Step 5.3 Funding or financing for implementation

Key message

Secure funding or financing before finalising your action plan. This is crucial for its sustainability and successful implementation.

Implementing adaptation actions can require significant financial resources. Your adaptation plan needs to be supported by a solid funding/financing plan.

Step 1.4 guided you through identifying potential funding sources, highlighting the EU funding of adaptation available on Climate-ADAPT and Financing opportunities overview from the EU Covenant of Mayors. For further details, see MIP’s Funding and Financing Guide. It’s also important to understand the distinction between funding and financing

Definition box 2

Funding - available non-refundable resources sourced from your organisation's budget, income from taxes or government allocations. It could include grants, subsidies or climate funds

Financing - refundable sources of money obtained through agreements with repayment expectations, including loans and bonds.

Flexibility and a combination of funding sources, including non-monetary support, is advisable. It's crucial to identify sources of public funding and private finance for each measure, ensuring alignment with eligibility requirements (see examples below). Your plan should remain flexible to accommodate funding deadlines, and you can use resources like Climate-ADAPT (EEA member states’ country profiles) or national adaptation platforms as references to demonstrate the use of state-of-the-art adaptation knowledge in your funding proposal.

When assessing and selecting adaptation measures in Step 4, you likely estimated implementation costs (Step 4.1). If not, obtaining quotes now can help you estimate costs for the selected measures, including the associated administration expenses. Securing funding before finalising the details of your action plan – and prioritising measures that are easier to fund, like no-regret actions and those linked to high-priority considerations (Step 4.2) – is very important for making your plan sustainable.

Funding or financing usually focuses on implementing specific actions, with maintenance costs often addressed by other avenues within an organisation. Neglecting to account for these costs upfront can result in inadequate funding and future challenges. When assessing adaptation options (Step 4.1), you likely already estimated maintenance expenses and identified the responsible organisational areas.

Public-private partnership for a new flood-proof district in Bilbao, Spain

Bilbao’s Zorrotzaurre redevelopment project is financing flood protection measures through a public-private partnership. Costs are shared based on ownership: 51% public and 49% private. The Comisión Gestora de Zorrotzaurre, created to represent private landowners, is a notable success of the project. The public-private partnership has a coordination board and a management board, overseeing the execution of the project and facilitating coordination. Within the project, the municipality is responsible for financing a flood protection barrier and storm water tanks, while elevating the ground level and redeveloping public green spaces are paid for by the Comisión Gestora de Zorrotzaurre. This successful partnership enables cost sharing between stakeholders while benefiting all the city’s residents.

Check full case study on Climate-ADAPT

Crowdfunding in Hochmoor Schrems

In Austria, the non-profit federal foundation COMÚN, in collaboration with the city of Schrems, initiated the "Förderkreis Hochmoor Schrems" a crowdfunding campaign to promote biodiversity, mitigate climate risks, and preserve natural habitat. Through both private and municipal donations, an additional 20% was added to the park’s conservation budget.

Source: Mission Stories (2024)

Using green bonds to fund adaptation in Paris, France

In 2015, Paris became the first city to issue a municipal green bond, raising EUR 300 million to fund projects aimed at enhancing the city’s climate resilience. Of the projected 1.75% annual return, 20% was earmarked for climate adaptation initiatives, including water demand management and efforts to reduce the urban heat island (UHI) effect. These projects support the broader goal of cutting Paris’s greenhouse gas emissions by 75% by 2030.

Investor demand for the bond was strong, with total applications reaching EUR 475 million—well above the initial offering—highlighting robust interest in environmentally focused investments. Ultimately, over 30 investors participated, predominantly domestic (83%), along with a smaller share from international institutions based in the Benelux region (9%), Switzerland (3%), and the Nordic countries (3%). The bond attracted a balanced mix of institutional investors, with insurers and pension funds acquiring 51% and asset managers holding 49%.

Paris’s groundbreaking issuance has since inspired other cities worldwide to follow suit, including Vancouver (Canada), Johannesburg (South Africa), and Mexico City (Mexico).

Urban adaptation in Europe: What works (2024)

Funding for blue forest conservation: key insights

Blue forests, like kelp and seagrass ecosystems, offer immense value by supporting biodiversity, boosting fish stocks, storing carbon, and providing recreational benefits. However, funding their conservation and restoration faces key challenges:

Public Funding Limitations: Most restoration projects depend on public funds, which are often insufficient and uncertain due to competition and government priorities like industrial development.

Engaging the Private Sector: To scale up efforts, private investors and financial institutions need to play a bigger role. New business models and blended financing (mixing public and private funding) are being explored to attract investment.

Innovative Solutions

Tools are being developed to help investors understand the financial and societal benefits of funding blue forests. Collaborative efforts with local stakeholders, businesses, and researchers ensure financing plans are realistic and widely supported.

Mission Stories (2024)

Resources

Urban adaptation in Europe: What works (2024)
Provides an overview of urban adaptation in Europe, including challenges and approaches to building resilience. Chapter 6 describes economic and financing instruments for adaptation measures.

Funding and Financing Guide: Supporting Regional Climate Adaptation (2024)
The guide introduces diverse funding and financing options, such as grants, PPPs, crowdfunding, and philanthropic funds, each explained with benefits for informed decision-making.