By Nidhi Upadhyaya and Jorge Gastelumendi
This report was made possible by the support of the Liberty Mutual Climate Transition Center. A special thanks to Rakhi Kumar, senior vice president for sustainability solutions and business integration at Liberty Mutual, for contributing insights to this report from her perspective in the financial sector.
Despite urgent calls in 2019 by the Global Commission on Adaptation, climate resilience and adaptation are significantly underfunded. Only $63 billion—less than 5 percent of international financial climate flows—is directed annually toward adaptation and resilience. Research shows that every dollar spent on resilience saves more than $13 in rebuilding costs. This means resilience isn’t just a climate imperative; it’s a smart financial investment.
The world is on a trajectory to hit 3 degrees Celsius (5.4 degrees Fahrenheit) this century. This will bring more intense and frequent loss-driving climate events including heat waves, rainfall, droughts, flooding, hurricanes, and wildfires. A recent study shows that a 1-degree Celsius rise in global temperature lowers world gross domestic product (GDP) by 12 percent. With this in mind, it is imperative to prepare for a more climate vulnerable future around the world.
Policymakers, businesses, and community leaders need to prioritize climate resilience and drive investment into adaptation efforts. They have a critical opportunity to embed resilience into planning, budgeting, and infrastructure decisions now, unlocking long-term savings and safeguarding communities before disasters strike.
There are direct solutions and policies that can expedite disaster recovery responses and even mitigate vulnerabilities before they happen. This report overviews five action areas that can most effectively mitigate and prevent the costs and losses that come from climate disasters.
What’s in the report?
Action area one: Land use policy and protecting natural assets
Action area two: Building codes
Action area three: Developing and disclosing resilience plans
Action area four: Post-disaster recovery planning
Action area five: Engaging the community
Action areas for resilient community planning
Planning for resilience is complex because of ever-changing and unpredictable weather patterns. It is further complicated by the fact that the physical climate and natural-catastrophe (nat-cat) impacts are largely felt at local levels, but the costs are often borne at the national or state level because governments step in to fund recovery and rebuilding efforts.
So, where do leaders tasked with building resilience start? This paper gives policymakers the foundation they need to develop and execute resiliency plans. By considering how to lower risk while simultaneously considering opportunities for insurers, we propose five tested approaches that policymakers and community leaders can use to facilitate the building of long-term resilience:
- Design climate-responsive land use policy and protect natural assets;
- Adopt and enforce strong building codes;
- Develop and disclose community resilience plans;
- Build post-disaster recovery plans; and
- Engage and educate the community.
These approaches consider risk-mitigation and insurability, with a goal of protecting lives and physical infrastructure. They are featured and explored below to form a foundation for policymakers to develop and execute adaptation plans. Blending all five approaches is the key to maximizing resilience.
1. Designing climate-responsive land use policy and protecting natural assets
Land use is a term that captures the broad range of human activities that can happen on a set parcel. From agriculture to conservation, land has economic and social value. Thus, land use policy is the starting point for many economic activities, like timber extraction or commercial development.
However, land use policy decisions have typically not considered the impact of a changing climate. Consequently, many of the existing property portfolios of towns, nations, and investors are vulnerable to growing nat-cat risks. Further compounding this problem, previous land use decisions are proving expensive to manage and hard to reverse. Revisions that better account for climate change can disrupt the routines of individuals as well as local finances and businesses. Land use decisions should account for long-term climate risks because reversing them comes with heavy costs and social burdens.
The protection of natural assets also merits consideration. Mangroves, freshwater and saltwater marshes, sand dunes, and coral reefs can serve as natural resiliency barriers to extreme climate events. For example, the protection of coral reefs and the maintenance of mangroves, marshes, and other natural solutions can reduce wave heights by up to 71 percent, protecting people and infrastructure around them.
However, local governments can often underestimate the resiliency of these natural assets. This is because their benefits are “free” and hard to quantify. Recent research suggests that nature-based solutions could reduce the intensity of climate- and weather-related hazards by 26 percent. This would save at least $104 billion in 2030 and $393 billion in 2050. The investment required to rebuild and maintain constructed assets that replicate this natural protection, such as sea walls, is high. It can be an ongoing drain on community resources. For example, in the Caribbean, coral reef restoration costs around $1 million per linear kilometer, whereas artificial structures for coastal protection such as seawalls and levees cost nearly $19 million per linear kilometer.
More than 80 percent of recent studies find nature-based solutions to be more cost-effective than conventional engineering solutions. Sometimes it is not even physically possible to have constructed structures in place of reefs or mangroves. However, where possible, there is growing interest in gray-green infrastructure projects. This approach builds natural asset protection into gray infrastructure plans, like an example in Vietnam where mangroves are incorporated alongside sea dikes for coastal protection.
