The Resilience Factor: A Competitive Edge for Climate-Ready Cities

Amy Bailey & Laura Brush
Posted on: 3/23/2022 - Updated on: 7/01/2022

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Increasingly, U.S. cities and regions are facing costly climate impacts that are having significant effects on local businesses and communities.

This report explores how the economic competitiveness of U.S. cities will be impacted as climate impacts worsen – and how enhanced climate resilience could could provide a competitive advantage. It focuses on the links between climate resilience and local economic competitiveness in three particular areas: city finances, economic development, and livability.

Based on a comprehensive literature review, discussions with city representatives and private-sector experts, and analyses of local resilience and economic development plans, this report examines the links between local climate risks and economic competitiveness. It highlights emerging resilience practices, identifies cross-cutting challenges, and recommends government and private-sector actions to strengthen climate preparedness and competitiveness among U.S. cities.

With respect to city finances, we find that local governments across the country are already facing real, but largely unquantified, financial impacts from weather disasters and chronic climate-related stressors that drain local budgets and put municipal creditworthiness at risk. Climate-related damages to public assets and systems force local governments to re-direct funds that had been designated for other needs towards repair and recovery instead. Municipal revenue streams are also at risk, for example when eroding property values lead to reduced property tax revenues. Local governments that are not adequately protected from these financial risks can be forced to boost long-term borrowing or otherwise adjust their budgets when impacts strike. At the same time, credit rating agencies and investors are starting to factor climate risks into their decision making, so cities ill-prepared for climate change may receive lower credit ratings and encounter higher borrowing costs – just when their need to invest in resilience grows.

A key component of a competitive city is the ability to maintain and attract new businesses through economic development, but climate change can hinder cities’ local economies by damaging private-sector assets and real estate, increasing operational costs, hindering worker productivity, and disrupting supply chains, utility systems, and transportation networks. One important aspect of a strong local economy – the commercial real estate industry – is becoming increasingly aware that investments and local markets may be affected by climate impacts and that greater risk management is needed. Further, cities with economies reliant on a single industry or major employer – a situation more common in small communities than large cities – are inherently more vulnerable than diversified economies to extreme weather events or chronic climate-related stressors. Despite the advantage a thriving and diversified economy provides, resilience planning has not typically focused on diversifying the local economy; likewise, economic development planning has not historically addressed climate resilience, or the economic opportunities that may be available in addressing climate risk.

City competitiveness also relies on factors that promote a high quality of life for residents, but climate change is already threatening the livability of U.S. communities. At its core, livability requires a safe place to live, and climate change presents an obvious threat by bringing sea level rise, inland flooding, wildfires, deadly heat waves, catastrophic storms, and more to neighborhoods throughout the country, threatening human life, health, and financial security. In addition, climate change is threatening housing affordability at the same time it is eroding home values – effects that appear contradictory but are often linked. For example, homes that cannot be insured or that face frequent repair costs due to climate-related impacts are both expensive to live in and worth less. Low-income communities and communities of color are disproportionately vulnerable to these and other effects of climate change on city livability.

City and industry experts agree that economic development and climate resilience planning should be more interwoven to ensure economic competitiveness in a climate-changed world. During our interviews with cities across the country, we encountered a variety of existing climate resilience strategies and others that are just emerging that can help cities strengthen their financial position, advance resilient economic development, and improve livability. Key strategies for local governments include: engaging across city departments, economic agencies, communities, and the private sector; preparing for new expectations around climate-risk disclosure; ensuring greater financial protections; climate-risk mapping vulnerable neighborhoods and assets; updating building and zoning codes; investing in resilient infrastructure; and prioritizing investments in vulnerable and marginalized communities.

Ensuring cities can take necessary action will require concerted efforts across sectors and governments to improve our institutions and their policies, practices, and tools. To help cities avoid economic losses and realize gains through climate resilience, we recommend the following:

Federal & State:

  • Establish a cohesive federal and state resilience policy landscape with adequate resources for local governments
  • Establish a national resilience clearinghouse to provide federal data and technical assistance to localities
  • Establish equity protections and resources to protect communities from negative impacts that arise from financial sector changes and the pandemic-caused economic downturn

Local & Regional:

  • Increase collaboration between city departments and agencies
  • Enhance protections and investments for low-income and marginalized communities
  • Promote regional collaboration to address shared climate risk

Private Sector:

  • Support local governments’ abilities to assess climate risks and the financial and economic benefits of resilience options
  • Increase collaboration with local governments to ensure public and private investments are resilient
  • Help local governments assess and adopt cost-effective financial protections to reduce the impacts of climate change on local budgets
  • Address the time horizon misalignment and risk ownership problems embedded in public- and private-sector decision-making

By addressing climate risks and boosting their resilience, cities can improve their ability to protect city finances, attract investors and employers, and improve livability – thereby positioning their local economies to be competitive in a climate-changed world.


The Resilience Factor: A Competitive Edge for Climate-Ready Cities. October 2020. Amy Bailey & Laura Brush. Center for Climate and Energy Solutions.…

Affiliated Organizations

The Center for Climate and Energy Solutions (C2ES) works to secure a safe and stable climate by accelerating the global transition to net-zero greenhouse gas emissions and a thriving, just, and resilient economy. C2ES is the successor to the Pew Center on Global Climate Change, long recognized in the United States and abroad as an influential and pragmatic voice on climate issues. Our mission is to secure a safe and stable climate by accelerating the global transition to net-zero greenhouse gas emissions and a thriving, just, and resilient economy.