Dan Li

123 W. Franklin St

Chapel Hill, NC 27516

I am currenty a postdoc at the Institute for Risk Management and Insurance Innovation (IRMII) at the University of North Carolina at Chapel Hill. My work involves tackling water resource challenges using approaches that blend engineering and economic principles. I’m particularly focused on assessing and managing environmental risks (e.g. drought, flood, wildfire), and translating them into financial risk mitigation tools (e.g. derivates, parametric insurance).

Piror to this, I received my PhD from the Civil & Environmental Engineering, Center for Digital Asset Finance at the University of Michigan, where I worked with Dr. Peter Adriaens. My doctoral research explores the effects of water risk on the municipal bond market and ESG factors on security pricing, such as green bonds. I enjoy combining causal inference, machine learning, and civil & environmental engineering to solve problems.

Before my PhD, I worked in the financial industry in the Greater New York area. I also have a background in polymer materials research, which I gained during my Master’s and undergraduate studies. This experience helped shape my understanding of finance and the interplay between engineering and economics. I believe that connecting these fields is key to addressing environmental challenges.

news

Feb 20, 2025	“A person who never made a mistake never tried anything new”. –Albert Einstein
Nov 07, 2015	A long announcement with details
Oct 22, 2015	A simple inline announcement. lalala

latest posts

selected publications

Impact of Flooding and Drought Risks on the Cost of Bond Financing for Water Utilities

Dan Li, Romesh Saigal, and Peter Adriaens

Environmental Science & Technology, 2024

Abs HTML

The global water cycle has experienced significant changes due to the interplay of climate shifts and human activities, resulting in more frequent and severe droughts and floods. These shifts have started to impact the operational efficiency of water treatment and delivery systems. This, in turn, has implications for the economic performance of these assets and the climate-impacted cost of their financing through the issuing of municipal bonds. Analyzing a decade of water bond data (2009–2019), this study offers empirical evidence for the impact of flood and drought risks on bond investor demand to offset water risks. The results reveal that bond markets factored in coastal flood risks between 2013 and 2019, adjusting by 3–6 basis points (bps) per risk score unit, and riverine flood risks from 2009 to 2013, with a 5–11 basis points increase per risk score unit. These effects were primarily driven by bonds issued in the Pacific Coast and Great Plains regions, respectively. In contrast, the pricing of drought risks in the bond market followed a more nuanced pattern. Additionally, we show the channeling effects of water consumption and investor perceptions of climate change on water risk pricing in the bond market. These findings have significant implications for water risk management in the public sector as regions with heightened water risk exposure are perceived as riskier by market participants, leading to a higher cost of capital for municipalities and water agencies.