Financing Urban Climate Adaptation

The Summary for Policy Makers of the IPPC's 6th Assessment Report (February 2022), highlighted that while adaptation has increased in all regions, it is unevenly distributed and prioritizes immediate and near-term risk at the expense of longer-term transformational adaptation. It tends to be fragmented, small scale, sector specific and more focused on planning than implementation. In fact, the IPCC acknowledges that many cities have included adaptation in the planning processes, yet major gaps exist, especially regarding programs affecting low-income populations and among cities of different sizes. Causing these gaps, it holds is the "widening disparities between the estimated costs of adaptation and documented finance allocated to adaptation." The Cities Climate Finance Leadership Alliance tracked $3.7 billion of investments in adaptation projects in 2017-2018, of which only 3-5% had an urban component (Richmond et al., 2021). In addition, in 2019, the developed countries were $20 billion short of their pledged $100 billion and of this only 25% went to adaptation.The IPCC report also observes that adaptation takes a long time to implement. Finally, it warns that the gap will continue to grow if action is not taken now. Chapter 6 of the full report details these issues. By the way, the fact that IPCC is dedicating a full chapter to Cities is a key step forward. And we observe, a key need is to address issues of multi-level coordination in order to promote innovating and impactful climate action. We will build on its findings in the proposed networking session. It will focus on urban adaptation finance, one of the most pressing but difficult areas to be able to address and overcome climate-related challenges. It will bring together experts, drawn from academia, the public and private sectors, and civil society, well versed in urban issues to 1.outline priorities for urban adaptation in general and specific to the global south and global north (contrasting especially the 60% of infrastructure yet to be built in rapidly urbanizing places with already built and possibly obsolete infrastructure in well urbanized places), 2.discuss policy and governance challenges and barriers to investing in the identified priority areas, 3.examine tools and approaches with the potential to deliver prompt and effective finance to cities and urban communities for climate adaptation including, for example, green and sustainability-linked bonds, sub-national catastrophe bonds with parametric triggers, risk finance and insurance, including sub-national risk pooling and a variety of blended finance approaches; and the role that investors and the insurance sector could play on enhancing mobilization of capital towards climate adaptation for cities and urban communities, 4.delineate areas for additional research and and development to support and innovate urban adaptation finance 5. seek commitments from participants to contribute to ongoing project mentioned in #4.