I've been trying to understand what happens when you quantify the future and then pretend you didn't.
Three weeks back, Mount Pleasant, South Carolina sold $56 million in municipal bonds for infrastructure meant to last thirty years. The bonds came with a flood risk score of 4.8 out of 5. Zero means you're fine, five means you're underwater. Mount Pleasant got 4.8, which puts it among the highest-risk municipal bonds tracked by ICE Climate Data. Up there with Chatham, Massachusetts and a handful of other places running out of time to pretend the ocean isn't coming.
The bonds sold anyway. At rates that don't reflect the risk.
Stand on the peninsula where Mount Pleasant sits and you can see why the number is what it is. Two rivers wrap around the town before emptying into Charleston Harbor. Salt marsh spreads south toward the Atlantic. When hurricanes push water inland, it has nowhere to go but up through the streets. The town's built where the water wants to be, and the water's getting more insistent about taking it back.
Ninety-nine percent of buildings face flood risk. Not someday risk. Not theoretical risk. Buildings in town average a 78% chance of flooding about 7.8 feet deep over the next thirty years—the exact length of the bonds they just sold. Every census tract has more than half its buildings facing storm surge, high tide flooding, surface flooding, river flooding. The town knows this. They're in the National Flood Insurance Program, they've improved their flood rating, they've secured $24 million in infrastructure grants. They're doing what growing towns do when 90,000 people live there now and 30,000 more are coming.
But the score exists now. It's public. It's standardized. It's attached to every bond offering. Everyone involved can see it—the officials who authorized the bonds, the investors who bought them, the rating agencies that blessed them. The number is right there.
It just doesn't matter yet.
"Despite accelerating economic damages from severe weather, physical climate risk is not yet being priced into municipal bonds."
That's from ICE's own research. The market can see the risk. It's quantified, standardized, impossible to miss. And the market is choosing not to charge for it. Over $42 billion in municipal bonds tied to high-risk areas were issued last quarter. Bonds with scores above 3.0 attract more scrutiny, more questions about whether higher risk demands higher yield. The questions haven't translated into action.
Mount Pleasant sits in that gap right now, between visible risk and invisible pricing. The town issued bonds to pay for thirty-year infrastructure in a place where the probability of a 100-year rainfall event is likely to triple by mid-century. Sea levels are projected to rise 1.21 feet by 2050, 2.46 feet by 2080. The infrastructure they're building with this $56 million has to last in a place where the projections say it won't.
Somebody in Mount Pleasant's government signed off on these bonds knowing the score. Looked at 4.8 and decided they needed the money more than they needed to worry about what that number means. Somebody's building roads and drainage systems that are supposed to work in 2055 in a town that might be fundamentally different by then. These aren't abstract decisions. They're choices made by actual people who can see the same number everyone else can see.
And the investors who bought the bonds? They can see it too. They looked at 4.8 and decided the interest rate was worth it. Maybe they figure they'll be out before the water comes. Maybe they think someone else will eat the loss. Maybe they just don't believe the number means what it says.
We've created a system that quantifies the risk, makes it public, attaches it to every transaction. And then everyone involved pretends it doesn't exist. The number is there. It's accurate. Nobody's disputing it. It's just not being acted on.
For now.
A Municipal Market Analytics report warned that climate vulnerability, socioeconomic factors, and underinvestment may lead to a "debt-climate trap" where the cost of borrowing to address climate risks becomes unaffordable for the places that need it most. Same report projected that climate adaptation investment could double annual municipal bond issuance by the mid-2030s. Towns will need to borrow more to adapt while investors demand higher rates to lend to places that might not survive.
Mount Pleasant is early to this. Not early to the flooding—that's already here, already costing money. Early to having a public number attached to their debt that quantifies what everyone knew but nobody wanted to say out loud.
The system transformation happening in municipal finance isn't that the risk is new. It's that the risk is finally visible. Quantified. Impossible to ignore.
And everyone's choosing to ignore it anyway.
The number will start to matter. What happens to Mount Pleasant then? When investors decide 4.8 means something. When the gap between the score and the price closes. When the thirty-year bonds come due in a place where the thirty-year projections say the water will be higher, the storms worse, the infrastructure underwater.
The bonds sold. The money's borrowed. The projects will get built.
And somewhere in a database, attached to this debt that someone in Mount Pleasant authorized and someone else bought, is a number. 4.8. Everyone can see it. Nobody's acting on it.
Give it five years. Maybe ten. Someone's going to look at that number and decide it means what it says.
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ICE Climate scoring methodology: The risk scores combine historical insurance losses with forward-looking climate projections, where integer increases represent an approximate doubling of risk for a given location and year.
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Mount Pleasant's flood management efforts: The town participates in FEMA's Community Rating System and currently holds a Class 6 rating, which provides residents with a 20% premium reduction on flood insurance policies.
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The coming debt-climate trap: Municipal Market Analytics projects that climate adaptation investment could lead to a 100% increase in annual municipal bond issuance by the mid-2030s, just as borrowing costs rise for vulnerable communities.
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Chatham's even higher score: Mount Pleasant's 4.8 flood score is matched by several other coastal communities, but Chatham, Massachusetts received a 4.9, representing one of the highest climate risk scores for recent municipal bond offerings.