Beyond offering direct economic benefits by shielding communities from environmental hazards, nature-based solutions provide significant co-benefits. These include supporting biodiversity restoration, improving water quality, and sequestering carbon—all of which support long-term socioeconomic resilience.
Key takeaways for land use policy and protecting natural assets
Land use policy—if informed by climate risk and coupled with zoning laws that preserve natural assets—can substantially mitigate long-term climate risk at a systemic level.
These policies should be carefully crafted with the help of future climate projections and must consider a combination of nature-based solutions and constructed assets to balance costs against maximum benefits. After all, nature-based infrastructure in cities is, on average, 42 percent cheaper and creates 36 percent more value than gray infrastructure if avoided costs and co-benefits are taken into account.
2. Adopting and enforcing strong building codes
Building codes set legal minimum requirements for the design and construction of buildings. These codes are the reason for codified fire safety, energy efficiency, electrical, plumbing, and accessibility standards. From a climate perspective, building codes can standardize ways that building design can prepare for external forces such as wind, rain, hail, or wildfire. They are one of the most effective tools we have for climate adaptation. However, the integration of climate resilience into their design and implementation falls short.
Many consumers incorrectly assume that their homes are designed to withstand the climate hazards in their geographic area. They expect local buildings codes to be updated and enforced. However, a 2023 Federal Emergency Management Agency (FEMA) report states that two out of three communities in the United States still need to incorporate the latest codes. In reality, there are many hurdles to updating and enforcing climate-responsive building codes. This can include cost constraints, since implementing new codes requires significant investment. It can also include lack of buy-in from builders to implement and enforce codes at a community level.
Further complicating this issue is the variability between districts and regions. Every country has a different system for the development, adoption, and enforcement of building codes. In some cases, the national government develops and recommends the codes, and subnational governments adopt them. Given these nuances, the development, adoption, and enforcement of building codes requires strong policy alignment and coordination between national, state, and local governments.
There are countless examples globally in which stronger codes have saved lives, minimized damage, and accelerated recovery after disasters. In a 2024 FEMA pilot study, data from California and Colorado indicate that the adoption and implementation of building codes can impact wildfire preparedness. For structure fires, the estimated lifetime economic savings reached nearly $1.8 billion for single-family residential structures in California. It rose to more than $44.9 million in Boulder and El Paso Counties. These savings are spread over the seventy-five-year useful life of residential structures. Even better, more than one hundred fatalities and more than one thousand injuries were averted in California, as well as seven fatalities and sixty-six injuries in Boulder and El Paso Counties.
Policy actions need to prioritize the adoption and enforcement of building codes. While this might increase construction costs, it will help mitigate risk to lives and property and reduce future rebuilding costs.
Key takeaways for adopting and enforcing resilient building codes
As climate risks continue to evolve, codes must reflect future risk projections, not just historical data.
The development, adoption, and enforcement of building codes requires strong policy alignment and coordination between all government levels. Updating—and enforcing—these codes can save lives and prevent property loss.
3. Developing and disclosing community resilience plans
Community resilience is the ability of a community to prepare for anticipated hazards, adapt to changing conditions, and withstand and recover rapidly from disruptions. Building community resilience is a multipronged process.
First, there must be a clear assessment that examines and identifies the risks and vulnerabilities of buildings and public infrastructure to long-term changes in weather patterns. Next, communities must develop action plans that can attract and allocate capital. Disclosing these plans can help governments, businesses, and individuals coordinate and prepare for future events. Many NAPs can even determine which buildings and constructions support critical needs. Moreover, these plans should consider the risks during and immediately after an event. They should also outline clear response plans for state and local governments.
For example, in the case of flooding, planners should clearly articulate how they are mitigating flood risk, how they will manage floodwaters, and which areas are likely to flood. This level of information could help limit total loss. Why? It gives businesses and residents important information that allows them to better assess risks and supports their planning and decision-making efforts.
Finally, they must have the resources, support, and enabling environment to allow quick and effective implementation. Resilience planning is the keystone of the NAPs. However, while many cities and settlements have developed adaptation plans, only a limited number have implemented them.
Publicizing these plans also builds trust with residents. It can also signal to the private sector the community’s commitment to managing climate risk responsibly. A transparent, inclusive process must align with both public and private-sector priorities. Resilience plans can unlock funding opportunities, drive innovation, and ultimately create safer, more economically stable communities. When communities demonstrate that they are actively managing risk—through land use planning, building codes, infrastructure investments, and nature-based solutions—they become more attractive to insurers and investors.
