Financing resilience to combat compounding climate hazards

In the opening address of the Multi-Stakeholder Partnerships Supporting Ambitious Climate Action, Dr. Jürgen Zattler, Germany’s Director General, Ministry for Economic Co-operation and Development, reflected on the devastating flooding that took place in his country this past summer, causing 165 deaths and resulting in an estimated $2.3 billion USD in damage.

He was quick to remind attendees that extreme weather conditions are occurring around the world on an almost daily basis. “I’m not only referring to the flooding in my own country in the Ahr Valley and North-Rhine Westphalia. We also witnessed the traumatic consequences (of flooding) in China and Turkey (and) the forest fires in southern Europe and North America.”

In response to these disasters, he said, “we need to move quickly into carbon neutral development to achieve the 1.5 degree goal of the Paris agreement (and) implement more robust solutions that promote economic and social development within our planetary boundaries.”

In light of the increased incidence of environmental disasters globally, Zattler noted that “today the investment gap for (climate related) urban infrastructure is enormous. It exceeds 1 trillion USD annually. This gap is particularly worrisome toward climate adaptation… which is why we need good and bankable projects and financing mechanisms that can reach cities directly.”

Adding to Zattler’s sense of urgency, Mami Mizutori, Head of the United Nations Office for Disaster Risk Reduction (UNDRR) observed that “the impact of the Covid pandemic and the experience of an increasing number of consecutive and compound hazards exacerbated by extreme weather events has underscored the critical importance of resilient and sustainable urban development.” She added that because cities are bearing the brunt of climate related disasters “my organization prioritizes working with cities… because we know that disaster risk reduction efforts are an investment… and not a cost.”

This recognition led to the creation of the Making Cities Resilient 2030 (MCR2030), a unique multi-stakeholder initiative involving UNDRR, ICLEI, C40 Cities and other strategic partners. To date, over 350 cities have joined the initiative, with projects underway in Africa, the Americas and Caribbean, various Arab states, Asia and the Pacific, and Europe.

As a way to connect participating cities, Mizutori shared that “an online dashboard supports and guides all city resilience journeys.” A dashboard that serves as “a meeting and marketplace both for cities… where access is provided to knowledge, experience, networks, tools, resources and services.”

Speaking on behalf of the KfW Development Bank, which supports local development around the world, Dr. Frank Weiler described the task of achieving sustainable development goals as a huge challenge due to “the increasing impacts of climate change and biodiversity loss. And on top of this, the effect of the Covid-19 pandemic. We all know that especially poor and vulnerable countries will suffer from this… and they are the countries least prepared to cope with climate related problems.”

In response to such daunting challenges, Weiler – who is the bank’s Team Lead for Urban and Social Development in Latin America and the Caribbean,  said that national and local governments need to provide solutions and help improve resilience.

Weiler shed light on the growing importance of more creative financial solutions such as risk insurance, which he said, “should be part of an overall risk management strategy and contribute to a paradigm shift from reactive crisis response to anticipatory action.”

He described the insurance as “a pre-arranged financial instrument that allows for payment to be made within hours of an event occurring.” It is just such an instrument that is now being provided through the InsuResilience Global Partnership. Currently, the group is working with small scale farmers in countries such as Togo and Uganda, providing insurance against the dual threats of drought and excessive rainfall.

Shedding light on yet another innovative finance initiative, Nigel Jollands, Associate Director of the European Bank for Reconstruction and Development spoke about how the group’s Green City Action plan (in partnership with ICLEI and the OECD) has been highly successful in freeing up investment capital for infrastructure projects. “How do we mobilize those resources? I think the main reason that we’ve been effective is because we don’t approach urban climate investment in a disconnected way. We see climate investment… as a set of interconnected investments… not a series of individual unconnected investments. And the way we connect them is through this Green City Action Plan,” which in turn “builds on the climate neutrality targets.” In other words, unlike a more conventional approach tied to a specific project, whether it’s to help fund district heating or to build a bike highway, the action plan takes a more holistic financing approach in support of a series of inter-related initiatives, all tied to a cities carbon reduction and resiliency goals.

“By taking such a systematic approach, it means we attract donors… and those donors like the way we go about having municipal investments,” Jollands observed. “The donors can see what they are contributing to is connected to a bigger whole… not just a single investment in replacing a few buses or in new fountains in a city or in a single building. They can see that the whole package is connected.”

Following Jollands’ presentation, Jocelyn Blériot, Executive Lead – Institutions, Governments and Cities at the Ellen MacArthur Foundation, spoke about the need for local governments to embrace the concept of a circular economy as a way to significantly reduce carbon emissions, after which the session  turned its focus on the plight of some of the world’s most vulnerable communities and the financial support they desperately need in the face of climate change.

Joseph Muturi, Chair of the Board for Slum Dwellers International observed that “one of the issues around climate change has been a lack of awareness… especially in the constituencies I represent, the poor in the global south… in the past issues of climate change have been more around deforestation issues and desertification. But over the last three years our organization has highlighted… the impact of climate change around and in informal settlements. We are talking about increased fires (and) increased levels of flooding which lead to what we call evictions of climate change.”

Muturi said there’s a need to “localize the discussion around climate change in terms of resilience… because at the moment, discussion is very high level… but it’s lacking at the grassroots level,” and “problems that need to be supported by the city (and) other like-minded partners in this climate space.”

He went on to say that cities need to move beyond “just emergency response and come up with long term strategies in terms of addressing challenges… because the threats are still there, they’re not going anywhere.”

In order to mobilize a more collective response and collaborative governance, Muturi pointed to the need for developing multi-level platforms of engagement. Platforms supported by greater digital access “because at the moment everything is digital in terms of relaying information, in terms of governing information… in terms of gathering data,” and as a way to enable “people to be more prepared.”

Due to this digital disconnect, Muturi said the current status quo is that “we are very reactive. We react after flooding. We react after a disaster,” so in order to respond more effectively to these challenges “we need better access to information.”

Joseph Mithika Mwenda, Executive Director of the Pan African Climate Justice Alliance shared that his group works closely with people who live in informal settlements, many of whom collect waste in cities as part of their livelihood – women in particular. And one of their goals he said is to find a way to “lift the voices of (these) people… it’s a procedural justice issue.”

In the wake of the 2015 Paris Climate Agreement, which was essentially a high level discussion, Mwenda said his group is seeking to frame climate change in the context of how local actions can impact on such big picture objectives as meeting NDCs. “When that is done, that is where the issue of justice comes in,” he observed. “What is the role of the people collecting waste? What is the role of the people who plant trees in the city? What is the role of women in the city? What is the role of young people?” And at the end of the day, with the youth representing almost 60 percent of Africa’s population “how are we going to deal with intergenerational equity, which is a fundamental issue of justice?”

Mwenda went on to say that by framing the impact of climate change and the work done locally, people on the ground will better understand the significance of the contribution they are making. And when that happens, he said “the people will drive the policy… and you will see (more) action in the areas (where) we are working.”

Mwenda’s closing remarks represented a perfect tie-in with the overarching theme of the session: the need for stakeholders to do a better job of working together… from the public and private sector taking a more creative approach to coordinating financial support… to various levels of government working together… to bringing big picture goals down to the grassroots level so that people on the ground are better engaged. All pulling in the same direction to improve climate resiliency and to better cope with natural disasters.