3. Lessons learned from the case studies

Cities have many different options to adapt to climate change. They can cope with the damages after an extreme weather event, they can incrementally improve the effectiveness of conventional protection measures or they can find different ways to solve problems by transforming the way cities are built and organised. Some measures come at high and others at low costs. Whatever solution a city finally choses, it needs to find ways to implement and finance it.

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The 11 case studies of this publication (section 4) provide an insight on different ways to finance urban adaptation action. Interesting lessons can be learned from this and summarised below. They should, however be seen as first indication and not a as a comprehensive and exhaustive analysis of the situation. That is out of the scope of this publication that focusses on providing inspiration and promote exchange of experience.

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Possible drivers for adaptation

  • Extreme events resulting in significant economic damage can be a key driver for encouraging changes to the status quo in urban planning (case Smolyan).
  • The existence or development of an adaptation strategy for a region or city supports the implementation of adaptation measures as it provides a framework for initiating activities and encouraging municipalities and companies to design projects and measures (case Bologna).
  • Financial savings can be another driver for adaptation. Communicating how a city or company can reduce its current operational or management costs through implementing adaptation measures can encourage alternative options (cases Lisbon, Copenhagen).

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Wise use of financial sources

  • The most successful practice of financing adaptation measures in European cities is combining different types of financing coming from various sources.  Often they are not specifically developed for adaptation action. Mainstreaming of adaptation should be the starting point.
  • A successful strategy can also be mainstreaming adaptation concerns into infrastructure and spatial project planning within various city sectors. It can create co-benefits and synergies involving no or only limited additional costs.
  • “Seed money” from a municipal government or other funders can help generate momentum to increase the quality and scope of the plans and with that further financing options. Initial public investment can leverage additional private investment (cases Malmö, Hamburg etc.).

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Essential capacities are needed in or for cities

  • The key for adaptation teams in municipalities is to have the capacities to identify, apply for and negotiate the various financing streams - often in parallel. That requires human resources and know-how. Several financing and funding bodies, such as the EIB, LIFE+ programme (see annex 1) and some regional authorities, have started to providing capacity-building and technical support to help cities to apply for their financing schemes.
  • Implementation of measures needs more than financial resources. Successful implementation also needs sufficient awareness and support among decision-makers in the public and private sector. An adaptation strategy or plan is often seen as helpful to raise such awareness. Early and active stakeholder engagement helps to ensure not only wider awareness, ownership and involvement of citizens in developing creative solution with broad support, it also provides an opportunity to raise funds from private contributions, such as crowd-funding or donation. Furthermore, it encourages bottom-up initiatives from among the citizens, that do not involve or require any additional municipal financial resources (case Amsterdam).

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Communication, reasoning, convincing

  • Stressing the diverse benefits of adaptation across various sectors, such as lowering risks, ensuring longer lifetime of infrastructure leading to long-term payoffs, market advantage, preservation or increase of property value, and similar can help to mobilise funding from various sectoral budgets and from private sector or societal organizations. It is important to use a language that speaks to the priorities, needs and concerns of the financing bodies.
  • Co-Benefits of green infrastructure, such as its value for nature, recreation and quality of life, are often used as a strong argument because these benefits are there immediately and not in an uncertain future.  
  • An important component of a business plan for a company is to take into account that implementing adaptation measures can lower costs, e.g. for avoided damages due to storm water or reducing energy use (green roofs as cooling and thermal insulation). This applies both to lower costs for issues such as operation and maintenance of infrastructure and health care, but also to lower investment costs for future measures.

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Overcoming barriers

  • Financing transformational adaptation measures that change the way a city is built and organised can face financing barriers, as the measures themselves often need to be financed in other sectors, such as water management, transport, nature, health etc. Taking, however, the comprehensive perspective of overall and integrated urban development can reveal overall lower costs and many favourable additional benefits.  Developing an economic case of adaptation and broadly communicating it helps (cases Copenhagen, Hamburg).
  • Often implementation of adaptation is hindered by existing rules and regulations, affecting the business cases.  An evaluation of the policy framework and its impact on the potential investment in adaptation projects can help identify the barriers and define solutions to overcome them. Often this requires a multi-level approach with authorities and regional and national level responsible for these rules and regulations (case Copenhagen).
  • Aligning with project developers and investment companies at an early stage allows to ensure that adaptation is sufficiently and efficiently addressed in city development or renewing projects (Malmö). It comes then at low/no costs for the city (cases Bilbao, Amsterdam).
  • An overarching urban development strategy or plan that includes adaptation concerns among other urban development goals can help clearly define the municipalities strategic direction and increase the trust by financing partners that the money granted will be spent responsibly and sustainably and in coordination with other activities in the municipality (e.g. the sustainability vision in case Malmö).
  • Being visible as part of national and EU projects builds capacities, networking relations and increases the chance to be involved in more such projects (case Bratislava).
  • A precondition for successfully obtaining project financing from financing institutions, such as loans, is the ‘bankability’ of the project. Each financing organisation sets their own criteria for bankability, commonly criteria such as technical viability, economic and financial viability, macroeconomic or legal context are evaluated. A financial institution will evaluate a project favourably if it is 1) technically sound, 2) the managing organisation has sufficient capacities for implementation, 3) there is a considerable social or market demand, 4) has a potential for substantial future money flow, 5) it has sufficient scale as well as if it fits the institutions lending strategy and aims. Obtaining funds from financing institutions is a little used option for adaptation so far and many projects are not yet bankable. However, in several sectors adaptation projects have a strong business case and therefore are bankable due to the direct financial savings or income (case Lisbon). In other cases, higher bankability can be achieved by combining adaptation measures with larger scale infrastructure or urban renewal projects. Several financing institutions provide technical consultation services assisting in defining bankable projects.
  • Smaller municipalities experience an even bigger challenge with making projects ‘fundable’ or ‘bankable’ due to the small project scale. They can overcome that challenge by cooperating with other (neighbouring) municipalities to ‘batch’ projects together or, similarly as in larger municipalities, by implementing larger scale urban renewal and development programmes where adaptation is only one element among several others. Another approach is to seek financing from regional investment banks (case Hamburg) which in some cases workon the basis of funds provided by national financial institutions or, e.g., the European Investment Bank.

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