Urbanisation is a mega-trend in Asia. While capitals and megacities receive much attention, emissions growth and vulnerability are just as pronounced in second-tier cities (such as provincial capitals). These cities can consist of 1 to 3 million people, and rates of population growth are often higher than in capitals, making climate compatible development a necessity there. However, it is difficult for these areas to access climate finance. While total costs are often not precisely known, international funding schemes still only meet a small portion of the total financing needed to support climate compatible development in cities.  The Green Climate Fund (GCF) presents a new opportunity; the "design and planning of cities to support mitigation and adaptation" being one of its initial focus areas.

Research partners Germanwatch, the Vasudha Foundation, the Institute for Essential Service Reform, the Institute for Climate and Sustainable Cities and Eberswalde University for Sustainable Development assessed the climate finance needs and gaps for climate compatible development in second-tier cities across three countries; India, Indonesia and The Philippines. The team explored how current opportunities can be harnessed to meet the climate finance needs.

Based on this assessment, the project has developed recommendations for how funding from the GCF and other sources can be more accessible to cities, for example through the creation of Urban Implementing Entities. Or how funding can be used in order to incentivise the deployment of national or sub-national resources such as revenues from fees, local taxes or municipal bonds for urban climate compatible development projects.

The research team defined three principal criteria for climate compatible development in cities:

• Adequate adaptation measures within cities to safeguard vulnerable urban areas
• A reduced energy consumption footprint of cities to mitigate global climate change
• Sustainable urban development that upholds the cities' elementary functions in times of rapid and unplanned urbanisation and notwithstanding a lack of sufficient environmental awareness in the general population.

The outcomes of this research have set the selected cities in India, Indonesia and the Philippines on a strategic path to achieve these goals. The cities are Gurgaon and Pune in India, Cagayan de Oro in the Philippines, and Kupang in Indonesia.

The project led to more targeted thinking by urban decision-makers around accessing financial resources for urban climate compatible development. The researchers have made recommendations for increased institutional effectiveness to attract sustainable urban development funding from the GCF and other sources. The inclusion of national decision-makers and other relevant stakeholders in the enquiry encouraged discussions at the national level on cities' access to funding. A set of recommendations have been translated into Indonesian to ensure that the outcomes are accessible there.

This research project also aimed to have policy impact on a global scale: it intended to raise the prominence of second-tier cities within international processes. Funding institutions, particularly the GCF, see appropriate implementing entities as a prerequisite for channelling investments to cities. The project aimed to attract GCF funding to the second-tier cities in the three study countries, in the expectation that it would act to encourage other cities to follow suit; GCF support for climate compatible development in other developing, second-tier cities may follow in the medium term.

Outputs

Handbook for Policy Makers: Finding the Finance - Financing Climate Compatible Development in Cities

This publication presents a number of options available for cities to meet their financing needs for translating low carbon and climate resilient development plans into action. It provides insights on how local governments can raise funding locally and gives an overview of the international climate financing landscape that cities can access. Click here to download the publication. (pdf 5 MB)

Going to Town

In spite of growing international climate finance, a particular constraint for urban areas is their restricted access to international climate funds. The limited creditworthiness of local governments as well as the lack of experience and low institutional capacities among many local authorities in dealing with climate change issues prevent cities from attracting investors. This paper illustrates three tangible entry points on how the Green Climate Fund can promote and advance climate compatible developments in cities. Click here to download the publication.

Case studies

Infographics for Gurgaon case study

Stakeholders consultations in the city of Gurgaon identified sustainable transport as an priority areas to ensure climate compatible development in their city. The project team conducted a pre-feasibility analysis to understand the social requirement of Gurgaon travelers and economic considerations of service providers in Gurgaon. The results of the online and offline survey are depicted in the transport infographic. Click here to download the infographic.

In a residential complex named Nirvana Country, also in Gurgaon, residents are taking action to 'go green'. For example, installing solar panels on their rooftops, thereby reducing their dependence on the electricity grid, alongside rainwater harvesting and other measures. Click here to download the infographic.

Climate change financing for cities in Indonesia

This report details the results of a scoping study on how climate actions in cities in Indonesia can be financed. This includes sources of international and national level funds alongside funds at the local level that can be used to finance climate actions at city level.

Hand in hand for urban transformation: Roles and responsibilities at the local, national and international level to enable cities’ climate leadership

This primer has been developed to guide policy makers on how the urban transformation necessary for achieving the Paris Agreement can take place. It describes why local governments have such important roles to play and what relevant parameters they can adjust to move cities forward on a low-carbon and climate-resilient path. It visualises the steps local governments have to take to lead cities towards becoming climate compatible urban spaces and it reviews the different forms of financing sources that are available to cities. Moreover, it looks at the responsibilities of national governments and what can be done domestically to encourage such a transformation, alongside how the Green Climate Fund can support cities through the different financing structures it provides.

In addition, Lisa Junghans wrote an article Financing the Resilient City which was published in the journal Crisis Response, Volume 12(1), September 2016 (within a piece titled Urban resilience is about people, not technocrats, by Laura Kavanaugh). Journal articles on Climate finance and climate justice: new battleground for Philippine cities, and Inclusive visions for urban transitions are awaiting publication.

CDKN Funding: £290,000