SYDNEY, Sept. 4 (Xinhua) -- Banks are shifting lending away from areas more exposed to physical climate risks before disasters strike, potentially limiting access to finance for small businesses and local economies, a new study shows.
The study, based on data from the United States, found that banks with greater exposure to physical climate risk held more capital and altered their lending behavior, shifting credit away from places more exposed to the same climate risks, according to a statement released Friday by Australia's University of New South Wales (UNSW).
Whether buying a home or opening a local business, affordability is no longer the only question people should be asking. They should also consider what their property might look like in 10 or 20 years, said the study's co-author Kristle Romero Cortes, senior deputy director of the UNSW Institute for Climate Risk and Response.
Climate change is increasingly a financial problem, Romero Cortes said, suggesting banks are adjusting their behavior in anticipation of physical climate risk, before storms, floods or fires translate into financial losses.
For a county with the median level of climate exposure, a one-unit increase in a bank's physical climate risk measure was associated with about 10 percent fewer small-business loans and a 5 percent fall in lending value, the study found.
Researchers found counties more exposed to broad temperature shifts subsequently experienced more disasters and greater damage.
Romero Cortes said such decisions could be rational for banks but may leave climate-exposed communities with less access to finance needed to adapt and grow. ■