Description
The municipal green bond market has been gradually growing since its inception. While research on the cost incentives for municipal issuers has been inconsistent, local government issuers steadily continue to issue green bonds. Since this self-regulated subsection of the municipal bond market offers a potentially limited investor base and little monetary benefit, this project seeks to understand nonpecuniary motivators for local government issuers. Specifically, this project explores the possibility of having an environmental public policy as a motivation for green bonds. Even though there are state regulations on combating climate change, local agencies are tasked with setting their own environmental goals to meet these climate goals and financing resiliency needs of their region. This research study will attempt to identify the association between these two variables, municipal green bond issuance and, specifically, issuers having a published climate action plan or similar environmental policy, by assessing patterns of bond issuances in California to climate action plans or related policies of local governments and agencies. This research highlights the importance of nonpecuniary incentives while underscoring the need for further research of other nonpecuniary incentives such as stakeholder engagement and education.
