Large-scale solutions are essential to mitigate the loss of life, damaged livelihoods, and disrupted supply chains resulting from extreme weather events. In the UK alone, adapting to rising water and flood risks is projected to cost more than £2 billion annually through 2030 — and potentially £10 billion per year if all climate-related risks and adaptations are considered.
Despite being well-documented, the challenge of securing funding remains significant, as outlined in the Climate Change Committee’s 2023 report on adaptation investments. Along with Marsh and the wider Marsh McLennan community, we are developing innovative finance pilots for climate adaptation across the world. These initiatives show the potential for collaborative efforts among central government, local authorities, and investors to devise creative financing strategies.
How the CLIFF initiative tackles coastal erosion with finance
One significant pilot is the Coastal Loss Innovative Funding and Finance (CLIFF) initiative in Suffolk, UK, which addresses the risk posed by coastal erosion to over 10,000 properties by the end of the century. The eastern coastline of England faces some of the highest erosion rates in Europe. Various government bodies, including local authorities, the Department for Environment, Food and Rural Affairs (Defra), and the Environment Agency, have engaged in studies to design innovative funding mechanisms. These efforts aim to develop a Coastal Accumulator Fund and local coastal adaptation funds, among other models, to alleviate the financial burdens on authorities while effectively supporting communities at risk.
The emphasis on a dual financing approach is notable, combining short-term disaster recovery funding with long-term coastal adaptation initiatives. This strategy supports residents facing immediate risk while simultaneously addressing broader resilience goals for communities experiencing coastal erosion.
Key considerations for effective climate adaptation financing
Understanding the investor landscape is essential to attract new investments. Stakeholders need to identify potential financial benefits to private investors — reduced repair costs, lower insurance premiums, and health benefits, among others — while designing mechanisms that can convert these benefits into tangible revenue streams. New proposals, like voluntary payments from affected large enterprises and expanded levy mechanisms, are being explored to capture value effectively and incentivize investment.
Central to promoting successful adaptation financing is the quantification and monetization of benefits. This involves creating clear methodologies to demonstrate the value of investment in resilience projects. Minimizing reliance on traditional grant funding is pivotal; sustained success rests on building internal capabilities to identify beneficiaries who may serve as potential buyers.
There is also an urgent call for government action to enhance climate adaptation efforts . This includes enabling local authorities not only to manage but also to strategically invest and access government funds over the long term. Recent discussions suggest that broadening funding criteria to adopt a holistic approach — one that integrates socioeconomic benefits and community protection — can facilitate access to necessary resources.
Sustaining climate momentum with action that scales
The push for innovative financing strategies for climate adaptation reflects a growing recognition of the systemic risks posed by climate change. By fostering collaboration among local authorities, investors, and communities and by aiming for scalable, investable projects, stakeholders can enhance their capacity to address the pressing challenges.
Unlocking financing for climate adaptation isn’t just about funding projects — it’s about shifting the system to recognize resilience as an investable priority, turning innovation into action that protects lives, economies, and ecosystems in the face of a changing climate.
