Climate solutions: The city as a sponge

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>> “Climate Solutions” is also available as a podcast and an e-book.

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By Leonor Berriochoa Alberola and Giulia Macagno

The risk of floods and other increasingly extreme weather events is a major headache for planners in historic cities, who can do little to change the dense, narrow streets of old centres.

That’s why Florence, whose centre is about as historic as they get, is putting into effect a plan to create areas around the Ema, a tributary of the city’s biggest river, the Arno, that will sop up future floods like a sponge. When the river isn’t in flood, these areas will be parks to be enjoyed by citizens.

It’s a clever plan and it’s something that more and more cities all over the world are going to be doing. Cities are adapting to the consequences of climate change with nature-based solutions that also make the city more attractive and pleasant for residents.

The European Investment Bank has a long relationship with Florence, making many loans to the Tuscan city over the decades. Recently the bank has responded to the climate crisis by encouraging all kinds of borrowers to think about what it means for them. In the case of cities, of course there are some obvious measures that can be taken. Buildings can be made more energy efficient, for example, with better insulation, heating systems and windows. Meanwhile, energy can be generated through solar panels, rather than through polluting fuels.

A role for urban climate adaptation

Energy efficiency and renewable energy schemes fall into the category of climate mitigation. They reduce the net emissions of greenhouse gases and, thus, counter global warming head on. That’s important, because most of the emissions heating up the global climate come from cities.

But cities also need to face up to the often disastrous impact of climate change as it already affects them—and as it’s likely to continue to affect them in coming decades, even under the most favourable scenarios. This adaptation to climate change is important in cities, because of the economic and social consequences of floods or extreme heat waves on unprepared populations.

None of this is easy. Every mayor knows their city has to adapt and is developing climate strategies. But the implementation and financing of climate-resilient projects is a challenge. Technical and financial teams in public administration need to work together to:

• understand climate risks and vulnerabilities
• integrate into projects the right improvements and safeguards to protect the city against climate change
• understand the budgetary framework to finance these new resilient projects.

The Hub for urban climate adaptation

Here’s how the European Investment Bank worked with the City of Florence on the definition of its climate strategy and climate-resilient projects that could be financed by the Bank.

Through the European Investment Advisory Hub, a partnership between the bank and the European Commission, we recruited a consultant to work with the Florence municipality to improve upon a planned flood protection scheme, so that it would also tackle additional climate change risks. The study aimed to create new Green-Blue infrastructure on the Ema to:

• reduce heat island effects
• improve the Ema’s water quality
• improve sustainable mobility with bicycle paths connecting local towns and nearby cultural sites
• reduce urban runoff and potential water pollution
• provide alternative water resources in case of water scarcity
• increase biodiversity.

Thus, the study developed a plan to improve the capacity of the area around the Ema outside the city centre to absorb rising water levels. This would lead to less damaging floods in the city centre.

With the consultant’s help, Florence coordinated with two smaller municipalities on its borders and developed a project that utilises a park around the banks of the Ema for a nature-based solution to the problem. Instead of building concrete tanks to collect flood water, they built hills and valleys in a park that can absorb the flood and, when there’s no flooding, double as a place for recreation, including bike paths.

The adaptation project may be included in an existing €225 million loan from the European Investment Bank that will help finance other urban infrastructure schemes.

How to replicate adaptation projects for unique urban challenges

Florence’s adaptation project is a good one. Like most adaptation measures, it also doesn’t eat up too much of the city’s budget.

But it required a lot of thinking, because each city’s adaptation solution is unique.

Cities need to bring in an expert to suggest tailor-made solutions. That’s the difficulty of adaptation. There are a lot of things that can be done, yet it’s hard to identify the most cost-effective and most suitable solution in any specific case, because the climate risks and vulnerabilities are unique for each project. Some cities don’t have the internal resources for this and they may need external specialists.

