Moody’s Investor Services, in a report published January 16, named The Bahamas and Suriname among countries that face “material credit risk” due to global sea level rise.
“Climate science shows that sea levels will most likely continue to rise for decades. Although this will happen gradually, higher sea levels contribute to increasingly frequent and severe natural disasters such as storm surges, floods or cyclones,” the credit rating agency stated in a notice on its website.
Moody’s explained that the implications of sea level rise and related natural disasters on sovereign credit ratings are far-reaching. These include lost income, damage to assets, loss of life, health issues, and forced migration.
“Vulnerability to extreme events related to sea level rise can also undermine investment and heighten susceptibility to event risk by hindering the ability of governments to borrow to rebuild, increasing financial risks, raising external pressures…”– Moody’s
The frequency and intensity of natural disasters related to rising sea level, which Moody’s says are “highly uncertain” to predict, further heighten risks to the countries’ sovereign credit ratings.
“Vulnerability to extreme events related to sea level rise can also undermine investment and heighten susceptibility to event risk by hindering the ability of governments to borrow to rebuild, increasing financial risks, raising external pressures, and/or amplifying political risk as populations come under stress and institutional capacities are tested,” Moody’s emphasised.
The report, therefore, underscored the need for countries to effectively improve adaptation measures.
Notwithstanding, it also pointed out that high-income economies like Japan and the Netherlands — rated A1 stable and Aaa stable respectively — have implemented countermeasures. As a result, despite being exposed to similar threats of rising sea level, “their credit strengths mean they are unlikely to suffer material credit impact”.
The Bahamas has a Baa3 stable credit rating and outlook, while Suriname has a B2 rating with a stable outlook.
The report also named Egypt (B2 stable) and Vietnam (Ba3 negative) and small island states among places facing credit risk deterioration due to the rising sea level.