Finding Cash in the Couch Cushions for Climate Adaptation

I’m immersed in a fascinating variety of projects for the Rockefeller Foundation and Regional Plan Association and all include a similar question about how to finance urban resilience. That got me wondering: What well-known financing solutions could help us to finance more adaptation today?

Here are seven:

1. Climate Reinvestment Act: In the post-housing bust period, Community Reinvestment Act funds have shifted to financing schools and the like from funding low-income housing. This has been a shift for banks that used to achieve their CRA goals within their general market share in low-value mortgages. So, what if banks to meet the credit needs of the communities where they operate used CRA investments for resilience that improved communities, such as green infrastructure to absorb stormwater and prevent flooding? Or how about LaSalle Bank, which a decade ago paid for tree planting along the Chicago marathon route counter urban heat island and runner’s heat stress.

2. General Obligation Bonds:  Cities are reluctant to assume more debt, worried especially about damaging their credit ratings. Yet, deferred maintenance, presumably triggered partly by insufficient bonds to pay for infrastructure improvements, means that much of the country’s infrastructure earns a dismal grade of D+ from the Society of Civil Engineers. Credit raters, though, are rational actors and more of them are mindful of resilience – vis-a-vis Standard &Poor’s recent reports on the impact of climate risk on sovereigns and corporations – and it’s a great time to borrow with interest rates low and investors seeking to diversify from stocks in a bull market. 

3. Green Banks: In the last decade, a healthy proliferation of Green Banks – public or quasi-public financing institutions that provide low-cost, long-term financing support to clean, low-carbon projects – has erupted worldwide. In the United States, their charters drawn up by state legislatures, all speak to energy efficiency and renewable energy sources. This made sense 10 years ago when investors needed to grasp climate resilience. But today, adaptation is where the discussion of efficient clean energy was back then – a murky area with few examples and fewer investors.

4 & 5: With tools such as green bonds and property assessed clean energy (PACE) programs, Green Banks are well placed to pivot to adaptation. It opens opportunities for green bonds that fund resilience and property-assessed resilience loans that travel with a property’s mortgage.

6. Infrastructure Bank: Hillary Clinton’s infrastructure plan proposes an infrastructure bank and promises that federal infrastructure investments would be resilient to both current and future climate risks.  Ensuring that federal funds for infrastructure go only to climate-resilient projects is a smart idea. Any taxpayer dollars for our roads, rail and water infrastructure should not be misspent on old-fashioned pre-climate change designs. Resilient infrastructure is a foundation that will not crumble, flood, catch fire, buckle or otherwise fail us due to the extremes of climate change.

7. Tourist Fees:  After 9/11, the U.S. instituted a $10 airline security fee for each round-trip ticket. In cities with very big resilience bills and big visitor populations such as New York, Miami, and Los Angeles, a resilience fee could help pay for a much more pleasant stay. 

What are your ideas for financing resilience?  Let us know!