City resilience bonds: an idea whose time has come?
This event, as part of London Climate Action Week 2023, explored city resilience bonds as a mechanism to help cities in the global South access finance for reducing climate risks.
For the first time in the history of the world, more people live in towns and cities than in rural areas. Urban areas ‘concentrate’ climate risk due to their location, demographics and governance contexts.
At the same time, international climate finance has largely overlooked the needs of cities - leading to the need for new and innovative mechanisms for generating finance to enhance urban resilience. This is where city resilience bonds can make a difference.
Through these bonds, a city government or agency can raise money from capital debt markets for investment in building resilience. However, questions remain on their viability, impact and the capacities that cities need to employ these to overcome their massive deficits in adaptation finance.
This event explored:
- What the precedents and past experiences are with structuring and issuing city bonds for sustainable development
- What potential and pitfalls of city resilience bonds are as a mechanism to help city governments in the global South access finance for reducing climate disaster risk, and
- What partners and programmes of work are needed to explore the potential of this instrument for building resilience.
- Stephanie Garcidueñas Nieto, University of Antwerp
- Héctor Herrera, University of Antwerp
- Abha Nirula, UNDP
- Michael Minkoff, Athena Infonomics
- Aris Moro, C40
- A Damodaran, Indian Council for Research on International Economic Relations (ICRIER)
- Neha Kumar, Climate Bonds Initiative
- Till Arne Bajohr, International Finance Corporation
- Neeraj Gupta, International Finance Corporation
- Asen Charliyski, Bankers Without Boundaries
- Chris Smith, Bankers Without Boundaries
- Tom Mitchell, executive director, IIED
- Aditya Bahadur, principal researcher, IIED's Human Settlements research group
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Participants at the event agreed there was alignment on the need for more research on creating an enabling environment for city resilience bonds.
There was also agreement on the need to scrutinise early examples of the use of this instrument and employ these for advocacy with cities to generate demand. There was near unanimous consensus on the potential for this innovative financing instrument to plug adaptation finance gaps in cities of the global South.