View Source

How Debt and Climate Change Pose a ‘Systemic Risk to the Global Economy’

How does a country deal with climate disasters when it’s drowning in debt? Not very well, it turns out. Especially not when a global pandemic clobbers its economy.

Take Belize, Fiji and Mozambique. Vastly different countries, they are among dozens of nations at the crossroads of two mounting global crises that are drawing the attention of international financial institutions: climate change and debt.

They owe staggering amounts of money to various foreign lenders. They face staggering climate risks, too. And now, with the coronavirus pandemic pummeling their economies, there is a growing recognition that their debt obligations stand in the way of meeting the immediate needs of their people — not to mention the investments required to protect them from climate disasters.

The combination of debt, climate change and environmental degradation “represents a systemic risk to the global economy that may trigger a cycle that depresses revenues, increases spending and exacerbates climate and nature vulnerabilities,” according to a new assessment by the World Bank, International Monetary Fund and others, which was seen by The Times. It comes after months of pressure from academics and advocates for lenders to address this problem.

downgraded its creditworthiness, making it tougher to get loans on the private market. The International Monetary Fund calls its debt levels “unsustainable.”

nearly $600 billion in debt service payments over the next five years. Both the World Bank and the International Monetary Fund are important lenders, but so are rich countries, as well as private banks and bondholders. The global financial system would face a huge problem if countries faced with shrinking economies defaulted on their debts.s

“We cannot walk head on, eyes wide open, into a debt crisis that is foreseeable and preventable,” the United Nations Secretary General, António Guterres, said last week as he called for debt relief for a broad range of countries. “Many developing countries face financing constraints that mean they cannot invest in recovery and resilience.”

The Biden administration, in an executive order on climate change, said it would use its voice in international financial institutions, like the World Bank, to align debt relief with the goals of the Paris climate agreement, though it hasn’t yet detailed what that means.

flurry of proposals from economists, advocates and others to address the problem. The details vary. But they all call, in one way or another, for rich countries and private creditors to offer debt relief, so countries can use those funds to transition away from fossil fuels, adapt to the effects of climate change, or obtain financial reward for the natural assets they already protect, like forests and wetlands. One widely circulated proposal calls on the Group of 20 (the world’s 20 biggest economies) to require lenders to offer relief “in exchange for a commitment to use some of the newfound fiscal space for a green and inclusive recovery.”

debts soared, including to China, and the country, whose very existence is threatened by sea level rise, pared back planned climate projects, according to research by the World Resources Institute.

The authors proposed what they called a climate-health-debt swap, where bilateral creditors, namely China, would forgive some of the debt in exchange for climate and health care investments. (China has said nothing publicly about the idea of debt swaps.)

sinking under huge debts, including secret loans that the government had not disclosed, when, in 2019, came back-to-back cyclones. They killed 1,000 people and left physical damages costing more than $870 million. Mozambique took on more loans to cope. Then came the pandemic. The I.M.F. says the country is in debt distress.

Six countries on the continent are in debt distress, and many more have seen their credit ratings downgraded by private ratings agencies. In March, finance ministers from across Africa said that many of their countries had spent a sizable chunk of their budgets already to deal with extreme weather events like droughts and floods, and some countries were spending a tenth of their budgets on climate adaptation efforts. “Our fiscal buffers are now truly depleted,” they wrote.

In developing countries, the share of government revenues that go into paying foreign debts nearly tripled to 17.4 percent between 2011 and 2020, an analysis by Eurodad, a debt relief advocacy group found.

Research suggests that climate risks have already made it more expensive for developing countries to borrow money. The problem is projected to get worse. A recent paper found climate change will raise the cost of borrowing for many more countries as early as 2030 unless efforts are made to sharply reduce greenhouse gas emissions.

View Source

Floods and Mudslides in Eastern Indonesia Leave at Least 41 Dead

The fatal alchemy of mud, water and sheer force struck in eastern Indonesia at an hour past midnight on Sunday, killing at least 41 people, disaster-relief officials said.

Flash flooding and landslides submerged entire neighborhoods in East Nusa Tenggara Province, which includes more than 560 islands. Seven villages were badly affected, according to Raditya Jati, a spokesman for Indonesia’s National Disaster Mitigation Agency. Twenty-seven people were missing, and nine were injured, he said.

Some of the worst damage was on the remote island of Adonara, where many residents were preparing to celebrate Easter Sunday. Torrential rain and strong winds had churned since the day before. The damage left dozens of houses under mud and water. Five bridges were severed, Mr. Raditya said.

