Introduction

The report examines how cities can structure urban climate adaptation projects to attract private finance. Cities in emerging and developing economies require an estimated USD147 billion annually to 2030 and USD165 billion annually from 2030–2050 for adaptation, more than ten times current finance levels. Private adaptation finance in developing economies currently represents around 3% of estimated needs.

The study combined interviews with banks, pension funds, insurers and development finance institutions with analysis of ten adaptation projects that mobilised private investment. Findings show adaptation projects become more bankable when revenue streams, risk allocation and commercial benefits are clearly defined. Investors identified uncertain revenues, limited monetisation of resilience benefits and insufficient climate-risk data as major barriers.

Strategies for structuring adaptation projects

The report identifies three project pathways: private sector-initiated, publicly initiated and joint public-private initiatives. Successful private-led projects emerged where climate risk directly affected revenues or operating costs, creating a clear business case. Public-sector responsiveness and enabling governance frameworks, including PPP regulations, were also necessary. In São Paulo’s Aquapolo project, authorities supported wastewater reuse solutions to prevent the potential loss of more than 1,000 local jobs.

Publicly initiated projects attracted investment when cities combined adaptation infrastructure with revenue-generating assets and allocated risks according to each party’s capacity. Examples included integrating flood protection with toll roads or transport systems in Dakar BRT, SMART Tunnel and Bilbao’s flood-proof district. Governments also improved bankability through subsidies, blended finance and de-risking structures.

Joint public-private initiatives succeeded where both sectors shared climate exposure and governance responsibilities from the outset. Existing joint ventures and concession agreements accelerated decision-making and supported long-term maintenance. The report concludes adaptation finance is more achievable when projects are embedded within broader infrastructure or economic development programmes rather than treated as stand-alone resilience initiatives.

City action plan

The report recommends strengthening enabling conditions through climate-risk data systems, supportive regulation and improved institutional capability. Cities are encouraged to integrate adaptation requirements into procurement frameworks and climate budgeting processes.

Project preparation capacity is identified as essential. Cities should invest in feasibility studies, financial structuring and procurement expertise while engaging financiers and insurers early to align commercial expectations with project design. The report also recommends developing revenue mechanisms linked to adaptation benefits, including tariffs, land value capture and blended finance structures. Monitoring, reporting and verification systems are considered necessary to maintain investor confidence after implementation.

Recommendations

The report recommends stronger collaboration between cities, financiers and insurers to scale adaptation investment. It highlights the importance of public-private risk-sharing mechanisms, insurance innovation and resilience-linked pricing. Real estate developers identified regulatory mandates and stronger climate-data integration as key enablers, while insurers recommended catastrophe bond and risk-pooling models.

Case studies

The ten case studies span flood resilience, water security, transport and nature-based adaptation across Europe, Latin America, Africa and Asia, including Bilbao’s flood-proof district, the SMART Tunnel and the Quintana Roo coral reef insurance scheme. The cases show private investment can support adaptation where projects create identifiable commercial value supported by public co-financing, institutional coordination and long-term planning.