About this resource
This series features expert-led, action-oriented explainers focused on key finance topics. The series is intended to help leaders learn about the topic, apply proven practices, and access hands-on tools that can strengthen their approach.
What is climate change adaptation?
According to the United Nations Framework Convention on Climate Change (UNFCCC): “Adaptation means the process of adjustment to actual or expected climate and its effects. In human systems, adaptation seeks to moderate or avoid harm or exploit beneficial opportunities; in some natural systems, human intervention may facilitate adjustment to expected climate and its effects.” (UNFCCC, 2023) Although the UNFCCC provides a standard baseline definition, climate adaptation can be defined and operationalized across states and local governments based on a range of factors that include, but are not limited to, the context, governance and legal framework, project sectors impacted by climate risk, and others.
"Adaptation seeks to moderate or avoid harm or exploit beneficial opportunities; in some natural systems, human intervention may facilitate adjustment to expected climate and its effects."
What is an example of a project focused on climate adaptation?
A coastal government implementing a climate adaptation project to reduce flooding and storm surge risks could focus its strategy on restoring wetlands, elevating critical infrastructure, and installing green stormwater systems like permeable pavements and bioswales. Such projects are often tailored to local conditions including sea-level rise projections, aging drainage systems, the character and condition of road infrastructure, and other factors. By combining natural infrastructure with targeted upgrades to roads, utilities, and public facilities, governments undertaking climate adaptation efforts to address flood risk are often focused on protecting vulnerable neighborhoods, reducing long-term disaster recovery costs, and improving overall resilience to more frequent and severe climate events.
How are governments funding climate adaptation?
Governments often fund climate adaptation through a combination of public finance strategies, including pay-as-you-go from intergovernmental grants, own-source revenues from taxes, charges, fines, and fees. In the U.S., for example, there are dedicated programs administered by agencies like the Federal Emergency Management Agency and Department of Housing and Urban Development that support state and local governments with upfront capital for projects like levees, stormwater systems, and climate-resilient housing, as well as post-disaster recovery funds that can be used to rebuild more resiliently. Many governments also fund climate adaptation projects via the sale of municipal bonds or the use of insurance-based mechanisms and securities to transfer risk and generate financing tied to reduced disaster losses.
ACTIONABLE RESOURCES
- U.S. Climate Resilience Toolkit: The U.S. Climate Resilience Toolkit was designed to help people find and use tools, information, and subject matter expertise to build climate resilience. The Toolkit offers information from across the U.S. federal government and sector partners in one location. This hub helps improve people’s ability to understand and manage their climate-related risks and opportunities, and to help them make their communities and businesses more resilient to extreme events. (Source: U.S.A.)
- Climate Change Adaptation Certification Tool: This tool was developed by EcoAdapt and Foresight Partners Consulting to support communities in the rapid implementation of climate-savvy planning goals and policies and enable community services, infrastructure, ecosystems, and economies to better anticipate and respond to the effects of climate change. (Source: EcoAdapt and Foresight Partners Consulting)
- Wildfire Risk Model: This Microsoft Excel workbook, developed by the Government Finance Officers Association (GFOA), estimates the chance of a county depleting its reserve over a ten-year period due to wildfire risk. (Source: GFOA)
- Transportation Resilience Planning Tool: This web-based application, by the State of Vermont, identifies transportation infrastructure vulnerable to damage from floods, estimates risk, and identifies potential mitigation measures based on the factors driving the vulnerability. While this tool is Vermont-specific, many of the metrics and considerations within it are generalizable. (Source: State of Vermont)
- The Climate Mapping for Resilience and Adaptation (CMRA) Assessment: This interactive application, developed by the National Oceanic & Atmospheric Administration (NOAA), provides statistics, maps, and reports on climate conditions for every county in the United States. You can enter your location and examine the statistics or maps to understand how your exposure to climate-related hazards is projected to change. There are also prepared data tables documenting past, present, and projected conditions related to common climate hazards. (Source: NOAA)
Project Spotlight: The State of Vermont
Since 2022, local governments across Vermont have experienced more than $240 million in flood-related damages, placing enormous financial pressure on small and rural communities. In Lyndon alone, flooding in 2024 caused an estimated $18 million in damages- roughly six times the town’s annual highway budget. In response, the Vermont Bond Bank has expanded its role in supporting climate adaptation by coordinating low-cost financing for infrastructure projects designed to reduce risks from extreme weather. One key initiative is the Municipal Climate Recovery Fund (MCRF), created in partnership with the Vermont State Treasurer’s Office to help communities plan, design, and invest in resilience improvements before disasters occur. To date, the MCRF has provided more than $33 million in low-interest loans to local governments, including a $4 million loan to Lyndon. Vermont stakeholders are also building the technical tools and local capacity needed to strengthen resilience statewide. For example, the Vermont Agency of Transportation developed a Resilience Planning Tool that helps communities assess and model flood risks to better inform infrastructure and adaptation decisions.
Acknowledgements, Disclaimer & Contributing Authors
This resource was created for educational purposes only as part of the Rural & Small Cities Program, with the support of the Robert Wood Johnson Foundation. The views and perspectives presented in this resource are those of the author and the Public Finance Institute team. The Public Finance Institute acknowledges staff members Lourdes German, Katy Hansen, Richard Figueroa, Haley Mulligan and Peter Hamlin for their contributions to this resource.
