Mobilizing Private Capital for Climate Adaptation Infrastructure

Tom Ewart, Joyce Coffee, Sarah Miller
Posted on: 10/31/2023 - Updated on: 11/06/2023

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This is part of a series that explores specific challenges and opportunities in the development and implementation of adaptation policy in Canada. This paper discusses the role of private finance in climate adaptation infrastructure.

Infrastructure is essential to Canadians’ well-being and to the country’s economic activity, but increasingly acute climate impacts pose serious threats. Floods, wildfires, heat waves, and other extreme weather events are already taking a toll on infrastructure, and these damages are set to accelerate. Canada has experienced a number of costly extreme weather events during the last decade, including the estimated $4 billion impacts of Hurricane Fiona in the Maritimes in 2022, the $9 billion floods in British Columbia in 2021, and the $9 billion wildfire in Fort McMurray in 2016. These events reinforce the urgency of adapting Canada’s infrastructure to climate change.

Of particular importance in limiting the damage from worsening climate change is the need to scale up systems-focused adaptation investments, which are investments “explicitly intended to deliver climate resilience benefits to the broader system.” These investments, which we refer to as “climate adaptation infrastructure,” will be the focus of this paper.

The challenge of scaling up this needed investment cannot be met through public funding alone. The scale of investment required is simply too large, especially as governments are operating in a relatively constrained spending environment and their ability to borrow and spend is not infinite. This challenge is particularly acute for municipalities, which own and operate 60 per cent of Canada’s public infrastructure: they face limited capacity and revenue sources to address climate impacts and are facing a large price tag for infrastructure adaptation—an estimated $5 billion annually.

Climate adaptation is chronically underfunded, not only in Canada but around the world. Adaptation accounted for only 7 per cent of climate finance flows in 2021 (while so-called “dual-use” low-carbon resilience projects accounted for an additional 2 per cent), leaving the remaining 90+ per cent focused on climate mitigation. In Canada only 3 per cent of climate bonds issued in 2018 were used for climate adaptation projects. And while the recent National Adaptation Strategy is a major step forward for more effective national adaptation action, the investment that the federal government has so far committed to implementing the strategy falls far short of what is required.

Closing the funding gap and investing more ambitiously in proactive adaptation is critical—not only to protect communities and livelihoods but also to limit the toll that climate change takes on Canada’s economy as a whole. The economic case for proactive adaptation is extremely strong: recent studies estimate that without proactive adaptation, climate impacts could cost the Canadian economy $78 billion annually by mid-century, even under a low-emissions scenario. Proactive adaptation can cut those costs in half.

But despite a strong economic case for resilience, Canada must address considerable challenges to unlock private finance. Most significantly, the benefits of climate adaptation infrastructure cannot always be easily quantified, aggregated, and monetized in a way that creates the cash flows required for the private sector to invest. This paper explores these challenges and identifies potential solutions to align the financial case for adaptation investment with the myriad benefits it provides.

Beyond this primary challenge, other barriers have hampered progress in adaptation infrastructure broadly—and mobilizing private finance for adaptation infrastructure specifically—that must be addressed. These include a lack of climate risk awareness at the individual and organizational level, institutional inertia, and capacity challenges, particularly at the municipal level. We discuss these challenges and put forward potential tools to begin to address them, for further discussion and policy analysis.


Ewart, T., Coffee, J., Miller, S. (2023). Mobilizing Private Capital for Climate Adaptation Infrastructure. Canadian Climate Institute. 

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