The rescue effort has been hampered because the only access to Adonara is by sea, and waters are choppy because of the heavy rain, he said. But the priority is to ensure that survivors are moved to areas safe from further flooding or landslides.

plane crashes, boat accidents and other transportation lapses.

In January, landslides killed about 40 people on Java, Indonesia’s most populous island. There, a further mudslide hit after disaster management officials had gathered to help with search and rescue efforts. The chief of a local disaster relief agency and a captain in the Indonesian Army were among those killed.

Rampant deforestation in Indonesia has contributed to the risk of such disasters, leaving soil loose and at risk of coalescing into deadly mud flows when torrential rains come.

Before this weekend, the national meteorology department had warned of high rain intensity, Mr. Raditya said. But many residents of small, far-flung islands like Adonara have few safe places to shelter.

“I think the biggest challenge will be how to utilize heavy equipment,” Mr. Raditya said, referring to efforts to dig out people and homes in hopes of finding survivors.

But given the communications challenges, Mr. Raditya said he was not sure if adequate equipment was available on Adonara.

View Source

Seven Infrastructure Problems in Urgent Need of Fixing

Engineers say that when infrastructure works, most people do not even think about it. But they recognize it when they turn on a faucet and water does not come out, when they see levees eroding or when they inch through traffic, the driver’s awareness of the highway growing mile after creeping mile.

President Biden has announced an ambitious $2 trillion infrastructure plan that would pump huge sums of money into improving the nation’s bridges, roads, public transportation, railways, ports and airports.

The plan faces opposition from Republicans and business groups, who point to the enormous cost and the higher corporate taxes that Mr. Biden has proposed to pay for it.

Still, leaders in both parties have long seen infrastructure as a possible unifying issue. Urban and rural communities, red and blue states, the coasts and the middle of the country: All are confronting weak and faltering infrastructure.

plagued by delays and cancellations, with similar problems affecting railways along the Northeast Corridor.

bridge has remained a source of frustration. Rusty and creaky, it has been listed as “functionally obsolete” in the federal bridge inventory since the 1990s, and it has a history of bottlenecks and crashes.

There is a $2.5 billion plan to fix the bridge and build a new one alongside it, but in Covington, Ky., some have expressed worries about the proposal. The mayor told The Cincinnati Enquirer that it was an “existential threat,” citing the size of the proposed bridge (some traffic would still cross over the old one, as well).

told local reporters at a news conference on Wednesday. “Hopefully somewhere in the bowels of this multitrillion bill, there’s a solution.”

Puerto Rico

a serious earthquake on Jan. 7.

The collapse brought attention to the more than 600 schools on the island that shared a “short column” architectural design, which makes them vulnerable to tremors. Teachers and parents were wary of reopening, and the schools with that design risk remain closed. Children who had gone to them are still learning remotely.

In addition, nearly 60 schools were closed after inspections following the earthquakes showed structural deficiencies. About 25 had “persistent” problems that predated the earthquake and its aftershocks, Puerto Rico’s education secretary told The New York Times last year.

residents went weeks with a boil notice in place.

The water crisis inflamed enduring tensions in Jackson, ones that grip many communities where white residents have fled and tax bases have evaporated. The city has old and broken pipes. It does not have the funding to repair them. City officials estimated that modernizing Jackson’s water infrastructure could cost $2 billion.

The storm also caused power failures for millions of people across Texas, which has prompted lawmakers there to weigh an overhaul of the state’s electric infrastructure. At least 111 people died as a result of the storm, according to state officials, and it also caused widespread property damage and left some residents to face huge electric bills.

conclusions were stark: A historic flooding event had caught up with years of underfunding and neglect.

The country has roughly 91,000 dams, a majority of which are more than 50 years old, and many are an exceptional rainfall away from potential disaster. As dams have aged, the weather has grown more severe, rendering old building standards outdated and creating conditions that few considered when many of the dams were built.

Residential development has also steadily spread into once rural areas that lie downstream from the weakening infrastructure. According to the Association of State Dam Safety Officials, about 15,600 dams in the country would most likely cause death and extensive property damage if they failed. Of those, more than 2,330 are considered deficient, the group said.

is not likely to let up soon, given new weather patterns driven by climate change. And some of the officials whose towns and cities were most affected by the 2019 floods are adamant: Simply refurbishing levees is not going to work anymore.

“Levees aren’t going to do it,” said Colin Wellenkamp, the executive director of Mississippi River Cities & Towns Initiative, an association of 100 mayors along the Mississippi River. His group presented a plan to the White House last month detailing a “systemic solution” to flooding. It includes replacing wetlands, reconnecting backwaters to the main river and opening up areas for natural flooding.

