What you need to know about the water crisis in Puerto Rico » Yale Climate Connections

Nature & Climate Perspective

**Severe drought in Puerto Rico highlights critical vulnerabilities in island watershed management and destabilizes regional carbon sink performance. **

• Prolonged water scarcity accelerates the degradation of tropical forest canopies and freshwater riparian habitats, reducing localized biodiversity resilience.
• Hydrological deficits directly impair terrestrial LULUCF sequestration capacities and threaten peripheral Blue Carbon ecosystems due to disrupted salinity and nutrient balances.
• Ecosystem stress increases systemic vulnerability to wildfire and secondary ecological collapse, compromising long-term environmental baseline stability.

Market & Policy Outlook

**Water infrastructure failures elevate localized physical transition risks, placing stringent demands on ICVCM permanence and environmental safeguard compliance. **

• Increasing hydrological volatility necessitates stricter municipal regulatory adaptations, paralleling international oversight mechanisms under Article 6.4 non-market adaptation frameworks.
• Elevated climate risk profiles increase capital discount rates for regional project finance, highlighting the need for ICVCM Core Carbon Principles (CCPs) alignment on risk mitigation and permanence buffers.
• Corporate supply chain operations face intensified Scope 3 operational disruptions, forcing alignment with SBTi water security targets and LEED resilient facility standards.