling to cope with rising temperatures.
In the Balkans, historic floods are just beginning to recede after five days of downpours killed 35 people and leveled approximately 100,000 homes in Serbia and Bosnia. The floods may have also displaced landmines placed during the Bosnian War.
The crisis also has severely impacted agriculture, with crop production taking a big hit in the country. The World Food Programme has said that it plans to send food assistance to 150,000 people in the wake of the disaster.
Preliminary estimates show that the region has suffered $1.37 billion in property damage alone as a result of the floods.
At the same time, a historic drought in California is ravaging American agricultural output and has set the stage for a dramatic early start to the wildfire season in the western United States. At least three studies have linked the fires directly to climate change, and California Governor Jerry Brown has just wrapped up a media blitz in which he said the wildfires have already cost his region $20 million in damages. According to him, fires like these will become ever more frequent, given that the state is on the “front lines” of climate change.
The humanitarian and financial consequences of extreme weather events will keep growing in severity unless widespread action to curb greenhouse gas emissions is taken on the global scale. Recent reports from the Intergovernmental Panel on Climate Change (IPCC) show that future risks from climate change—including effects on public health, agriculture, and urban infrastructure—depend strongly on the amount of warming gases that will released in the coming decades.