organized by

The world is inexorably becoming urban. By 2030

approximately 60% of the global population will
live in cities. Urban areas are major drivers for
national economic developments with significant
impacts on our climate. Already today, the majority
of global greenhouse gas emissions is related to
cities, their inhabitants and urban economies.
1

National states, city governments, the private sector
as well as urban residents share a common
responsibility. Urban efforts to mitigate climate
change especially in the fast growing
agglomerations in developing countries and inter-

1
United Nations 2007: World Urbanization Prospects: The 2007
Revision Population Database. New York: United Nations;
UNEP 2012: Cities and Carbon Finance: A feasibility study on
an Urban CDM; World Bank 2010: Economics of Adaptation
to Climate Change: Synthesis Report.





national emission reduction targets. At the same
time cities, often situated on coasts or river banks,
are highly vulnerable to a changing climate and
require substantial efforts to adapt to current and
future impacts. In this context efficient climate-
resilient resource, infrastructure and energy
management will be a key task for cities in order to
protect livelihoods and improve inhabitants quality
of life.
However, municipal adaptation and mitigation
activities put high requirements on project planning
and financing. To meet the basic needs particularly

Background Paper for the International Symposium:
Cities in a Changing Climate
Financing Adaptation and Mitigation in the Urban Context of Developing Countries
and Emerging Economies
13th-14th November 2012, KfW Headquarters, Frankfurt, Germany




2
Background Paper for the International Symposium:
Cities in a Changing Climate
Financing Adaptation and Mitigation in the Urban Context of Developing Countries and
Emerging Economies
organized by
of poor citizens, protect them from climate impacts
and contribute to sustainable, low carbon
development, cities depend on extensive public and
private investments.
Against this background KfW Entwicklungsbank
on behalf of the German Federal Ministry for
Economic Cooperation and Development will host
the international symposium Cities in a Changing
Climate Financing Urban Adaptation and
Mitigation Action in Developing Countries and
Emerging Economies in Frankfurt/Germany,
November 13th-14th, 2012. The symposium
addresses experts from German development
cooperation, international financing institutions and
academia as well as representatives of local
governments engaged in climate change mitigation
and adaptation in the urban context.
Objectives of the symposium:
Review the latest scientific findings on climate
change impacts on cities, considering the
uncertain implications of climate change
scenarios for urban micro climates and the
challenge of identifying the adequate
investments under these constraints
Discuss financing instruments, policies and
innovative approaches to address the specific
challenges of mitigation and adaptation in the
urban context whilst highlighting the multitude
of independent actors engaged in this field
Address the relevance of national strategies for
channelling international climate funding into
sustainable and climate resilient urban
development
Provide a platform to share experiences, lessons
learned and future plans on financing climate-
resilient and low carbon urban infrastructure in
developing countries and emerging economies
Cities and Climate Change
Mitigation
Cities are increasingly important hubs for social
and economic development and are major
contributors to climate change. Urban production
and consumption patterns account for more than
80% of the worlds total greenhouse gas emissions.
2

Given worldwide urbanisation and demographic
trends such as population growth and rural-urban
migration, urban
emissions can be
expected to grow
further. Thus,
cities are pivotal
to reducing global greenhouse gas emissions.
However, obtaining reliable estimates for urban
emissions is in itself already a challenging
endeavour. During the symposium, the latest
scientific findings on current and future urban
emissions as well as the related uncertainties will be
presented and discussed. A thorough analysis of the
multitude of actors in the urban context is also
important for identifying the respective shares and
drivers of increasing emissions and their inter-
linkages with economic growth and urbanisation.
There is a growing need to explore the patterns and
structures that account for greenhouse gas
emissions in cities of developing countries and
emerging economies.
Climate Change Impacts and
Adaptation
Especially cities and their poor neighbourhoods
in developing countries and emerging economies,
situated at coasts or river banks but also inland,
are vulnerable to the impacts of climate change.
Residential and commercial structures, transport
and energy as well as water and sanitation
systems may be
affected. Climate
change is likely to
aggravate existing
problems of urban
development like population growth and traffic
congestions.
3
The symposium wants to discuss

2
World Bank 2010: Economics of Adaptation to Climate
Change: Synthesis Report.
3
United Nations Human Settlements Programme 2011: Cities
and climate change: global report on human settlements.
What are the driving
factors of greenhouse
gas emissions in cities?
How will climate
change affect urban
development?