A plan that simply replaces infrastructure, rather than rethinking what it encompasses, will be ineffective and ultimately unaffordable, Mr. Wellenkamp said. He is not sure whether his group’s proposals have been folded into the Biden plan. But he sees little choice.

“This is a losing game unless we incorporate other, larger solutions,” he said.

Campbell Robertson and Frances Robles contributed reporting.

View Source

Biden Details $2 Trillion Plan to Rebuild Infrastructure and Reshape the Economy

WASHINGTON — President Biden will unveil an infrastructure plan on Wednesday whose $2 trillion price tag would translate into 20,000 miles of rebuilt roads, repairs to the 10 most economically important bridges in the country, the elimination of lead pipes and service lines from the nation’s water supplies and a long list of other projects intended to create millions of jobs in the short run and strengthen American competitiveness in the long run.

Biden administration officials said the proposal, which they detailed in a 25-page briefing paper and which Mr. Biden will discuss in an afternoon speech in Pittsburgh, would also accelerate the fight against climate change by hastening the shift to new, cleaner energy sources, and would help promote racial equity in the economy.

The spending in the plan would take place over eight years, officials said. Unlike the economic stimulus passed under President Barack Obama in 2009, when Mr. Biden was vice president, officials will not in every case prioritize so-called shovel ready projects that could quickly bolster growth.

But even spread over years, the scale of the proposal underscores how fully Mr. Biden has embraced the opportunity to use federal spending to address longstanding social and economic challenges in a way not seen in half a century. Officials said that, if approved, the spending in the plan would end decades of stagnation in federal investment in research and infrastructure — and would return government investment in those areas, as a share of the economy, to its highest levels since the 1960s.

signed into law this month, the “American Rescue Plan.”

“The American Jobs Plan,” White House officials wrote in the document detailing it, “will invest in America in a way we have not invested since we built the interstate highways and won the Space Race.”

While spending on roads, bridges and other physical improvements to the nation’s economic foundations has always had bipartisan appeal, Mr. Biden’s plan is sure to draw intense Republican opposition, both for its sheer size and for its reliance on corporate tax increases to pay for it.

Administration officials said the tax increases in the plan — including an increase in the corporate tax rate and a variety of measures to tax multinationals on money they earn and book overseas — would take 15 years to fully offset the cost of the spending programs.

The spending in the plan covers a wide range of physical infrastructure projects, including transportation, broadband, the electric grid and housing; efforts to jump-start advanced manufacturing; and other industries officials see as key to the United States’ growing economic competition with China. It also includes money to train millions of workers, as well as money for initiatives to support labor unions and providers of in-home care for older and disabled Americans, while also increasing the pay of the workers who provide that care.

Many of the items in the plan carry price tags that would have filled entire, ambitious bills in past administrations.

Among them: a total of $180 billion for research and development, $115 billion for roads and bridges, $85 billion for public transit, and $80 billion for Amtrak and freight rail. There is $42 billion for ports and airports, $100 billion for broadband and $111 billion for water infrastructure — including $45 billion to ensure no child ever is forced to drink water from a lead pipe, which can slow children’s development and lead to behavioral and other problems.

The plan seeks to repair 10,000 smaller bridges across the country, along with the 10 most economically significant ones in need of a fix. It would electrify 20 percent of the nation’s fleet of yellow school buses. It would spend $300 billion to promote advanced manufacturing, including a four-year plan to restock the country’s Strategic National Stockpile of pharmaceuticals, including vaccines, in preparation for future pandemics.

In many cases, officials cast those goals in the language of closing racial gaps in the economy, sometimes the result of previous federal spending efforts, like interstate highway developments that split communities of color or air pollution that affects Black and Hispanic communities near ports or power plants.

Officials cast the $400 billion spending on in-home care in part as a salve to “underpaid and undervalued” workers in that industry, who are disproportionately women of color.

Mr. Biden’s pledge to tackle climate change is embedded throughout the plan. Roads, bridges and airports would be made more resilient to the effects of more extreme storms, floods and fires wrought by a warming planet. Spending on research and development could help spur breakthroughs in cutting-edge clean technology, while plans to retrofit and weatherize millions of buildings would make them more energy efficient.

The president’s focus on climate change is centered, however, on modernizing and transforming the United States’ two largest sources of planet-warming greenhouse gas pollution: cars and electric power plants.

A decade ago, Mr. Obama’s economic stimulus plan spent about $90 billion on clean energy programs intended to jump-start the nation’s nascent renewable power and electric vehicle industries. Mr. Biden’s plan now proposes spending magnitudes more on similar programs that he hopes will take those technologies fully into the mainstream.

