How Private Investors Are Helping Cities Adapt to Climate Change: Lessons from the Afsluitdijk and Beyond

The Afsluitdijk, a 32-kilometer (about 20-mile) causeway in the Netherlands, has served as one of the country’s primary barriers against sea level rise since 1932. After nearly a century of use, the structure required hundreds of millions of dollars in upgrades. To address this, the Dutch government partnered with a consortium of contractors a decade ago, structuring the project as a 25-year contract with payments spread over time. This approach effectively introduced private financing for a public initiative.

As climate risks intensify, cities globally face a stark financial challenge: protecting themselves from rising seas and extreme weather could cost hundreds of billions of dollars—far exceeding the budgets of many governments. A new report from C40, a global climate group representing cities, suggests that one solution to this funding gap is engaging outside investors.

Work on the Afsluitdijk is now complete, and the sea wall continues to protect against encroaching water. The project is featured as one of 10 case studies in the report, which C40 will release during the World Bank spring meeting this week. The report also includes examples from Dakar, Senegal, and Washington, D.C., to illustrate why and how cities should collaborate with the private sector.

“The idea of this report is really to improve the conversation and bring in proof of concept so we can work with cities to leverage more of these opportunities. We can change the narrative.”

As climate risks grow, so does the cost of defending against them. The report cites research estimating that low- and middle-income countries alone will need between $256 billion and $821 billion by 2050 for climate adaptation. Yet, less than 1% of global climate funding currently supports urban adaptation efforts, leaving a significant shortfall between needs and available resources. This gap persists partly because adaptation projects are harder to finance than those focused on emissions reduction.

“Avoiding future damages is not a financing stream you can take to the bank in the way that you can energy efficiency and decarbonization. Projects need to be bankable.”

Balancing public sector goals with private sector attractiveness can be challenging, but C40 hopes its report will accelerate adaptation efforts. Barros emphasized that creative financing strategies are especially vital for cities with limited tax-raising capacity or low credit ratings.

According to the Zurich Climate Resilience Alliance, private investment currently accounts for just 3% of adaptation finance needs in developing countries. With targeted policy efforts, this figure could rise to 15%.