Washington, D.C., and New York City face the risks of increased flooding and extreme heat days tied to climate change but have the financial resources and strategies in place that could help them weather the worst of the challenges, Moody's Investors Service said in a recent research note.
New York City and Washington are two of the five largest metropolitan economies in the U.S., and their location on the coast leave them vulnerable to sea level rise and flooding from extreme rain and storms, the report said. Both cities, but especially Washington, have also seen an uptick in extreme heat days where temperatures exceed 90 degrees.
Because the cities effectively anchor the two largest regional economies on the East Coast, "large disruption of the District or New York City economies by climate shocks or other factors could in turn disrupt the national economy in addition to having a severe local impact," the report said.
Both city governments are taking steps to adapt to climate risk and have adopted policy goals for the next three decades, the report said. New York City and energy companies that operate in the area have been working on climate mitigation since Superstorm Sandy in 2012 flooded power stations, city blocks and prompted the New York Stock Exchange and Nasdaq to close for two days. Sandy caused about $47 billion in destruction and $26 billion of lost economic output across the affected region.
One credit strength for the cities is that the federal government can usually be counted on to provide disaster aid through the Federal Emergency Management Agency. The bulk of New York City's resiliency funding has come from the federal government tied to Sandy, the report said. In addition, New York City and the District of Columbia have very strong financial management "that allows them to adjust quickly to unexpected events" and both have "healthy fund balances and strong liquidity," which can help with near-term cash flow needs following a disaster before federal aid starts to kick in.
Washington's $2.8 billion Clean Rivers Project is focused on reducing sewer outflows into the Anacostia and Potomac Rivers and Rock Creek while also relieving and mitigating flooding. It includes an 18-mile tunnel that is nearly half complete and green infrastructure to promote rainwater retention. The neighborhoods where the first segments of the tunnel became operational in 2017 have already started seeing benefits. Street and basement flooding has been virtually eliminated during heavy rain, the report said.
New York City since Sandy has completed the equivalent of 25 miles of coastal defenses and has updated building codes based on preliminary new flood maps. The report said the city is also planning the $560 million East Coast Resiliency project, a 2.4-mile storm surge and rising sea-level flood protection system.