The absence of references to climate change in utilities' bond disclosures suggests we have not systematically assessed how climate hazards could disrupt operations or revenues and, just as concerning, that they aren’t incorporating climate risk into capital planning and investment decisions.
The lack of standard home rebuilding playbooks, combined with the uneven delivery of federal disaster recovery funding, has led to fragmented rebuilding efforts over the past few decades. However, disaster recovery has evolved to more systematic approaches using pre-approved home plan catalogs.
Winter Storm Fern swept across a huge swath of the United States in January 2026, revealing both vulnerabilities and progress on the climate resilience and adaptation front.
The absence of references to climate change in utilities' bond disclosures suggests we have not systematically assessed how climate hazards could disrupt operations or revenues and, just as concerning, that they aren’t incorporating climate risk into capital planning and investment decisions.
Each major storm that hits the U.S. serves as a real-world infrastructure audit, providing a stress test for the resilience of different components of the country’s systems. Winter Storm Fern, which pummelled large swaths of the U.S. in January, turned the spotlight on water infrastructure.
Across the central and southern U.S., snow, ice, and sustained cold triggered hundreds of water main breaks, boil-water advisories, and water outages. Another wave of damage struck once the storm finally passed: hundreds of pipes burst in North Texas as cracked pipes unfroze. The issues sketch out a map of where water systems are getting brittle and where there are gaps between physical climate risk and the investment planning needed to close those gaps.
A recent study from Carnegie Mellon University quantifies this problem: Drinking water utilities serving 67 million Americans are located in areas facing high climate risk from flooding, drought, wildfire, and extreme cold. However, more than a third of those utilities’ bond disclosures, which outline the risks associated with lending money to these utilities, don’t mention climate change.
The absence of climate disclosures suggests utilities have not systematically assessed how climate hazards could disrupt operations or revenues and, just as concerning, that they aren’t incorporating climate risk into capital planning and investment decisions. As a result, investors, regulators, and ratepayers are operating blind to threats facing critical infrastructure, and communities remain unprepared for accelerating climate impacts.
This is worrisome in a state like Texas, which has 74 drinking water utilities, less than 5% of which mention climate change in their bond statements. When investors buy municipal bonds from these utilities, they’re essentially betting on infrastructure that may not withstand the next climate disaster, without being told that risk even exists. And utilities likely haven’t modeled how extreme heat, drought, or flooding could strain treatment capacity or increase costs.
Another example is Jackson, Mississippi, classified by the CMU study as “High Priority,” meaning high climate risk with no climate disclosure. In 2022, flooding coupled with aging infrastructure left 180,000 residents without clean drinking water after the city’s main water treatment plant failed. That facility had experienced “recent flooding” and “operational failures,” yet climate change was not referenced in the bonds that financed the system.
Fortunately, practical opportunities exist for various ecosystem stakeholders to help close the gap between physical risk and financial planning:
Winter Storm Fern demonstrated a critical disconnect: We know where climate risks threaten water infrastructure, but that knowledge hasn’t translated into the financial planning and capital investment needed to protect those systems. Solutions exist. The key is to implement those solutions before the next climate disaster hits.
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2.1 trillion gallons
In the U.S., about 2.1 trillion gallons of water are lost every year in water main breaks, partially due to aging infrastructure.
Source: EPA.
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The Epicenter helps decision makers understand climate risks and discover viable resilience solutions. The Epicenter is an affiliated publication of The Resiliency Company, a 501(c)3 nonprofit dedicated to inspiring and empowering humanity to adapt to the accelerating challenges of the next 100+ years.
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