Bringing cities and finance together for blue-green infrastructure

By: Dr Sebastiaan van Herk and Sophie Rasbash of Bax & Company

The cost of climate adaptation for developing countries is rising rapidly. Global public finance commitments to address climate change are also growing. According to the IHE Delft Institute, funding jumped from $4 billion in 2010 to $25 billion in 2013, but this is still not enough. To meet even the most optimistic estimates, adaptation finance will need to increase by 1,020 percent by 2050.

While there might be a significant finance gap, there is no shortage of initiatives and ideas being developed all over the world, as governments and public authorities establish local climate action plans. These projects are struggling to find investors and part of the problem is the lack of convincing business cases for climate-resilient investments. A solid business case acknowledges the interests of different stakeholders. Too often, opportunities are missed to highlight the monetizable benefits of adaptation projects – just consider blue-green infrastructure (BGI).

By following nature’s lead and managing rainfall where it lands, BGI can achieve a flood-reducing performance of up to 100 percent in certain cases. Research from The Economics of Ecosystems and Biodiversity (TEEB) shows that BGI benefits can potentially outweigh costs by a factor of 2 to 10. The combination of reducing flood risks and providing a myriad of other multiple benefits including mental health benefits for city-dwellers makes BGI a promising measure for adapting ourselves to a changing climate. But BGI has yet to be implemented on a significant scale. BGI projects often have higher upfront costs than traditional grey infrastructure and there is little to no awareness of the significant benefits. Additionally, financiers often overlook the smaller scale projects, missing their potential. In spite of these challenges, several BGI initiatives across Europe have proven to be effective and reliable investments.

In the London borough of Enfield, Firs Park Farm has combined flood storage and drainage, recreation, and biodiversity. It raised some of its playing fields and turned others into wetlands to better hold back water and prevent flooding downstream. Local people were encouraged to get involved in the park’s maintenance, while the wetlands provide an educational resource for schoolchildren.

In the Netherlands, the city of Dordrecht bundled six pilots into one program called BEGIN that promises €200M of benefits – outweighing the original investment between five and ten times over. Similar initiatives are being explored in Bergen, Norway, and Kushan, China. The BEGIN project is an excellent example of the shift in what’s driving this innovation – the project was recently extended with health and social benefits as the two main contributors. At the start of the project, the focus was very much on water management and greening. These cities are coming together to share best practices and experiences. Local BGI projects often need to find financing to create immediate impact that can also buy time for larger-scale interventions and provide further opportunities for investment.

Bringing finance and cities together around projects is a common challenge that was addressed at the ICLEI 10th Global Forum on Urban Resilience and Adaptation in Bonn. City officials and investors often struggle to see how to align their interests and processes. Financiers look for large scale bankable programs (eg >$50M-100M), whilst local governments create meaningful smaller projects. Financiers require diligent project design and feasibility studies according to their policies and procedures and local governments often lack the capacity to produce them. In sessions with financiers including the Asian Development Bank, Asian Infrastructure Investment Bank, Global Environment Facility, Development Bank of Southern Africa, and cities such as Johannesburg, South Africa, Recife, Brazil and Melaka, Malaysia, the lack of communication between local authorities and financiers was noted. It is here that progress on BGI unnecessarily grinds to a halt. Solutions discussed as part of the workshop included bundling smaller projects into larger programs and supporting local governments in project design. Once a steady flow of investment can be set up, BGI can be implemented on a scale big enough to make a global impact.