ISF Briefing Note: Financing Climate Change Adaptation and Resilience

The costs of climate-related weather events such as fires and floods are growing in Canada and around the world. And climate-change adaptation and resilience will be high on the agenda at the COP27 global climate summit next week.

There remain many challenges to unlocking private-sector financing for the adaptation and resilience infrastructure initiatives that will protect Canadian communities in the future. To shed light on this issue, a new Institute for Sustainable Finance Briefing Note clearly defines the problem and makes recommendations for the public and private sectors and academia to work toward the solutions.

The Briefing note, authored by ISF Executive Director Sara Alvarado and Research Associate Caelan Welch, reflects the combined contribution of a sub-group of experts from ISF’s Advisory Board and Research Advisory Council.

 Key takeways:

• While financing climate change mitigation (reducing greenhouse gas emissions) has been a major focus in Canada, adaptation and resilience (helping communities withstand climate-related events that are already happening) is much less developed.
• This is the case despite annual losses in the billions from climate damage. The cost of rebuilding after the late 2021 floods in British Columbia alone is estimated at $9 billion.
• Adaptation financing accounts for only 7% of global climate finance. And while the private sector has the capital required, the benefits of investing in a resilient infrastructure are highly diffuse, challenging to quantify, and difficult to monetize as cash flows, deterring investment.
• This reality is particularly poignant among municipalities, which control approximately 60% of the country’s infrastructure but collect just 8% of its tax dollars.
• Investing in adaptation and resilience today will likely prove to be more cost effective and less disruptive to the economy and society as a whole than the alternative down the road.

The briefing note’s Problem Statement and Recommendations will inform decisions by the financial sector in the creation of appropriate financial products, and other financial players and policy makers as they assess the adaptation problem from their own perspectives and work on potential solutions.

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ABOUT THE INSTITUTE FOR SUSTAINABLE FINANCE

The Institute for Sustainable Finance (ISF) is the first-ever multi-disciplinary and collaborative hub in Canada that brings together academia, the private sector and government to align mainstream financial markets with Canada’s transition to a prosperous sustainable economy, including long-term environmental sustainability. Housed at Smith School of Business at Queen’s University, the ISF fills an important gap of relevant data, expertise and business-oriented solutions for sustainable finance. 

Media contact

David Watson
Associate Director, Communications, Institute for Sustainable Finance
david.watson@queensu.ca
C: 613.796.3605