Frontiers of Engineering Management

, Volume 6, Issue 1, pp 117–127 | Cite as

Financing climate-resilient infrastructure: Determining risk, reward, and return on investment

  • Peter B. Meyer
  • Reimund SchwarzeEmail author
Research Article


Urban infrastructure investment is needed for both, mitigation of climate risks and improved urban resiliency. Financing them requires the translation of those benefits into measurable returns on investment in the context of emerging risks that capital markets can understand and appreciate. This paper develops a generic framework to identify what are the necessary and sufficient factors to economically favor climate-change resilient infrastructure in private investment decisions. We specifically demonstrate that carbon pricing alone will not generate the needed will, because market prices at present systematically fail to account for climate change risks such as the costs of stranded assets and the national and local co-benefits of investments in climate resiliency. Carbon pricing is necessary, but not sufficient for an enhanced private financing of climate-resilient infrastructure. The Paris Agreement and other supra-local policies and actors including city networks can concretely help to generate the sufficient social and political will for investments into climate change mitigation and resiliency at the city level.


infrastructure urban finance climate low carbon economy 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Bulkeley H, Castán Broto V, Maassen A (2014). Low-carbon transitions and the reconfiguration of urban infrastructure. Urban Studies (Edinburgh, Scotland), 51(7): 1471–1486CrossRefGoogle Scholar
  2. Buys L, Miller E (2012). Residential satisfaction in inner urban higherdensity Brisbane, Australia: Role of dwelling design, neighbourhood and neighbours. Journal of Environmental Planning and Management, 55(3): 319–338CrossRefGoogle Scholar
  3. Cappelli S (2017). Energy efficiency: Impact on Real estate values and risk. Bologna, IT: CRIF-RES. Google Scholar
  4. Carbon Disclosure Project (CDP). CDP cities and regions data. (Acc. 2018/12/30).
  5. Center for Community Strategies (P.B. Meyer, et al.) (2013). Spurring Local Economic Development with Clean Energy Investments: Lessons from the Field. Washington, DC: US Department of Energy, Energy Efficiency and renewable Energy.
  6. Center for International Environmental Law (CIEL) (2016). Trillion Dollar Transformation: Fiduciary Duty, Divestment, and Fossil Fuels in an Era of Climate Risk. Washington, DC: (The report was authored and edited by numerous CIEL Staff members).Google Scholar
  7. Cities Climate Finance Leadership Alliance (CCFLA) (2015). The state of city climate finance, 2015.
  8. Climate Policy Initiative (CPI) (2017). Global Landscape of Climate Finance 2017. San Francisco, CA: AuthorsGoogle Scholar
  9. European Environment Agency (EEA) (2017). Financing Urban Adaptation to Climate Change. Report 2/2017. Copenhagen: AuthorsGoogle Scholar
  10. Environment U N (2017). The emissions gap report 2017.
  11. Global Covenant of Mayors (GCOM) (2018). Raising ambition: GCoM releases impact, data reporting standard, and new tool at global climate action summit.
  12. Gordon D J, Johnsons C A (2018). City-networks, global climate governance, and the road to 1.5°C. Current Opinion in Environmental Sustainability, 30(1): 35–41CrossRefGoogle Scholar
  13. Ingram G K, Flint A (2011). Cities and infrastructure: A rough road ahead. Land Lines., 2018–9-14Google Scholar
  14. Institute for Market Transformation (IMT) (2016). Added Value of ENERGY STAR-Labeled Commercial Buildings in the US Market. Washington, DC: AuthorsGoogle Scholar
  15. Karsten L (2007). Housing as a way of life: Towards an understanding of middle-class families’ preference for an urban residential location. Housing Studies, 22(1): 83–98CrossRefGoogle Scholar
  16. Liao H F, Farber S, Ewing R (2015). Compact development and preference heterogeneity in residential location choice behaviour: A latent class analysis. Urban Studies (Edinburgh, Scotland), 52(2): 314–337CrossRefGoogle Scholar
  17. Myers D, Gearin E (2001). Current preferences and future demand for denser residential environments. Housing Policy Debate, 12(4): 633–659CrossRefGoogle Scholar
  18. O’Brien P, Pike A (2015). City deals, decentralisation and the governance of local infrastructure funding and financing in the UK. National Institute Economic Review, 233(1): R14–R26CrossRefGoogle Scholar
  19. Pivo G, Fisher J D (2010). Income, value and returns to socially responsible office properties. Journal of Real Estate Research, 32(3): 243–270Google Scholar
  20. Regional Greenhouse Gas Initiative (RGGI) (2017). The Investment of RGGI Proceeds in 2015. New York: AuthorsGoogle Scholar
  21. Reicher D, Brown J, Fedor D (2017). Derisking decarbonization: Making green energy investments blue chip. Palo Alto, CA: Stanford University. Google Scholar
  22. Schwanen T, Mokhtarian P I (2004). The extent and determinants of dissonance between actual and preferred residential neighborhood type. Environment and Planning B. Urban Analytics and City Science, 31(5): 759–784Google Scholar
  23. Senior M, Webster C, Blank N (2004). Residential preferences versus sustainable cities: Quantitative and qualitative evidence from a survey of relocating owner-occupiers. Town Planning Review, 75(3): 337–357CrossRefGoogle Scholar
  24. Talen E (2001). Traditional urbanism meets residential affluence: An analysis of the variability of suburban preference. Journal of the American Planning Association, 67(2): 199–216CrossRefGoogle Scholar
  25. The Global Commission on the Economy and Climate (2014). Better Growth, Better Climate: The New Climate Economy Report–The Synthesis Report. Washington, DC: New Climate Economy c/o World Resources InstituteGoogle Scholar
  26. Tobin P, Schmidt N M, Tosun J, Burns C (2018). Mapping states’ Paris climate pledges: Analysing targets and groups at COP 21. Global Environmental Change, 48: 11–21CrossRefGoogle Scholar
  27. United Nations Office for Disaster Risk Reduction (UNISDR) (2015). Global Assessment Report on Disaster Risk Reduction-Making Development Sustainable: The Future of Disaster Risk Management. Geneva, Switzerland: AuthorsGoogle Scholar
  28. World Bank (2011). Urban risk assessments: An approach for understanding disaster and climate risk in cities.
  29. World Bank and Ecofys (2018). State and Trends of Carbon Pricing 2018. World Bank, Washington, DC. doi:10.1596/978-1-4648-1292-7Google Scholar
  30. World Bank Group (2013). Infographic: Building Low-Carbon Cities. Washington: AuthorsGoogle Scholar
  31. World Bank Group (2015). Investing in Urban Resilience. Washington, DC: International Bank for Reconstruction and Development/InternationalGoogle Scholar
  32. Development Association World Economic Forum (WEF) (2015). How can we bridge the $1 trillion infrastructure gap? Geneva: Authors.
  33. Young R F (2011). Planting the living city. Journal of the American Planning Association, 77(4): 368–381CrossRefGoogle Scholar
  34. Zhang M, Liu Z, Wie J, van Dijkand M P (2018). Comparison of carbon emission trading schemes in the European Union and China. Low Carbon Economy, 9: 33–44. Available at: CrossRefGoogle Scholar

Copyright information

© Higher Education Press 2019

Authors and Affiliations

  1. 1.Urban Policy and EconomicsNew HopeUSA
  2. 2.Department of EconomicsHelmholtz-Centre for Environmental Research–UFZLeipzigGermany

Personalised recommendations