From The Wall Street Journal:
By the end of this century Oakland, Calif., will be experiencing a “100-year flood” every week. At least that’s what the Oakland city government argued last year, when it filed a lawsuit against several oil companies for contributing to climate change. The city forecasts that rising water levels in the San Francisco Bay will threaten the sewer system and other property “with a total replacement cost of between $22 billion and $38 billion.”
Suppose you hold some of Oakland’s municipal bonds. This climate apocalypse sounds like a serious risk, right? Yet a recent prospectus for Oakland’s general-obligation bonds shrugs off the threat. “The City is unable to predict when seismic events, fires or other natural events, such as sea rise or other impacts of climate change or flooding from a major storm, could occur,” the prospectus states. And even if such events occur, the city can’t be sure “whether they will have a material adverse effect on the business operations or financial condition of the City or the local economy.”
Other California localities have told courts one thing and investors another regarding climate change. In a similar lawsuit, San Francisco claims it faces “imminent risk of catastrophic storm surge flooding.” But in a bond offering last year, the city said it is “unable to predict whether sea-level rise or other impacts of climate change or flooding . . . will occur.” San Mateo County claims in another suit that there is a 50% chance that a “devastating three-foot flood . . . occurs before 2030.” The county uses boilerplate similar to San Francisco’s to play down such risks in its communications to bondholders.
By the end of this century Oakland, Calif., will be experiencing a “100-year flood” every week. At least that’s what the Oakland city government argued last year, when it filed a lawsuit against several oil companies for contributing to climate change. The city forecasts that rising water levels in the San Francisco Bay will threaten the sewer system and other property “with a total replacement cost of between $22 billion and $38 billion.”
Suppose you hold some of Oakland’s municipal bonds. This climate apocalypse sounds like a serious risk, right? Yet a recent prospectus for Oakland’s general-obligation bonds shrugs off the threat. “The City is unable to predict when seismic events, fires or other natural events, such as sea rise or other impacts of climate change or flooding from a major storm, could occur,” the prospectus states. And even if such events occur, the city can’t be sure “whether they will have a material adverse effect on the business operations or financial condition of the City or the local economy.”
Other California localities have told courts one thing and investors another regarding climate change. In a similar lawsuit, San Francisco claims it faces “imminent risk of catastrophic storm surge flooding.” But in a bond offering last year, the city said it is “unable to predict whether sea-level rise or other impacts of climate change or flooding . . . will occur.” San Mateo County claims in another suit that there is a 50% chance that a “devastating three-foot flood . . . occurs before 2030.” The county uses boilerplate similar to San Francisco’s to play down such risks in its communications to bondholders.