Key takeaways for developing and disclosing community resilience plans
Resiliency plans can reduce costs, improve efficiency, and pave the way for attracting financial investments in building long-term resilience.
To be effective, they must be developed and implemented in collaboration with communities. This engagement can allow individuals, businesses, and first responders to enact plans and identify any potential barriers early in the process.
4. Inclusively building post-disaster recovery plans
Developing a post-disaster recovery plan is essential for ensuring a swift, coordinated response when—not if—a disaster strikes. Post-disaster recovery plans address short-term aspects of the recovery process. They can facilitate quick community responses. However, to do so, these plans require clearly defined roles and responsibilities. This allows community leaders, local government officials, businesses, and community members to know the actions to take for different climate hazards.
A well-structured recovery plan helps reduce confusion in the aftermath of a crisis. It can accelerate the return to normalcy and minimize both human and economic losses. In a study conducted for emergency responses in Thailand, the total monetary value for a one-minute improvement for each emergency dispatch over one year was 1.6 million Thai baht (approximately $50,000).
Creating a well-defined post-disaster recovery plan requires close collaboration with community leaders, local businesses, government agencies, emergency services, and utility providers. This cross-sector approach can align efforts and more effectively mobilize resources. A well-defined plan should also set phased goals for the built environment. These goals must establish expectations for the restoration of key community services in the subsequent days, weeks, and months. By investing in this planning upfront, communities can build trust and increase resilience. Post-disaster recovery plans better prepare individuals and communities for the realities of a changing climate.
Key takeaways for building post-disaster recovery plans
A post-disaster recovery plan should define what actions key community stakeholders can take after a major climate event to help speed up recovery.
To be successful, post-disaster recovery planning requires consultations with multiple stakeholders, including community members, local leaders, private businesses, and civil society organizations.
5. Engaging and educating the community
Community engagement is an important, but often overlooked, element of resilience building. Community members must have the opportunity to participate in resilience discussions, planning, and decision-making processes. These plans can increase costs, reduce revenues, or disrupt community services. Thus, buy-in is essential.
Without the buy-in and contributions of communities, governments can make well-intentioned decisions that are inadvertently destined to fail in the long term. For example, specific building codes might mandate more expensive materials or retrofits. The construction of new adaptive infrastructure could limit access to major roadways on which communities rely. Due to these direct impacts on individuals, early community support and can help reduce pushback or complaints.
Part of resilience building includes raising awareness and sharing knowledge with communities and individuals. This can help them understand and prepare for the impacts of climate change on their lives and livelihoods. Without this information, community members might not take individual actions needed to mitigate risks to their lives and property. They might also oppose funding for key resilience projects if they are not fully aware of the physical risks. Effective dialogues with communities can raise awareness of the possible short-term burdens for long-term benefits.
Individuals also need information and instruction on how to make risk-informed financial decisions, such as constructing with the highest build codes at the time of renovations or evaluating a building’s resiliency to physical risk when buying a home.
Policy action should also focus on deeper community engagement prior to, during, and after major climate events. A more engaged community will ensure that resilience plans are implementable, enabling the effective use of financial resources to save lives and property by directing those same resources to address critical gaps.
Key takeaways for engaging and educating the community
Delays in decision-making due to lack of buy-in from communities can result in higher costs or losses. Engaging communities in the resilience planning process can ensure that resources and finances more effectively address critical gaps in a timely manner.
Through capacity-building trainings, community members should be informed of individual actions to protect themselves and their assets during a climate event.
A more resilient way forward
Adapting to climate change and building climate resilience are often addressed in a fragmented manner. Building climate resilience and adaptation requires a full societal approach with coordinated action between diverse stakeholders across governments, communities, and private businesses. This requires strong resilience actions that can better direct funding to save lives and property.
Investing in climate resiliency or adaptation makes economic sense. The cost of building resilience is far cheaper than the cost of rebuilding after a disaster. However, many barriers to financing adaptation need to be overcome, including perception biases. There is a misguided belief among individuals and communities that loss-driving climate events are more likely to happen elsewhere or to someone else—not to them. Awareness raising and knowledge exchange can better prepare communities for the reality of climate events.
This process—and the consequent mobilization of adaptation finance—starts with resilience planning. To close adaptation or resiliency funding gaps, communities need clear, enforceable policies on land use, building codes, and disaster recovery. In parallel, countries must cultivate relations with constituencies to co-design solutions and build support for the upfront costs of adaptation.
In the development and implementation of NAPs and adaptation strategies, governments need to build trust with residents. Government leaders must signal their commitment to managing climate risk responsibly. Without proper resilience plans, communities—and governments themselves—will become financially and socially vulnerable to growing physical risk and to the changing risk preferences of homebuyers, mortgage lenders, investors, and insurers.
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