The Afsluitdijk is a 32 kilometer causeway in the Netherlands that, since 1932, has been one of the country’s primary barriers against sea level rise. But after nearly a century of use it needed hundreds of millions of dollars in upgrades. So, about a decade ago, the government turned to a consortium of contractors to reinvigorate the bulwark. Instead of paying for the project up front, the agency leading it signed a 25-year contract that allowed it to make payments over time — a move that effectively amounted to private financing for a public project. As climate risks intensify, cities around the world face a stark financial reality: Protecting themselves from rising seas and extreme weather will cost hundreds of billions of dollars — far more than many governments can afford. A new report from C40, a climate group representing cities, argues that one way of closing that gap is bringing in outside investors. Work on the Afsluitdijk is complete, and the sea wall continues fending off the encroaching water. The initiative is one of 10 case studies that form the backbone of the report, which C40 is releasing on the sidelines of the World Bank spring meeting this week. It cites examples from Dakar, Senegal to Washington D.C. to show why — and how — cities should be collaborating with the private sector. ‘The idea of this report is really to improve the conversation and bring in proof of concept so we can work with cities to leverage more of these opportunities,’ said Barbara Barros, global head of adaptation finance for C40 and one of the report’s authors. ‘We can change the narrative.’ As climate risks grow, so too does the price of defending against them. The report highlights research showing this could cost low and middle-income countries alone between $256 and $821 billion by 2050. Yet no more than 1 percent of all climate funding is currently going to urban adaptation, leaving a gap between what cities need and what they can afford. That’s in part because adaptation is a harder sell than projects that mitigate emissions. ‘Avoiding future damages is not a financing stream you can take to the bank in the way that you can energy efficiency and decarbonization,’ said Dan Zarrilli, who was New York’s City’s chief resilience officer and chief climate policy advisor. ‘Projects need to be bankable.’ Developing investments that meet public sector goals while being attractive to the private sector can be a difficult balance, but C40 hopes the report it released today will help accelerate adaptation efforts. Barros says that finding creative ways to engage funders will be especially important for cities that can’t easily raise taxes and those with a low credit rating. According to a report from the Zurich Climate Resilience Alliance, private investment accounts for just 3 percent of the adaptation finance needs in developing countries. With concerted policy efforts that could rise to as much as 15 percent. Glenn Duquez, associate pastor at Church of God Jesus is Alive Fellowship, begins to clean up after a fast-moving flood swept through Haleiwa, Hawai’i, on March 21. Stephen Lam/San Francisco Chronicle via Getty Images ‘There is a very big difference between mitigation and adaptation,’ Barros said. ‘The only way to increase adaptation amounts is with more private investment.’ Augmenting public funding is critical in the United States too, said Dakota Fischer, who works on adaptation issues for the environmental group NRDC. Smaller municipalities often lack the tax base to fund large projects, while the federal government — historically the primary source of climate adaptation funding — is dramatically scaling back its support under President Donald Trump. Amid that retreat, he said, ‘we all collectively are thinking more about how do you get more dollars for climate adaptation. Just about everyone working in climate adaptation has run into this problem, said Zarrilli, who is now the chief climate & sustainability officer at Columbia University. What this report does particularly well, he said, is concretely lay out options and scenarios others can duplicate. ‘The case studies are great,’ he said. The report highlights a range of models: a wastewater recovery project in Sao Paolo, coral reef insurance in Mexico, and performance-based payments in Washington DC, to name a few. One project that caught Zarrilli’s eye was in Kuala Lumpur, Malaysia, where designers paired a stormwater management system with a revenue-generating toll road. ‘Now you have this revenue stream to do this joint thing,’ he said, lauding the creativity. One key to designing projects that appeal to both the public and private sector, he said, is early engagement from the start, rather than one party taking a fully formed idea to the other. ‘You need to do some work to build that trust and get a shared vocabulary.’ The report hints at other ways of getting around the barriers cities face. For instance, urban climate adaptation projects can be relatively small, so bundling them could make a package that’s more attractive to funders like the World Bank or multilateral development banks. Investment vehicles such as green bonds or funds can make it easier for companies to invest in adaptation more broadly, rather than bankrolling individual projects. Fisher wishes that rural communities and those with fewer resources, especially in the United States, were better represented in the report. A small town in Iowa that sees frequent flooding and has just a handfull of employees, for instance, may not relate to the case studies. But he said, ‘to have examples, period, is helpful.’ But bringing private firms into a project isn’t without risk. The Zurich Climate Resilience Alliance report cautions that governments must ensure that the quality of projects remains high, and remain attune to equity and justice concerns. Profit motives, the report notes, could lead to a focus on short-term initiatives and under-investment in long-term needs. There is also a limit to how much the private sector will be able to do, cautioned Debbie Hillier, the head of the alliance. ‘There is definitely scope there. But what we don’t want is to assume the private sector can do everything,’ she said. ‘They cannot and they will not.’ Read Next Drought is quietly pushing American cities toward a fiscal cliff Tik Root C40 published similar findings. Fischer adds that even the perception of favoritism, or that private firms are inappropriately receiving public funds could be problematic for officials. ‘Whenver you’re in government, you’re trying to ensure confidence,’ he said, adding that clear rules around procurement, contracting, revenue and other types of oversights are vital. ‘You need to be able to lay out a clear plan for how the public and private sector can work together.’ The ultimate aim, said Barros, is to make sure the most vulnerable are protected from climate impacts, rather than exposed to them. ‘Successful experiences depend on how projects are structured — particularly in terms of cost and risk sharing, as well as strong social and environmental safeguards,’ she said. ‘It seems very capitalist, but the goal is to protect our citizens.’ Zarrilli added that it’s about finding the ‘right balance’ between bringing private finance to the table and getting a good project done —governments have long managed in other arenas, such as building roads and bridges. That said, he and Barros stress that the private sector isn’t suited for every situation. ‘What we are saying,’ Barros explained, ‘is that, for projects that can build revenue streams, why not also involve the private sector?’ Without that, many adaptation projects might not happen. Or at least won’t happen quickly enough to buttress against the climate-driven disasters that increasingly threaten cities around the globe. The private sector, C40 says, can help. ‘It will take some years for cities to think differently,’ said Barros. But, she added, ‘I do expect this will change.’ This story was originally published by Grist with the headline Climate adaptation funding is scarce. Private investors could help. on Apr 17, 2026.

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