These cities are not mere cultural and administrative hubs; they serve as economic powerhouses driving regional prosperity. Thriving industries like agriculture, manufacturing and services not only contribute to local and regional economic growth but also provide employment opportunities. The economic vitality of these cities underscores the critical need to integrate climate resilience into their development trajectories for long-term sustainability and prosperity.
Effective climate financing emerges as the linchpin in achieving this vision. A blended approach, marrying local initiatives with international support, is indispensable in securing climate financing solutions for second-tier cities. Engaging the private sector through public-private partnerships unlocks novel avenues of investment, particularly in infrastructure projects aimed at enhancing resilience. Moreover, leveraging international climate funds and partnerships offers vital financial resources, technical expertise, and knowledge sharing opportunities for these cities.
COP28 heralded a significant milestone with an additional USD 3.5 billion pledged towards the second replenishment of the Green Climate Fund – a testament to global commitment towards addressing climate change. This substantial boost elevated the total of the second replenishment to USD 12.8 billion, marking a 28% increase over the initial replenishment. However, amidst this progress, a stark reality looms: the annual financing shortfall for adaptation, as highlighted by the U.N. Environment Programme (UNEP), remains staggering, reaching as much as USD 366 billion compared to the USD 25 billion provided during the 2017-2021 period. The competition for accessing available funds intensifies, necessitating compelling proposals. This underscores the imperative of establishing a robust baseline for each city.
Baselining entails establishing a comprehensive understanding of a location's current state of climate vulnerability and resilience. This, in turn, facilitates the development of targeted, localised, and tailored solutions to safeguard those hardest hit by the escalating impacts of climate change. Recognising that the needs of every city vary, conducting thorough assessments of climate risks, vulnerabilities, and adaptation requirements is paramount. Think City has spearheaded such efforts, devising targeted strategies that prioritise investment in climate-resilient infrastructure and services for cities like Kuala Kangsar and Batu Pahat.
However, a recurring question persists: who will foot the bill for this baselining process? Here, the pivotal roles of local and national governments come into play. As per a 2019 report by the Organisation for Economic Co-operation and Development (OECD), local governments bear a significant share of climate-related public spending and investment, accounting for 63% of climate-significant public expenditure and 69% of climate-significant public investment across over 30 OECD and EU countries. Despite this, local governments in second-tier cities often face funding constraints for baselining initiatives. Addressing this challenge necessitates concerted efforts between national and local governments to pave the way for climate resilience. Without this crucial initial step, tapping into the potential offered by international and private funding options becomes significantly more arduous.
Forging connections between local initiatives, private partnerships and international support is crucial for empowering second-tier cities to accelerate climate financing, enable sustainable urban growth and enhance resilience. However, it is essential to recognise the need for optionality in financing approaches. This flexibility ensures that cities can access a diverse range of funding sources tailored to their specific needs and circumstances. With decisive action, we can confront the challenges of climate change and cultivate thriving, resilient communities in second-tier cities. The time for action is now.
By Hamdan Abdul Majeed
Think City Managing Director
