The Ripple Effect: Water Risk in the Municipal Bond Market

This report takes a comprehensive look at how water scarcity, climate change, and ever-growing demand for clean water can lead to serious risk exposure for water and electric utilities, especially in the US Southwest and Southeast. It finds that market participants are systematically overlooking that risk, and even inadvertently encouraging risk by rewarding pricing and infrastructure plans that encourage increased water use despite near-term supply constraints. By overlooking these critical factors, all involved are allowing water risk to grow—and remain hidden—in the bond market. The report includes a first-of-its-kind model, developed by PwC, to aid rating agencies, public utilities and investors in understanding the potential risks of undersupply.