Financing Climate Action
The scale of action demanded to mitigate and adapt to climate change and create resilient communities requires trillions of dollars of investments, in addition to fiscally healthy local governments that can act boldly. Mainstreaming climate-informed decision-making and scaling up climate investments requires land markets and land use regulations to accurately reflect climate risks and mitigation targets. New opportunities for climate financing can be found in land-based finance tools such as special assessments, impact fees, and property tax. When implemented, these tools can improve the fiscal health of cities and help close the global climate finance gap, enabling local governments to respond to urgent local needs exacerbated by climate change.
We are researching ways to fund urgent climate investments through land-based financing tools, documenting and disseminating best practices, and working with partners to provide technical assistance to support on-the-ground implementation. We also evaluate public climate funding sources and emphasize the importance of leveraging both public and private investments to meet climate goals.
What Is Land-based Finance?
Land-based finance is an approach that enables local governments to generate revenues for or recover costs of infrastructure investments by recovering increases in land values that are the result of public investment and administrative or regulatory actions.
Land-based financing provides a funding source for local infrastructure projects that are key to climate mitigation and adaptation, such as public transit, green infrastructure, or flood resilience. When used in conjunction with sound urban planning principles, land-based financing can be an integral tool to help governments advance positive fiscal, social, and environmental outcomes, and can meaningfully contribute to climate action and a just transition to net zero.
Land Value Capture: Leveraging Land for Financing Climate Action
Watch this video to learn about the potential impacts of climate adaptation and mitigation measures on property values, and see some examples of land value capture instruments across the world.
Where is Land-based Financing Being Used to Fund Climate Action?
Boston
In Boston’s rapidly developing Seaport district, the city is funding climate adaptation improvements, such as sea walls and green infrastructure, through developer contributions to a Climate Resiliency Fund. The city aims to use $40 million in developer contributions to fund critical improvements necessary to safeguard the Seaport from rising seas.
London
The city of London is leveraging two land value capture instruments, including the Community Infrastructure Levy, to generate nearly $800 million to partly finance the Crossrail railway extension. The project is expected to achieve approximately 2.75 million tons of carbon savings over its lifetime.
Curitiba
In Curitiba, Brazil, an innovative transfer of development rights (TDR) program has made it possible to implement a large-scale park system to absorb and contain floodwaters, while also relocating informal settlements located in high-risk flood zones. Through the TDR program, property owners in high-risk or environmentally sensitive areas obtain the right to build in designated areas of the city while their properties are converted into parks and green infrastructure.
Atlanta
Atlanta established a special service district around parts of its new BeltLine—a 22-mile linear park around the city—where commercial and multi-family property owners will contribute slightly more in property taxes. The BeltLine will reduce reliance on automobiles, therefore reducing emissions, while also improving air quality and reducing flood risks with green infrastructure.
Exploring How Land-Based Approaches to Climate Change Adaptation Intersect with Property Values and Municipal Finance
A recently released suite of commissioned research papers offer findings that can inform public policy and practice across a diverse set of topics, including climate-informed zoning, land value capture, green infrastructure, and more.
Land Policies, Urban Law, and Climate Change
This document serves as a presentation of the second stage of research on Land Policies, Urban Planning Law, and Climate Change. In the first stage, we described a series of urban and taxation instruments in Argentina, Brazil and Colombia that are used, or can potentially be used, to finance measures that address climate change. In this second stage, we present a more in-depth analysis of some of these instruments, focusing on their implementation, and then perform a comparative analysis and extract possible lessons for other countries.
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Exploring the Use of Land Value Capture Instruments for Green Resilient Infrastructure Benefits
Building resilient infrastructure is one of the major challenges cities face due to urbanization rates and climate change. Financing these investments is an additional challenge particularly for cities in low and middle-income countries. However, land value capture (LVC) can provide alternative and local finance sources. This study identifies and assesses the multiple benefits of a green resilient infrastructure (GRI) project including flood risk reduction and proposes land value capture instruments for green resilient infrastructure benefits, as a framework for financing public benefits and (partly) recovering the project investment.
Strategy Considerations for Greenhouse Gas Reduction Funding
As climate actors pursue larger public and private finance solutions to begin tackling the multitrillion-dollar global problem of climate change, the Greenhouse Gas Reduction Fund (GGRF) offers an important first step in the United States, launching one of the country’s most ambitious public funding proposals to date.
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Land Value Return
Communities around the world face a crisis of investment, yet they often give away their most valuable resource: land. This policy brief lays out how the public sector can recover and reinvest land value increases that result from public investment and other government actions.
