Federal Water Tap, November 16: Federal Reserve Warns of Financial Instability from Climate Change

The Rundown

The nation’s central bank says to watch out for market crashes linked to a warming planet. The Army Corps proposes a rule change that would shrink federal stream protections. The EPA finalizes a rule that allows electric utilities more options for handling coal ash waste. USAID posts its list of high-priority countries for water, sanitation, and hygiene funding. A USGS study finds that removing leaves and cleaning streets can have a measureable effect in reducing nutrients in urban stormwater. The USGS also evaluates future groundwater infiltration in the Colorado River basin. And lastly, the National Drinking Water Advisory Council sets a date for its December meeting.

“Climate change poses important risks to financial stability. A lack of clarity about true exposures to specific climate risks for real and financial assets, coupled with differing assessments about the sizes and timing of these risks, can create vulnerabilities to abrupt repricing events. Acute hazards, such as storms, floods, or wildfires, may cause investors to update their perceptions of the value of real or financial assets suddenly. Chronic hazards, such as slow increases in mean temperatures or sea levels, or a gradual change in investor sentiment about those risks, introduce the possibility of abrupt tipping points or significant swings in sentiment.” — Lael Brainard, a member of the Federal Reserve board of governors, discussing the financial risks posed by climate change. For the first time, the Fed inserted a climate change section in its financial stability report, which it publishes twice annually. The report assesses risks to the U.S. financial system. It argues for more disclosure of risks to assets like real estate, and it advocates for more research on the links between climate and the economy in order to avoid “abrupt repricing events” such as market collapses.

By the Numbers

18: High-priority countries for federal water, sanitation, and hygiene funding in fiscal year 2021. Thirteen of the countries are in Africa, including Ghana, Kenya, Mali, Tanzania, and Uganda. (USAID)

News Briefs

Army Corps Proposal Would Cut Stream Protections
The Army Corps of Engineers is considering a rule change that would shrink federal protection of small streams.

The Corps is proposing extensive revisions to its nationwide permits, which authorize construction that disturb wetlands and streams. Nationwide permits, intended for “minor” actions, are issued for projects that are expected to do minimal environmental damage.

For 10 of the 52 permit categories, the Army Corps wants to shift from linear measurements to area measurements. Instead of limiting damage to 300 linear feet of stream bed, the Corps proposes that the standard be 0.5 acres, which is also the standard for wetlands.

However, this would have far-reaching effects for small streams. Damaging 0.5 acres of stream bed for a stream that is 6 feet across means allowing nearly 3,500 linear feet of the stream to be damaged — more than 10 times the previous limit and roughly two-thirds of a mile in length.

The Corps said in its proposal that it is acting in response to the president’s order to review regulations that burden energy development.

The public comment period ends on November 16. Submit comments via www.regulations.gov using docket number COE-2020-0002.

In context: Overlooked Army Corps Rulemaking Would Shrink Federal Stream Protections

Coal Ash Storage
The U.S. Environmental Protection Agency finalized a rule that allows electric utilities more options for storing the waste products from burning coal.

The rule establishes the process by which utilities can apply to use a different liner for the bottom of coal ash pits than what is prescribed by federal regulation. The purpose of the liners is to prevent contamination of groundwater with heavy metals and other toxic substances that are present in the waste.

A 2015 rule requires unlined pits to be retrofitted or shut down.

Studies and Reports

Future Groundwater in the Colorado River Basin
Using climate models, U.S. Geological Survey researchers project divergent groundwater futures for the upper and lower Colorado River basin.

Groundwater infiltration is expected to increase in the upper basin, due to slightly more precipitation and warmer winters. Warmer winters mean that water that was stored as snow will be available for groundwater recharge. They also mean that less water is available later in the spring and summer.

In the lower basin, meanwhile, warmer weather and less precipitation indicate less groundwater recharge in the coming decades. Groundwater in this region is important for cities, farmers, and spring-fed ecosystems.

Two caveats: For the climate models, there is more uncertainty in precipitation changes than for temperature. And conclusions about groundwater recharge across an entire basin might not hold true for smaller areas within that basin.

Rake the Streets?
Cities can reduce the amount of nutrients, especially phosphorus, in urban stormwater by removing street leaf piles and cleaning streets in areas of dense tree canopy, according to a U.S. Geological Survey study.

The study tested the effects of leaf removal and street cleaning in three Wisconsin cities. They found that when tree canopy covered 30 percent or more of the street, weekly leaf removal and cleaning began to have a measurable effect on reducing nutrient runoff. Best practices, they caution, still need additional study.

The authors also argue that leaf removal/street cleaning can complement swales, retention ponds, and other urban green infrastructure intended to improve water quality.

On the Radar

National Drinking Water Advisory Council Meeting
The council that advises the EPA on matters related to drinking water will hold a virtual meeting on December 2. The meeting is open to the public. An agenda and dial-in information are not yet available, but they will be posted to the council’s website.

Emergency Response Survey
The EPA will conduct a survey of state emergency response committees. The survey will assess how the committees are carrying out a federal law that includes provisions related to risks to drinking water from events like chemical spills and explosions. The findings will be published in a report.

Federal Water Tap is a weekly digest spotting trends in U.S. government water policy. To get more water news, follow Circle of Blue on Twitter and sign up for our newsletter.

Brett Walton

Brett writes about agriculture, energy, infrastructure, and the politics and economics of water in the United States. He also writes the Federal Water Tap, Circle of Blue’s weekly digest of U.S. government water news. He is the winner of two Society of Environmental Journalists reporting awards, one of the top honors in American environmental journalism: first place for explanatory reporting for a series on septic system pollution in the United States(2016) and third place for beat reporting in a small market (2014). He received the Sierra Club’s Distinguished Service Award in 2018. Brett lives in Seattle, where he hikes the mountains and bakes pies. Contact Brett Walton