Our speaker will be Marti Subrahmanyam (New York University).

He will give a talk on “Urban Riparian Exposure, Climate Change, and Public Financing Costs in China”.

Abstract: We construct a new geospatial measure using high-resolution river vector data from National Geomatics Center of China (NGCC) to study how urban riparian exposure shapes local government debt financing costs. Our baseline results show that cities with higher riparian exposures have significantly lower credit spreads, with a one-standard-deviation increase in riparian exposure reducing credit spreads by approximately 12 basis points. By comparing cities crossed by natural rivers with those intersected by artificial canals, we disentangle the dual role of riparian zones as sources of natural capital benefits (e.g., enhanced transportation capacity) versus climate risks (e.g.,flood vulnerability). We find that climate change has amplified the impact of natural disasters, such as floods and droughts, particularly in riparian zones, thus weakening the cost-reducing effect of riparian exposure on bond financing. In contrast, improved water infrastructure and flood-control facilities strengthen the cost-reduction effect. Our findings contribute to the literature on natural capital and government financing, offering valuable implications for public finance and risk management.

The talk will take place on May 28, 2025 at 12:00 pm in room TC.4.03.