Climate change is a mega-trend that will affect countries creditworthiness, and New Zealands worse than most, says Standard & Poor's.
In a report released on Friday the ratings agency said global warming, alongside ageing populations, was going to be the second mega-trend affecting sovereign credit risk and more difficult for governments to address.
Collective action was bedevilled by the prisoners dilemma: "Each society would be worse off if it were to act alone to mitigate climate change: the society would have all the pain for negligible gain. On the other hand it would be better off if it shirked an international concerted mitigation effort that all other societies undertook: the society would have to take no sacrifice while it benefits from the improvements caused by the actions of others," the report said.
"Typically such an incentive structure leads to unco-operative outcomes and to no effective risk mitigation."
Unlike the ageing population issue, climate change will affect poorer countries more than rich ones.
S&P has compiled a league table of 116 countries, with rankings based on what proportion of their population lives within 5m of sea level, the relative importance of agriculture to the economy and the countries placing in a vulnerability index compiled by Notre Dame University which ranks by susceptibility to, and ability to cope with, climate change.
At number 72 of the 116 countries on the S&P list, New Zealand is closer to Vietnam (the most vulnerable) than to Luxembourg (the least vulnerable).
It reflects the fact that a relatively large proportion of New Zealanders live in coastal cities and agriculture is a bigger share of the economy than in most developed countries.
S&P said some of the most potent ways climate change could affect countries growth prospects might be changing patterns of rainfall that could reduce agricultural yields via droughts and floods, and heatwaves and wildfires.
Data collected by the reinsurer Munich Re suggested weather-related loss events had risen in all continents since the early 1980s and more than fourfold in Asia and North America, S&P said.
So far the agency had not revised any countrys credit rating as a consequence of extreme weather events.
"However, assuming that extreme weather events are on the rise in terms of frequency and destruction," the report said, "how this trend could feed through to our ratings on sovereign states bears consideration."