How to Increase Financing for Urban Climate Adaptation and Resilience: 7 Key Actions for National Governments to Take

Cities are at the forefront of the climate crisis. Climate risks are escalating, and climate hazards are becoming more frequent and costly. Cities account for more than 80% of the global gross domestic product (GDP) and more than half of the world’s population. The impacts of climate change are often felt disproportionally in urban communities due to high population density, a concentration of key infrastructure in cities and their role as economic hubs, among other factors. Yet, investment in urban climate finance adaptation is far from what is needed.

Key Actions to Increase Urban Climate Adaptation Finance 

1. Urgency: Declare a national climate state of emergency to prioritize financing for urban climate adaptation and resilience.
2. Vertical Integration: Actively engage with local governments and stakeholders to identify the most pressing adaptation challenges, impacts and risks, and promote solutions targeted to local needs, making sure to include local governments and cities of all sizes when developing or updating national adaptation plans (NAPs), nationally determined contributions (NDCs) and other national planning efforts to incorporate and incentivize cities’ needs and efforts.
3. Preparation: Boost technical assistance and project preparation support and funding for cities to adapt to climate risks.
4. Collaboration: Engage with critical stakeholders from public financial institutions across the entire ecosystem (including multilateral development banks (MDBs) and national development banks (NDBs)) to mobilize financing instruments for urban adaptation projects that overcome barriers like high transaction costs and lack of clear funding mandates.
5. Mobilization: Engage the private sector in investments to allocate risk across multiple actors, e.g., by using public-private partnerships (PPPs) or insurance. Define clear mandates for public financial institutions, including to mobilize public and private capital for climate and adaptation projects.
6. Measurement: Support and engage with initiatives working to measure and assess climate risk. Support subnational governments as they integrate climate risk assessments and disclosure.
7. Invest to Avoid: Invest in national preventive measures, such as strong national early warning systems and emergency response plans for extreme climate events, to support cities in avoiding immediate budget losses.

National governments can play a key role in enabling and scaling financing for urban adaptation. This document presents key actions for national policymakers around the world to increase the amount of available finance for cities to respond to climate risks.