The effect of environmental regulations on municipal bonds

Air pollution regulations in the United States are intended to protect public health, but a new study has found that they also carry an unexpected cost: higher interest rates on the bonds used by counties to fund schools, hospitals, and infrastructure. When a county falls out of compliance with the ozone standards set by the U.S. Environmental Protection Agency (EPA), borrowing becomes costly. As a result, the municipality faces higher costs to fund public infrastructure like schools, hospitals, and roads.