It bets heavily on spending meant to increase the use of electric cars, which today make up just 2 percent of the vehicles on America’s highways.

The plan proposes spending $174 billion to encourage the manufacture and purchase of electric vehicles by granting tax credits and other incentives to companies that make electric vehicle batteries in the United States instead of China. The goal is to reduce vehicle price tags.

The money would also fund the construction of about a half-million electric vehicle charging stations — although experts say that number is but a tiny fraction of what is needed to make electric vehicles a mainstream option.

Mr. Biden’s plan proposes $100 billion in programs to update and modernize the electric grid to make it more reliable and less susceptible to blackouts, like those that recently devastated Texas, while also building more transmission lines from wind and solar plants to large cities.

It proposes the creation of a “Clean Electricity Standard” — essentially, a federal mandate requiring that a certain percentage of electricity in the United States be generated by zero-carbon energy sources like wind, solar and possibly nuclear power. But that mandate would have to be enacted by Congress, where prospects for its success remain murky. Similar efforts to pass such a mandate have failed multiple times over the past 20 years.

The plan proposes an additional $46 billion in federal procurement programs for government agencies to buy fleets of electric vehicles, and $35 billion in research and development programs for cutting-edge, new technologies.

It also calls for making infrastructure and communities more prepared for the worsening effects of climate change, though the administration has so far provided few details on how it would accomplish that goal.

But according to the document released by the White House, the plan includes $50 billion “in dedicated investments to improve infrastructure resilience.” The efforts would defend against wildfires, rising seas and hurricanes, and there would be a focus on investments that protect low-income residents and people of color.

The plan also includes a $16 billion program intended to help fossil fuel workers transition to new work — like capping leaks on defunct oil wells and shutting down retired coal mines — and $10 billion for a new “Civilian Climate Corps.”

Mr. Biden would fund his spending in part by eliminating tax preferences for fossil fuel producers. But the bulk of his tax increases would come from corporations generally.

He would raise the corporate tax rate to 28 percent from 21 percent, partly reversing a cut signed into law by President Donald J. Trump. Mr. Biden would also take a variety of steps to raise taxes on multinational corporations, many of them working within an overhaul of the taxation of profits earned overseas that was included in Mr. Trump’s tax law in 2017.

Those measures would include raising the rate of a minimum tax on global profits and eliminating several provisions that allow companies to reduce their American tax liability on profits they earn and book abroad.

Mr. Biden would also add a new minimum tax on the global income of the largest multinationals, and he would ramp up enforcement efforts by the Internal Revenue Service against large companies that evade taxes.

Administration officials expressed hope this week that the plan could attract bipartisan support in Congress. But Republicans and business groups have already attacked Mr. Biden’s plans to fund the spending with corporate tax increases, which they say will hurt the competitiveness of American companies. Administration officials say the moves will push companies to keep profits and jobs in the United States.

Joshua Bolten, the president and chief executive of the Business Roundtable, a powerful group representing top business executives in Washington, said on Tuesday that his group “strongly opposes corporate tax increases as a pay-for for infrastructure investment.”

“Policymakers should avoid creating new barriers to job creation and economic growth,” Mr. Bolten said, “particularly during the recovery.”

Coral Davenport and Christopher Flavelle contributed reporting.

View Source

Flooding Inundates Australia a Year After Wildfires Raged

SYDNEY—Unusually heavy rainfall has caused widespread flooding across eastern Australia, triggering evacuation orders for roughly 18,500 people and disrupting supplies of commodities.

Some parts of New South Wales state experienced their wettest week on record, prompting the closure of a major coal-haulage railway and cuts to coal production. The floods destroyed crops and drowned cattle that farmers weren’t able to get to higher ground.

Hundreds of homes have been inundated with water and vast networks of road have been damaged, authorities said. Power outages have occurred throughout the region, where another 20,000 residents have been warned they could need to move to safety.

Roads were under around two meters (or more than 6 ½ feet) of water, said Oliver Sawaya, who fled his home in a dinghy with his 72-year-old father, Henry. The property in Pitt Town, about an hour’s drive from Sydney, is surrounded by creeks, which overflowed and cut off escape routes.

“You couldn’t see anything,” the 44-year-old lawyer said. “It looked as if you were in Sydney Harbour and you were on a boat.”

View Source

Australia’s Worst Floods in Decades Quicken Concerns About Climate Change

WINDSOR, Australia — Kelly Miller stood in her doorway on Monday, watching the water rise to within a few inches of the century-old home where she runs an alternative medicine business. The bridge nearby had already gone under in some of Australia’s worst flooding in decades, along with an abandoned car in the parking lot.

