Stretching or conforming? Financing urban climate change adaptation in Copenhagen

Abstract

Cities worldwide are struggling to build resilience to the risks posed by climate change for their infrastructures, economies and quality of life. However, no city government has sufficient capacities to fund the adaptations required to ensure such resilience alone. Copenhagen’s efforts to secure financing for adaptation and mitigation are investigated, focusing on its innovative arrangements for funding projects to protect against extreme rainfall and flooding. A mixed-methods approach explores how municipal actors and investors accessed finance for supporting transition to a climate-adapted city. Mobilising concepts from the multilevel perspective to analyse the governance and market conditions that facilitate or impede such financing, this paper contributes to sustainable transition theory and the assessment of different funding approaches. The case study confirms the comprehensiveness and effective implementation of the city’s plans, especially its innovative financing product for adaptation to urban flooding. However, this approach has knock-on effects for tackling other climate hazards, partnerships and investment urgency. Although extreme rainfall events in 2011–13 opened a valuable ‘window of opportunity’ for change at the system landscape level, catalysing a radical shift in government policy and investment, this disruption did not elicit a commensurate response from the city’s finance sector. 'Practice relevance' Several challenges exist for municipalities and investors when financing urban adaptation. Innovation is needed not only in technology but also in approaches to financing and investment. A key strength of Copenhagen’s adaptation approach lies in its innovative financing arrangements for funding an effective response to the risks of extreme rainfall, 'i.e'. combining measures to protect against urban flooding with improvements in the urban public realm. A sustainable transition model can help guide cities in planning and funding adaptation to climate change. Recommendations include equal prioritisation by all actors of climate adaptation and mitigation; the removal of constraints on private sector participation; government engagement with a diverse set of private capital providers; experimentation with different financing mechanisms; the development of bankable adaptation projects; and efforts to monetise and unlock the value of adaptation projects.

Keywords

• adaptation
• cities
• climate finance
• climate risk
• investors
• sustainable transition
• copenhagen