Faculty Spotlight

Rising Tides and Rearranging Deckchairs: Albany Law’s Chung Warns of Financial, Municipal Consequences of Climate Change

Christine Chung

By John Caher


As the co-director of the Institute for Financial Market Regulation, Professor Christine Sgarlata Chung is perpetually focused on what's around the corner. And in examining the financial and municipal consequences of climate change, she doesn't like what she sees.

"We will see more storms, more wildfires, and that will put more stress on state and local governments and their ability to pay for essential services and infrastructure," Chung said. "There is no option of maintaining the status quo. The costs and pressures are increasing, and if we do nothing, we will find ourselves in an enormous hole with implications for health and welfare."

In a forthcoming article in the Georgetown Environmental Law Review, Chung makes a compelling argument that it would literally be a grave mistake to continue taking for granted dependable infrastructure—safe drinking water, reliable power, passable bridges and roads. She notes in "Rising Tides and Rearranging Deckchairs: How Climate Change is Reshaping Infrastructure Finance and Threatening to Sink Municipal Budgets" that in communities across the country, people suffer when infrastructure fails. In Puerto Rico, for example, thousands of people died in the aftermath of Hurricane Maria, after the storm had passed and left the infrastructure destroyed.

Further, Chung is concerned that the state and local governments traditionally responsible for infrastructure development, maintenance, and repair are ill-equipped to deal with the coming storms—environmental as well as financial. She said Wall Street has taken notice and that climate risk is already having an impact on the billions of dollars in municipal bonds that are issued each year for infrastructure.

Read Professor Chung's scholarship on SSRN

"Climate change poses a nationwide threat to infrastructure (and thus public health and welfare), but we do not have a coherent, comprehensive, fiscally sound strategy for addressing this threat," Chung writes. "Instead, we tell state and local governments—including financially distressed or otherwise vulnerable communities—to figure out what needs to be done and pay for it."

Hurricane Maria, Chung argues, portends the future if something isn't done. She cites one study finding 4,654 excess deaths in Puerto Rico after the storm, and notes that about a third of the post-hurricane fatalities resulted from infrastructure-related inaccessibility to medical help. She points to the "bleak" condition of U.S. infrastructure, referencing a recent report by the American Society of Civil Engineers. The organization rated U.S. infrastructure a dismal D+.

Chung said that while infrastructure is crumbling and costs are increasing, the ability of localities to pay for upgrades is diminishing. There are few options, since, unlike private businesses, state and local governments cannot issue equity securities or easily reduce infrastructure costs, reduce risk, or leverage assets to raise money. She said Wall Street is beginning to respond and will likely make it more difficult and more expensive for localities and states to raise capital.

Exacerbating the problem, Chung argues, is the federal government's current hostility toward climate science and climate change. Over the past two years, for example, the United States  has rescinded flood risk management standards, reportedly curtailed climate science research, and pulled out of the Paris Climate Accord, an international effort to reduce emissions. "The federal government is unlikely, in the short term, to enact legal, regulatory, or policy reforms designed to assist, encourage, or support state and local governments in climate change adaption or resiliency planning," Chung writes.

While Chung firmly believes that the federal government is a key component in addressing future impacts of climate change, she also contends that states and local governments can take a leadership role in climate change adaption and resiliency planning. She noted that state and local governments across the country, including in New York and California, are rising to the challenge, and she implores states to explore ways to help smaller municipalities raise the necessary capital for infrastructure support.

Still, Chung argues the problem is far too complex to be dealt with in such a patchwork manner, and urges further study, foresight, and planning.

"There are no easy answers," she said.