Waiting to address climate change could cost taxpayers in coastal cities — particularly in highly vulnerable Florida — in a way that not even the most progressive resiliency planners have considered.
Leaving the growing risk of rising seas unaddressed is going to hurt municipal and government credit scores, says the bond rating agency Moody’s in a new report. That means that cities or states now ignoring the issue could face higher interest rates when they borrow money down the road. And, according to long-term climate projections, they will need to borrow a lot of it — hundreds of millions, maybe billions — for civil works projects that will be needed to keep sea level rise from inundating streets, homes and businesses in Florida in coming decades.
Guess who is going to pick up that extra cost of those bonds? Taxpayers.
So far, some South Florida counties and cities, which have already invested in or are planning projects to adapt to the threat of rising seas, are making moves to offset what amounts to a hidden cost of climate change. Miami Beach has famously invested nearly half a billion dollars in pumps and road raising, and Miami voters just approved the $400 million Miami Forever bond to address issues like sea level rise.
“The longer you wait to fix your problem the more expensive it gets,” said Fernando Casamayor, Miami’s assistant city manager and chief financial officer. “It’ll take a lot more duct tape and bubble gum, but you’ll still have to fix it anyway.”
Outside of South Florida, where a handful of counties have joined in a compact to address the issue together, the bill could be bigger. Since Gov. Rick Scott took Florida’s helm, there have been no major plans to address climate change, much less sea level rise, a symptom that already affects the miles of coastline the Sunshine State stakes its economy on.
In a state that consistently tops the list of most vulnerable to climate change, all recent action to combat the rising seas that threaten Florida’s condo-crowded shores are at the local and regional level.
Those moves, like hardening the power grid and enacting stricter building codes, will become more expensive if bond ratings worsen.
But getting kudos for these projects — including the Miami Forever bond, which Moody’s hailed as a good thing for the city’s credit — is just “icing on the cake,” Casamayor said.
“The reality is we’re taking these steps because we want the city to be resilient,” he said.
The same way spotty work history wrecks a credit score and can add hundreds or even thousands of dollars to a car purchase, a city without the financial strength to rebound after a hurricane or to face the imminent threat of sea level rise will see its credit rating take a hit, tacking extra percentage points of interest on the multi-million (or billion) dollar projects.
Bond interest, after all, is what will turn the hundreds of millions Miami-Dade originally borrowed for the Marlins stadium into a bill that will top a billion dollars when it will be all paid up in 2048.
Both the long-term effects of climate change (like more precipitation, sea level rise and hotter temperatures) and the short term (stronger hurricanes, more frequent droughts and more intense floods) affect the area’s economy and therefore the city’s ability to repay the debt.
The more resilient the city, the better for everyone, said Miami-Dade’s Deputy Mayor Edward Marquez. That will take time.
“We’re not there. No one is. But we’re working toward being ready when the time comes,” he said. “We’re moving in the right direction. I’m sure of that.”