Closing the Gap on City Climate Finance in Developing Countries

Mahesti Okitasari; Wenjie Liu; Richa Kandpal; Kanako Morita

Policy Brief

Closing the Gap on City Climate Finance in Developing Countries

Recommendations for policymakers on improving cities’ access to climate finance.

Publication Date: 26 Jul 2023

Authors: Mahesti Okitasari Wenjie Liu Richa Kandpal Kanako Morita

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Photo: Veejay Villafranca / ADB

This policy brief offers recommendations for local policymakers to improve cities’ access to climate finance and deliver sustainable development at scale. It analyses barriers faced by cities in securing financing for climate mitigation and adaptation, and identifies strategies to build enabling environments at the national and local levels.

Highlights

Addressing sustainable urban development issues and delivering the finance needed for climate mitigation and adaptation require closing the city finance gap. Structural changes and improved capacity for city climate finance in developing countries are necessary to overcome the prevalent barriers to accessing available financing. Well-designed and well-managed city climate finance is key for effective interventions to unlock investments and deliver implementation.

Recommendations:

Prepare city-level climate finance plans and investment strategies.
Diversify financial approaches and build community-driven sustainability financing.
Improve internal capacity, information disclosure, and prudential regulations.
Develop bankable projects and provide incentives to strengthen private sector engagement.