{"id":2027,"date":"2018-04-15T07:20:33","date_gmt":"2018-04-15T11:20:33","guid":{"rendered":"http:\/\/lifeaftercarbon.net\/?p=2027"},"modified":"2018-06-11T11:14:40","modified_gmt":"2018-06-11T15:14:40","slug":"next-era-of-market-finance-for-resilence","status":"publish","type":"post","link":"https:\/\/in4c.net\/2018\/04\/next-era-of-market-finance-for-resilence\/","title":{"rendered":"Next Era of Market Finance for Resilence"},"content":{"rendered":"

Walking through my Midwestern neighborhood, I spy innovations that suggest we are up to the challenges that a changing climate triggers. I see storm sewers with \u201crain blockers\u201d that delay rainwaters\u2019 approach to them during and after big rains; \u201cpermeable alleys\u201d that absorb water through pores in their concrete; and bioswales of plants and spongy soil that absorb water runoff from roofs and roads. And underground a mile or so away, deep tunnels take precipitation from heavy rains and snow melts to large distant reservoirs to prevent overflows of sewage and storm water.<\/p>\n

It\u2019s a cornucopia of innovation with the city as a lab. And it\u2019s paid for with an equally creative mix of funds, from consent decree-induced storm water rate increases; legal settlements after utility failures; federal and agency grants and incentives; and philanthropic partnerships with nonprofit community organizations.<\/p>\n

What will it cost?<\/p>\n

As we enter an era of demands on cities sparked by climate change\u2013induced shocks and stresses, ingenuity by cities is in high demand. Various estimates of adaptation\/resiliency<\/a>[1]<\/a>\u00a0funding needs exist. For instance, the United Nations Development Program projects that adaptation costs could range from $140 billion to $300 billion by 2030 \u2013 and between $280 billion and $500 billion by 2050 (source<\/a>). In the U.S., the Union of Concerned Scientists, a source for cost estimates to remedy such risks, estimates that sea-level rises of 13-to-20 inches by 2100 would threaten privately insured coastal property valued at $4.7 trillion (source<\/a>).<\/p>\n

In addition, the Risky Business initiative notes that increases in temperature, heat waves and humidity will drive up demand for energy and require the equivalent of 200 new power plants nationwide that could cost up to $12 billion a year by 2100 (source<\/a>). Plus, we already know how costly it can be to respond to climate change. Hurricane Sandy in 2012 cost New York $32 billion in damage and loss.<\/a>[2]<\/a>\u00a0Earlier, thunderstorms, tornadoes and flooding in the summer of 2008 caused more than\u00a0$18 billion in damage and 55 deaths nationwide, primarily in the Midwest<\/a>.<\/p>\n

Communities need funds to shore up their critical infrastructure assets, such as transportation infrastructure, wastewater treatment, telecommunications networks and electricity and gas supply. Funds are required for projects where resilience is a primary function to enhance a particular geography (e.g., a new sea wall) and to boost traditional mainstream projects\u2019 resiliency attributes (e.g., elevating an existing bridge). Both primary function and resilience projects can bring big paybacks. Global reinsurer Zurich calculates that for every dollar spent on targeted flood-risk reduction measures,\u00a0five dollars can be saved by avoiding and reducing losses<\/a>.<\/p>\n

Where will cities find the funding stream to support inventive resilience-related projects that strengthen the capacity of governments, communities, institutions and businesses to survive, adapt, and grow in the face of increased climate-driven shocks and stresses? Based both on my role in the Global Adaptation and Resilience Investment work group and on dozens of conversations with resiliency fund leaders, resilience initiatives, hazard mitigation experts and regional collaborations (primarily in support of the Regional Plan Association\u2019s Regional Resilience project for the Fourth Regional Plan entitled\u00a0\u201cEstablishing a Regional Resilience Trust Fund<\/a>\u201d), here are three elements to a fresh era of market finance.<\/p>\n

Collateral Benefits<\/strong><\/p>\n

In many communities, those most at risk from climate impacts are poor or disenfranchised residents. Their greater risk can reflect such factors as lower insurance penetration, fewer savings, language-barriers, fewer funds to dedicate to maintenance, more unemployment, less access to information and more assets in lower-lying areas. When planners focus on improving infrastructure and social structures in more vulnerable communities, projects reap collateral benefits, known as \u201cresilience dividends.\u201d In these situations, a future disruption doesn\u2019t become a disaster and shorter-term economic and social benefits are realized. The key lies in setting priorities for proposals that decrease economic vulnerability along with climate vulnerability.<\/p>\n

For practitioners, three practical ways build these collateral benefits into projects:<\/p>\n