Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/307377 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11447
Publisher: 
CESifo GmbH, Munich
Abstract: 
How are financial markets responding to anticipated climate-driven wildfire risk increases? Combining high-resolution meteorological predictions and land use pattern maps with detailed US municipal bond data, this paper finds that municipalities facing higher future wildfire risk increases are already having to pay substantially higher borrowing costs as a result. A one standard deviation increase in future wildfire exposure is associated with a 23-basis point rise in school district bond spreads, corresponding to 42% of the sample mean. Borrowing cost impacts are significantly larger in areas with higher minority population shares and heavier reliance on local revenue sources.
Subjects: 
wildfires
climate risk
municipal bond
fiscal costs of climate change
JEL: 
G12
H74
Q54
Document Type: 
Working Paper
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