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Moody’s flags heat and water scarcity risks to reshape real estate values
In a sample of 159,000 water-intensive U.S. facilities, nearly 49,000 are projected to face high or very high water stress by 2100, with Texas and California among the biggest concentrations.
Moody’s has warned that rising heat and growing water scarcity are increasingly threatening asset valuations worldwide, with particular risk for real estate and other water-intensive industries, according to a new Moody’s report.
The analysis frames heat and water stress as two sides of the same problem as they shift from occasional shocks into longer-term conditions, raising exposure for the financial sector and increasing the need for insurers and reinsurers to revisit how they underwrite risk. The report also links the trends to operational risk, earnings volatility, and the risk of “stranded” assets.
Moody’s said its assessment used a sample of 159,000 water-intensive facilities across the U.S., finding that nearly 49,000 are expected to be in high or very high water-stress conditions by 2100. The facilities are concentrated in heavy manufacturing and processing, mining and quarrying, and food and beverage manufacturing, the report noted.
The report also highlighted regional patterns, saying Texas and California have the largest concentration of facilities projected to shift into high-stressed status, while Louisiana and Oklahoma have notable concentrations of at-risk properties. Moody’s pointed to drivers including recurring drought, pressure on major river systems such as the Colorado River and the Rio Grande, and declining groundwater availability, and it cited related research showing commercial real estate values can be lower in markets with higher natural disaster risk.