As if municipalities and muni-bond investors don’t have enough to worry about with a recession and dropping tax revenue because of the coronavirus, a recent report from Moody’s Investor Service suggests coastal state and local governments face increased credit risks from rising sea levels as more frequent and severe flooding threaten coastal communities’ economies, property values and critical infrastructure.

These increased credit risks could hurt municipalities from smaller towns economically dependent on fishing and shipping to even rich beach towns looking to borrow in the $3.85 trillion muni bond market to pay for everything from road repaving to a seawall.

To be sure, insurers and other credit-ratings firms have pointed out climate-change risks for municipalities before, but that was before COVID-19 weakened their finances. States and local governments have seen tax revenues drop and expenses rise because of the coronavirus pandemic. Some states, such as New Jersey, were already in bad shape financially […]