Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/315040 
Year of Publication: 
2025
Series/Report no.: 
Economics Working Paper Series No. 25/398
Publisher: 
ETH Zurich, CER-ETH - Center of Economic Research, Zurich
Abstract: 
How do financial markets respond to anticipated climate-driven wildfire risk? Using high-resolution meteorological forecasts, land use data, and U.S. municipal bond spreads, we find that municipalities facing greater future wildfire exposure already incur higher borrowing costs: A one standard deviation increase in projected wildfire risk raises primary (secondary) market spreads by 14 (26) basis points - over 40% of the sample mean. Impacts are significantly larger in areas with higher minority populations and greater reliance on local revenue. Our study contributes to the broader literature by introducing a new approach to identifying the financial effects of evolving climate risks.
Subjects: 
Wildfires
Climate Risk
Municipal Bond
Fiscal Costs of Climate Change
JEL: 
G12
H74
Q54
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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