Enhancing Water Disclosure and Credit Assessment
U.S. water providers are facing unprecedented challenges, including more vulnerable water supplies, declining revenue and growing environmental pressures. Investors who finance the projects that keep the water flowing - by purchasing municipal bonds that pay for pipelines, treatment plants and other key infrastructure projects - now want better information on how water utilities are managing these wide-ranging risks.
Ceres has been highlighting the financial risks associated with these challenges, beginning with the report, The Ripple Effect: Water Risk in the Municipal Bond Market. The report is designed to help bond-rating agencies, utilities and investors understand the long-term financial risks of trying to manage water shortages through overreliance on new large-scale water supply projects.
Since then, Ceres has been working closely with bond investors and credit rating agencies to enhance water utility disclosure on these topics and evolve credit risk assessment methods that support more sustainable water resource management.
In January 2016, Standard & Poor’s released an update of its credit rating methodology for the public water sector. The updated methodology is favorable to utilities that incorporate climate risk assessment into their planning and are proactive in drought management and reducing water leakage rates. According to S&P, the new methodology is expected to result in a credit movement of 25% of its rated water and wastewater utilities.
- Report: The Ripple Effect: Water Risk in the Municipal Bond Market and Water Ripples: Expanding Risks for U.S. Water Providers
- Report: Assessing Water System Revenue Risk: Considerations for Market Analysts
- Letter: Investors Worth $40 Billion Send Letter to the National Federation of Municipal Analysts with Recommended Best Practices for Water and Sewer Transactions
- Latest Victim of California’s Drought: Water Bonds, The Wall Street Journal
- Investors Tackle the Impact of Water Scarcity on their Portfolios, Institutional Investor
- California’s Water Crisis Is The Result of Market Failure As Much As Drought, Fast Company