When you turn on the tap, you can typically expect clean, safe water to flow out. But behind that simple action lies a complex system of pipes, pumps, governance, and financials that, for millions of Americans, is at risk in the face of climate change.
To address this, a team of researchers at Carnegie Mellon developed the first publicly accessible Drinking Water Utilities Climate Risk Index for the United States, a comparative tool that measures the risks drinking water systems face from climate events like droughts, floods, and extreme heat. By cross-referencing 1,455 medium and large water utilities across the country with what those utilities reported in their bond disclosures (financial documents that show investors the risks associated with lending money to these utilities), the study finds a gap between the actual climate risk and the risk reported in their disclosures.
Utilities serving 67 million people were rated as high risk, but more than a third of their bonds (36%) do not mention climate change, leaving communities exposed to potentially unsafe drinking water during extreme weather events and investors unaware of hidden financial liabilities. The municipal bonds studied represent $39.3 billion in debt, most of which will mature within the next 20 years. Of that total, $9.2 billion was issued by utilities identified as having high risk to climate change, but with limited evidence of climate risk awareness.