How unique is each adaptation project? Some things apply everywhere, of course. If there’s a risk of floods, one common adaptation practice is to put heating and air-conditioning machinery on the roof, instead of in the basement where it can be inundated by water. However, when it comes to the design of public infrastructure, things become more complicated.

Here are a few unique examples that we’ve noticed either through projects we worked on or from observing how cities are dealing with the challenge:

• Growing grass or trees in the south of Spain is a challenge, because of low rainfall. In Malaga, it wasn’t feasible to plant trees to provide shade for citizens. So the municipality put up large parasols in pedestrian areas. The result: people go out even in the sunshine, which is good for business, tourism and social life.
• Barcelona saved a lot on climate adaptation measures for social housing projects, just by finding the right orientation of the buildings to create cross-ventilation and to maximise the exposure to the sun at the right time.
• In Paris, air-quality measures were presented to residents less as a climate issue and more as a matter of health, which made them popular even with people who would have been unwilling to accept them just for the sake of climate action
• Rotterdam is taking away paved areas of the city. Those impermeable surfaces, which do not allow water to drain away fast enough, are being replaced with sand, soil and plants. The aim is to use the city as a sponge, retaining water for later use.

There are a lot of options that are relatively low-cost. Cities are testing things out, because adaptation is clearly a field of urban development that will be increasingly important.

The key element that we always drive home in our consultations with cities is that adaptation should be part of an integrated plan. Random, small interventions can add a lot of value, in particular in cities where there is little new development. However, as long as the masterplan doesn’t take adaptation fully into account, then it’s difficult to make the city truly resilient to climate change.

Urban climate adaptation in Athens

Athens is a good example of a city that has really made adaptation central to its resilience strategy.

The urban fabric of Athens is made up of dense constructions that cover 80% of the city’s surface. So much asphalt and concrete retains heat during the extended heatwaves to which the city is increasingly exposed. These urban heat islands in the city centre can be more than 10°C warmer than the suburbs. But asphalt and concrete are not just a liability when the weather’s hot. They also stop water seeping away into the ground during rainstorms. The result: frequent local flash floods.

The city set out to solve these problems, which are the result of climate change. Athens is entering into a set of innovative climate adaptation projects financed by the Natural Capital Finance Facility, a programme run by the European Investment Bank in cooperation with the European Commission that focuses on nature conservation, biodiversity and adaptation to climate change through nature-based solutions.

The Athens Natural Capital Finance Facility project is expected to create at least 25% more green areas and introduce several climate adaptation measures that include birdhouses and trees. Green corridors are very important for biodiversity, because they allow species and air masses to move.

They’re also very pleasant for city residents.

Nature-based urban climate adaptation

These parts of the overall project, backed by the Natural Capital Finance Facility, are included in the framework loan from the European Investment Bank signed in December 2018 that’s intended to support Athens’s “2030 Resilience Strategy,” drawn up by the city in 2017. The main part of the loan will finance refurbishment of public infrastructure, including energy upgrades and earthquake fortification for municipal buildings, as well as sustainable mobility and waste management initiatives. The important thing to note here: the adaptation element is part of an integrated plan, and that’s what is likely to make it more effective—and easier to finance.

Athens is the first city to be financed under the Natural Capital Finance Facility, which includes technical assistance granted free to the municipality, in part to pay for an international consortium of consulting firms to assess the design of the plan. The consultancy will also follow the implementation and development of the range of projects that will be covered by the bigger loan from the European Investment Bank. It is a pilot project, which we think could be expanded to many other cities.

Urban climate adaptation and air quality

The quality of life for citizens is an important factor in adaptation projects. For one thing, greening areas once covered by impermeable concrete generally leads to parks or natural areas that residents enjoy.

Other environmental urban projects that are not strictly adaptation can be a similar benefit to the lives of citizens. Improvements in air quality are very important in this regard, because they counter the emission of greenhouse gases and bring health improvements to residents who find themselves breathing cleaner air.

