The $3.8 trillion municipal-bond market has found a new tool in its effort to understand the impact of climate change: the array of satellites orbiting high above Earth.

Assessing climate risks is a particularly vexing problem given that U.S. state and local governments tend to give investors information that’s often too little or just too late. But the use of geospatial data and information from sources like Google Earth could help municipal-bond investors evaluate and price the risks posed from a warming climate, rising sea levels and natural disasters.

The deployment of spatial technology in the municipal market advanced in January when credit-ratings company S&P Global Ratings completed an analysis of U.S. water utilities using data from National Aeronautics and Space Administration satellite missions. Other investment firms say they’re starting to focus on geospatial information as a way to evaluate climate risks as well.

“Largely, finance lives in columns and rows in Excel spreadsheets—climate change is not a row and column exercise,” said Chris Goolgasian, director of climate research at Wellington Management, a Boston asset manager that uses mapping technology to consider the impacts of climate change on investments like municipal bonds. “It’s much more powerful to see it visualized.”

The potential financial applications for the technology led researchers at the University of Oxford to coin the term “spatial finance” and to launch an initiative last year with groups like the Green Finance Institute to foster the use of geospatial data in markets.

Spatial finance takes advantage of the proliferation of satellites, which have become easier and cheaper to launch, as well as investors’ growing desire to consider environmental risks like climate change, said Christophe Christiaen, sustainable finance lead for U.K. technology company Satellite Applications Catapult, which is part of the initiative.

The municipal market could use the satellite data to monitor the impact of wildfires or natural disasters on local economies, Christiaen said. That is a “potential game-changer” he added. “What we want to achieve in the end is to mainstream this type of thinking.”

S&P, one of three big U.S. credit-ratings companies, used information from NASA satellites to examine whether the location of public water utilities had anything to do with their financial strength. They found that utilities located in ecosystems that foster better water quality, such as evergreen forests, were associated with better debt metrics.

Water utilities are a good sector to consider geography because of the potential for droughts or scarce supply in high-growth areas, making it especially necessary to consider climate change, said Ted Chapman, a senior director in S&P’s municipal and cooperative utility group. “That’s relevant to credit quality,” he said.

Adam Stern, co-head of research at the Boston-based Breckinridge Capital Advisors, said the use of such data—including information from satellites—will be an “indispensable” tool to understand the impact of climate change. The firm already considers the geography of certain municipal investments, such as whether they’re located in California areas at risk of wildfires.

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