Source: IMF in French
How does vulnerability to climate change affect the credit ratings of states?
Serhan Cevik and João Tovar Jalles
February 17, 2021
Climate change has made our planet a more perilous space.
Damage from heat waves, droughts, hurricanes or coastal flooding not only leads to loss of life and deterioration of livelihoods, but can also have serious consequences for a country’s finances.
According to one recent IMF staff studyHowever, a country’s vulnerability or resilience to climate change can have a direct effect on its creditworthiness, the costs of its borrowing and, ultimately, the likelihood that it will not be able to repay its sovereign debt.