“It’s coming up really quickly,” she said.

Two massive storms have converged over eastern Australia, dumping more than three feet of rain in just five days. In a country that suffered the worst wildfires in its recorded history just a year ago, the deluge has become another record-breaker — a once-in-50-years event, or possibly 100, depending on the rain that’s expected to continue through Tuesday night.

Nearly 20,000 Australians have been forced to evacuate, and more than 150 schools have been closed. The storms have swept away the home of a couple on their wedding day, prompted at least 500 rescues and drowned roads from Sydney up into the state of Queensland 500 miles north.

Shane Fitzsimmons, the resilience commissioner for New South Wales — a new state position formed after last year’s fires — described the event as another compounding disaster. Last year, huge fires combined into history-making infernos that scorched an area larger than many European countries. This year, thunderstorms have fused and hovered, delivering enough water to push rivers like the Hawkesbury to their highest levels since the 1960s.

Scientists note that both forms of catastrophe represent Australia’s new normal. The country is one of many seeing a pattern of intensification — more extreme hot days and heat waves, as well as more extreme rainfalls over short periods.

It’s all tied to a warming earth, caused by greenhouse gases. Because global temperatures have risen 1.1 degrees Celsius, or about 2 degrees Fahrenheit, over preindustrial levels, landscapes dry out more quickly, producing severe droughts, even as more water vapor rises into the atmosphere, increasing the likelihood of extreme downpours.

“There is a very strong link between global warming and that intensification in rainfall,” said Andy Pitman, director of the ARC Center of Excellence for Climate Extremes at the University of New South Wales. “There’s good scientific evidence to say extreme rain is becoming more extreme due to global warming.”

Australia’s conservative government — heavily resistant to aggressive action on climate change that might threaten the country’s fossil fuel industry — has yet to make that link.

Prime Minister Scott Morrison has offered funds for those forced to flee, and several dozen areas have already been declared disaster zones.

“It’s another testing time for our country,” he told a Sydney radio station, 2GB, on Monday.

Windsor may become one of the places hardest hit. Over the weekend, the Hawkesbury rose rapidly by more than 30 feet, and it is expected to peak in the next day or so at 42 feet.

With rain continuing to fall, emergency workers wearing bright orange went door to door on side streets with waist-deep puddles where the road dipped.

In and around the historic downtown, many of the businesses close to the river stayed shut on Monday, with a few putting sandbags by their doors. The central meeting place seemed to be at the foot of the Windsor Bridge, where television crews and crowds in rubber boots marveled at the view.

The new Windsor Bridge, which opened just a few months ago as a “flood-proof” replacement for an older bridge, was completely underwater.

It was built 10 feet higher than the bridge it replaced, but the river flowed over it as if it did not exist. A red flashing light on the top of a buried yellow excavator offered the only hint of the old bridge, or what had once been solid ground.

Cameron Gooch, 46, a diesel mechanic from a town nearby, said he saw huge trees speeding downriver toward the coast a day earlier. The water seemed to have slowed down, he said, becoming a giant bathtub with water held in place and rising slowly from tributaries.

“That’s the problem,” he said. “It’s just going to keep building up.”

A few feet away, Rebecca Turnbull, the curator of Howe House, a home and museum built in 1820, put handwritten notes on the furniture that would need to be removed if the water surged a few more feet.

She pointed to a line drawn on the doorway of a room that smelled of damp old wood.

“This is where the water came up to in 1867,” she said.

Like many others in Windsor, she said she doubted the river would reach quite that high this time around. But that didn’t bring much solace to those closer to the rising brown sludge.

Rachael Goldsworthy, who owns a home and real estate business just behind Ms. Miller’s naturopathic clinic — it’s a few feet higher on the hillside — said she saw a new Mercedes washed downstream the night before after a man had parked in a small puddle and then went into a grocery store to buy a roast chicken. In just minutes, the rising water carried the car away.

On Monday, she tried to help Ms. Miller find a few milk crates — the only defense for some of the heavy furniture that could not be moved out.

Inside, Ms. Miller and her son collected oils and other products that she would normally be selling, with plans to put them in a truck or a storage unit. The antique flowered carpet was still dry, and she’d taped up the toilets to keep the septic system from backing up into the house.

She said she didn’t have flood insurance because she couldn’t afford it. So all she could do was learn from YouTube videos about how to fight a flood.

“We’re trying to work out how to save what we can,” she said. “We don’t want to lose everything.”

Yan Zhuang contributed reporting from Melbourne, Australia.

View Source