Cities are where the climate crisis is being felt most acutely. And they are also where it must be solved.
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From intensifying heatwaves to more frequent flooding and deepening water stress, urban areas are on the front line of climate impacts.
Yet, too often, the finance needed to tackle these impacts is still framed purely as a cost limiting ambition, when the reality is that well-designed adaptation projects deliver clear economic and financial value.
Despite the increasing urgency, too little climate finance is actually reaching the places where it will most benefit peoples’ lives.
As climate risks accelerate, investment in resilience is falling dangerously short.
A new C40 Cities report sets out a practical way forward. The report highlights the key recommendations for cities to build the financial case for adaptation, showing how adaptation in cities can become investable when it is structured for value creation. It also identifies the enabling conditions – such as strong public sector leadership – for attracting private sector investment.
This is not about replacing public investment, which remains indispensable, especially for protecting the most vulnerable and delivering essential infrastructure. But if we are serious about closing the urban climate finance gap – estimated to be $US4.5 trillion annually by 2030, with public finance covering only some of that need – private capital must be mobilised alongside it.
The good news is that this is already happening.
A new Bus Rapid Transit system in Dakar, Senegal, is integrating flood resilience into its design while leveraging private finance through a public-private partnership.
The Aquapolo wastewater reuse project in São Paulo, Brazil secured private investment through long-term off-take agreements, creating a drought-resilient water supply for industry.
In Kenya the Upper Tana-Nairobi Water Fund Trust mobilised private capital from downstream users to finance watershed restoration, strengthening water security for millions.
These are not isolated examples. In Bilbao, Spain, public investment in flood protection has catalysed private financing to create a resilient new district. And in the Mexican region of Quintana Roo, an innovative coral reef insurance scheme is bringing the private sector into coastal protection, safeguarding both ecosystems and local economies.
These examples demonstrate the power of a well-designed adaptation project. Reduced losses, increased land and asset values, improved productivity and service reliability: these are all outcomes that investors understand and take into account. The challenge is not a lack of interest or opportunity, but a lack of structure. Adaptation can become an investment proposition by shifting how projects are developed and presented.