We worked on a project with the city of Milan that grew out of the EU’s Urban Agenda, which includes a section on air quality. The Urban Agenda calls for the preparation of a technical assistance guide for cities and local authorities that lays out how to finance urban air quality plans—without jargon.

We prepared this guide by going through the process of developing an air quality plan with Milan. City officials had good data on how much they might be able to reduce emissions with improved heating systems and urban green areas. They wanted to know specifically:

• how to finance the project
• how to develop general guidance to be shared with other cities.

We prepared user-friendly guidance that shows in graphic format how to structure the financing based on a fundamental difference: Does the measure generate revenue, or not. If it doesn’t, the municipality is unlikely to get private investment. That might seem like a basic and rather obvious fact, but it’s not clear to every municipality. City plans are typically made by technicians, not financiers, and they need guidance so that they can consider the potential sources of financing early in the planning process.

Government or private investment for urban climate adaptation

Air quality plans generally include a wide array of measures, from the reduction of emissions from cars and other vehicles, to the improvement of energy efficiency in buildings and the expansion and improvement of urban green areas. While many cities know how to tackle air quality problems, identifying the most suitable sources to pay for them is often a challenge.

That depends on whether it’s revenue-generating or not, as mentioned earlier. However, some measure can generate revenue—or not—depending on their main purpose. For example, a low-emission zone can generate revenue if people are allowed to use their cars in return for the payment of a fee. But such a scheme may be unsuccessful in reducing emissions, since people are often happy to pay a price so that they can still use their car. In that case, the result is that the project brings in revenue, but doesn’t improve air quality.

The document we prepared through our Urban Agenda Partnership for Air Quality provides examples of different sources of financing for municipal air quality projects. It also shows the part the European Investment Bank can play, from technical advice by the European Investment Advisory Hub’s URBIS platform through to “framework” loans, in which a variety of urban projects can be included within a single loan from the Bank.

The idea is to share knowledge about a sector that:

• requires technical faculties some cities don’t have
• has a lot of aspects in common with the urgent task of confronting climate change

Thus, the very highly motivated technical staff at municipalities will be able to use the guide as a tool to define an appropriate combination of financing sources in cooperation with their budget offices.

We are now about to launch a study of the economic value of adaptation in urban areas. This is also a result of the Urban Agenda adaptation partnership. We intend to select three or four cities with specific projects and a resilience or adaptation strategy, working with them to assess their options through the lens of a cost-benefit analysis.

The bottom line is that cities need to adapt to climate change. They also need to adapt to, well, the idea that adaptation is part of that process. Our challenge is to help prepare them for this increasingly important part of managing a city.

Climate solutions: Urban climate adaptation if you’re a…

Policymaker: Reflect on how climate change impacts your city and its infrastructure. Reflect on how to translate this into your masterplan at the city level. Once you have that level of general planning, it’s much easier to prioritise individual projects, because they can be seen to help reach the bigger goal. To define priorities, you need to plan and look at the city as a whole. Adaptation isn’t an issue that will just make you look up to speed on a current issue—climate change. Rather, it has an economic impact and a social impact on the quality of life of your citizens.

Citizen: Be aware and push local authorities to make adaptation key to their city plans. Ask questions about the impact of climate change on your city. Is it a health impact, because heat waves send people to the hospital? Is it an economic impact from frequent floods that destroy the stores in your basement?

Financial institution: We have a responsibility to steer local authorities and project promoters into thinking about adaptation. We have to strengthen our technical capacity, especially at commercial banks that lack experts with an understanding of these risks. This is, in itself, an additional risk to which these banks are exposed. We have to find a way to reward municipalities that take adaptation into account. If they have an increased cost that ultimately mitigates a risk, it has a positive impact on their long-term financial stability, so we have to take that into account in the pricing of a loan. The benefit has to be financial for it to be taken up widely.

Leonor Berriochoa is an engineer and Giulia Macagno is an economist in the urban development division of the European Investment Bank.

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>> “Climate Solutions” is also available as a podcast and an e-book.

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