Capital Planning and Asset Management, Risk Assessment

Planning for Uncertainty

Page from GFR

In summer 2023, the State of Vermont suffered its second catastrophic flood and rain event in 12 years. Flooding was expected that summer, but the state didn’t anticipate the severity and the attendant damage to municipal assets. Waste treatment plants were incapacitated, for example, and the state’s capital was submerged. Costs to repair and replace public assets alone rose to $120 million as of October 2023. And the state experienced other notable climate events in 2023. The winter of 2022 to 2023 was the third warmest on record in the City of Burlington, despite a short period of record low temperatures, including windchills that reached 43 degrees below zero. The wide temperature variations also created unpredictable problems like a surge in potholes, causing road and vehicle damage.

All this occurred in a state that major news publications have called a “climate haven.” The lesson from Vermont’s difficult year is that environmental volatility, both acute and chronic, is now a fact of life. Governments’ ability to respond to these consequences—whether successful or insufficient—will have wide-ranging impacts on civic life and fiscal sustainability, which is why the situation requires special attention from government finance professionals.