How California's wildfires could spark a financial crisis - Business Insider

group of firefighters look on as a house burns during the wind-driven Kincade Fire in Healdsburg, California, U.S. October 27, 2019Wildfires across the Western US are among the sparks from climate change that could ignite a financial crisis in the country by damaging home values.

Those effects could set off a cascade of events including defaults and market disruptions, undermining the U.S. economy and sparking a crisis. Here's how:Global warming is making the U.S. West hotter and drier, with wildfires more frequent and intense, scientists say. That designation hurts home values, which in turn increases mortgage default risk, research cited by the report suggested. More defaults would damage banks, mortgage holders and markets where mortgages are sold. Securities based on mortgages were a trigger for the 2007-2009 financial crisis.

"You can tell the same story in terms of sea level rise and flooding and more intense storms and their impact on residential real estate value," said Jones, now a senior director at The Nature Conservancy.Lower home values reduce cities' real estate tax revenue and impair their ability to repay debt, potentially leading to bond defaults, according to the report.

2020 : How everything we do could spark a potential financial crisis lol

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