3
Background Paper for the International Symposium:
Cities in a Changing Climate
Financing Adaptation and Mitigation in the Urban Context of Developing Countries and
Emerging Economies
organized by
how climate impacts and the necessary responses
will affect the future development of cities.
Taking Action under Uncertainty
While knowledge on emission scenarios and
future climate impacts is growing, uncertainties
regarding the development of global emission
levels, specific local effects of climate change
(magnitude, frequency and timing) and the
resulting risks remain. Under these circumstances
investing in the adaptation and mitigation
measures identified poses various challenges to
political decision makers and financiers. Sound
vulnerability assessments and the systematic
identification and prioritisation of adequate
adaptation and mitigation measures are needed.
The uncertainties involved require new models
and risk management approaches to facilitate
urban climate investments. The symposium seeks
to address the issue of how to tackle climate-
related uncertainties in city-wide strategic
thinking and investment strategies.
Preparing decisions under uncertainty needs even
more stakeholder participation than usual
planning decisions. Only if the affected groups
have the chance to bring in their own point of
view and see it balanced towards other interest,
the process can result in measures accepted and
supported by the urban community.
Especially concerning climate change action,
many activities
are beyond the
responsibility of
local or national
authorities and a
large number of
individuals needs to be convinced to act into the
same direction.
Investment Needs and
Implementation Requirements
Infrastructure is the backbone of any urban
system and a major driving factor of sustainable
urban development and economic growth.
Climate change impacts are an important factor
to consider but not the only one as urban
infrastructure has
to meet a variety
of different
needs. Therefore,
adaptation and
mitigation need
to be integrated into the process of urban
development planning, taking into account
interfaces and potential synergies with
conventional investment needs.
Adaptation and mitigation will require the
substantial transformation of and investment in
low-emission, climate-resilient infrastructure.
According to the World Bank the annual global
costs of adaptation for sectors related to urban
areas is estimated to be at least between $57
billion and $65.2 billion for resilient public
infrastructure as well as for respective investment
in private property.
4

Taking steps towards building resilience and low
carbon development requires municipalities and
private actors to define economically and
financially viable projects. This includes a
thorough evaluation of investment priorities,
realistic cost estimation and financial assessment,
as well as seeking affordable financing resources.
Initiatives like the Asian Cities Climate Change
Resilience Network (funded by the Rockefeller
Foundation) or the Cities Development Initiative
for Asia (funded by BMZ and Asian
Development Bank) are supporting cities in


4
World Bank 2010: The Economics of Adaptation to Climate
Change; see also World Bank 2010: Cities and Climate
Change: An Urgent Agenda.
How to facilitate urban
climate investments
under climate-related
uncertainty?
How to link urban
climate action and
investment plans to
national strategies?




4
Background Paper for the International Symposium:
Cities in a Changing Climate
Financing Adaptation and Mitigation in the Urban Context of Developing Countries and
Emerging Economies
organized by
implementing their strategies by preparing
concrete projects. The conference will present
examples and lessons learned from climate-
resilient infrastructure projects. Discussions will
focus on the
challenges cities
face in defining
financially viable
urban infrastructure
investments.
Financing in a Multi-Level
Governance Context
Cities contribute disproportionately to the overall
economic performance of their respective
countries: economic growth is urban to a large
extent. In this regard sustainable and climate-
resilient urban development is of utmost national
interest and necessitates national strategies.
Approaches to urban adaptation and mitigation
need to reflect the multiple levels of governance
that affect the planning and financing of
responses to climate change. Cities rely on larger
sectoral policies and decisions taken at
state/provincial, national and international levels.
Today mechanisms supporting the elaboration of
specifically urban strategies on the national level
are at an early stage.
To strengthen policy coherence as well as access
to climate finance, urban activities need to
consider existing national strategies and plans
such as national climate strategies as well as
multilateral processes under the UNFCCC
5.
As
international climate funding will be linked to
respective national strategies, the question arises
of how cities governments can get involved in
the discussion. At the same time, there is a need
to debate how national governments can improve
legal, regulatory, institutional and financial

5
e.g. Nationally Appropriate Mitigation Actions (NAMA),
National Adaptation Programmes of Action (NAPAs), National
Adaptation Plans (NAPs)
conditions in order to facilitate urban climate
investments. The symposium will shed light on
these discussions, addressing governance-related
barriers and opportunities of urban climate
finance as well as raising the question of
conflicts of interest in this regard.
Climate Finance Instruments
Well-designed financing and investment
programmes are one key to promoting adaptation
and mitigation activities in cities. The field of
climate finance or more precisely climate-
specific finance is becoming increasingly
complex, with a growing number of mechanisms
aiming at different target groups. Currently,
international climate funding is largely
channelled through national governments. From
an urban perspective accessibility is limited and
questions arise of how cities needs could be
better reflected in the design of financing
instruments.
6

Besides seeking international climate funding
through bilateral and multilateral institutions,
cities need to turn to conventional public sector
financing and look into existing revenue-
generating
mechanisms
(e.g. property
tax, local
municipal
fees and user
charges). How to enforce and channel those
mechanisms for climate financing will be a key
question for cities.


6
Cities Development Initiative for Asia 2011: Overview of
International Financing for City Climate Change interventions.
How to prepare
adaptation and
mitigation projects
for investment?
How to better consider
urban needs in national
and international climate
change response
strategies and processes?




5
Background Paper for the International Symposium:
Cities in a Changing Climate
Financing Adaptation and Mitigation in the Urban Context of Developing Countries and
Emerging Economies
organized by
According to a global study by the Climate
Policy Initiative, private financing currently
provides the
majority of
low-carbon
investments.
7
With regard to
the gap between ambitions for public climate
financing as expressed during international
climate negotiations and the status quo,
































7
Climate Policy Initiative 2011: The Landscape of Climate
Finance.
adaptation and mitigation activities in cities will
continue to need private sector financing for
public infrastructure. In this context, public
finance can play a potential catalytic role
8

through promoting innovative approaches and
pilot projects initiating further private
investment. The symposium wishes to encourage
discussions about the identification, applicability
and improvements of existing as well as
requirements for new financing approaches.


8
World Bank 2010: Climate Finance in the Urban Context.
What are cities needs
regarding international
climate finance?