CCFLA Urban Adaptation and Resilience Finance Workstream Scoping Paper

The CCFLA scoping paper highlights a critical funding gap for urban climate adaptation, noting that only 1% of tracked urban climate finance in 2021/22 went to adaptation. It identifies key barriers including cities' lack of technical capacity to develop investible projects, restrictive mandates for financial institutions, and the exclusion of cities from National Adaptation Plans. The report recommends improving project matchmaking, documenting viable business models, standardizing taxonomies, and enhancing the enabling environment to attract private investment.

• There is a severe shortage of financing for urban adaptation and resilience. In 2021/22, only approximately USD 10 billion per year (1% of the USD 831 billion in tracked urban climate finance flows) was allocated to adaptation, with an additional USD 7 billion supporting projects with both adaptation and mitigation benefits.
• Urban adaptation finance is geographically uneven. Latin America and the Caribbean received 31% of total flows, while sub-Saharan Africa received only 8% and South Asia received 7%.
• CCFLA members identified 12 priority challenges to scaling urban A&R finance across three domains. Demand-side challenges include cities' lack of expertise to develop investible projects and implement solutions, limited revenues, fragmented jurisdictional control, and low creditworthiness in emerging markets and developing economies (EMDEs). Supply-side challenges include limited private insurance, restrictive mandates for international financial institutions (IFIs) and national development banks (NDBs), and limited capacity of financial institutions to assess climate-smart infrastructure. Enabling environment challenges involve misaligned policies and inadequate market environments.
• A significant gap exists in project preparation support for urban A&R projects at the structuring and transaction stages. While 22 programs support concept design, only 11 support the later structuring and transaction phases, a gap that is particularly acute in the MENA and LAC regions and for cities with fewer than 500,000 inhabitants.
• There is a lack of centralized knowledge and documented business models for urban A&R investments. This contributes to investor misperceptions that such projects lack investable risk-return profiles, despite existing examples like Swiss Re’s Parametric Earthquake Catastrophe Bond and stormwater credit trading in Washington, DC.
• Supply-side financing is dominated by international climate finance via grants and concessional loans, with a lack of equity and risk mitigation instruments. Additionally, there is a knowledge gap between private investors and cities regarding investment criteria and risk communication.
• The use of taxonomies to track urban A&R investments is limited and non-standardized across financial institutions, which hinders the ability to accurately track finance flows and meet the requirements of certain investor classes.
• Cities are often under-represented in National Adaptation Plans (NAPs), creating a risk that they will miss out on international climate finance from the Green Climate Fund and Global Environment Facility.
• The report recommends several actions to close these gaps: matchmaking between project preparation facilities and financiers, creating a blueprint knowledge product of successful business models, aligning on A&R finance definitions and taxonomies, and integrating city needs into NAPs.

APA

Kehew, R., Neto, M. C. P., Mayes, A., Abdullah, H., & Yang, K. (2025). CCFLA Urban Adaptation and Resilience Finance Workstream Scoping Paper. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/05/Adaptation-scoping-paper.pdf

Chicago

Kehew, Robert, Manoel Carlos Pereira Neto, Alastair Mayes, Hamza Abdullah, and Kristiina Yang. CCFLA Urban Adaptation and Resilience Finance Workstream Scoping Paper. Climate Policy Initiative, 2025. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/05/Adaptation-scoping-paper.pdf.

Wikipedia

{{cite report |last1=Kehew |first1=Robert |last2=Neto |first2=Manoel Carlos Pereira |last3=Mayes |first3=Alastair |last4=Abdullah |first4=Hamza |last5=Yang |first5=Kristiina |title=CCFLA Urban Adaptation and Resilience Finance Workstream Scoping Paper |publisher=Climate Policy Initiative |date=March 2025 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2025/05/Adaptation-scoping-paper.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kehew2025ccfla, author = {Kehew, Robert and Neto, Manoel Carlos Pereira and Mayes, Alastair and Abdullah, Hamza and Yang, Kristiina}, title = {{CCFLA Urban Adaptation and Resilience Finance Workstream Scoping Paper}}, institution = {Climate Policy Initiative}, year = {2025}, month = mar, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2025/05/Adaptation-scoping-paper.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }