Funding for adaptation to climate change : the case of Surat

Abstract

The need for cities to adapt to climate change is widely acknowledged, yet the question of adaptation finance remains uncertain. Unable to access global climate funds, cities must seek out alternative sources to support their adaptations to climate change. This is particularly challenging for local governments in India, where incomplete fiscal decentralization has resulted in severe developmental deficits and resource constraints. Using Surat, Gujarat, as a case study, this research examines how cities in India might fund climate adaptation despite limited fiscal and administrative autonomy. It furthermore explores how the urban finance system might affect the implementation of climate adaptation strategies at the city level. Evidence comes interviews with key officials, municipal budget data, and public planning documents. The case study suggests that cities can effectively marshal funds from international, national and state sources to invest in climate adaptation. Some of these funding sources explicitly support adaptation, whereas others are linked to broader urban development or disaster risk reduction objectives. The research findings indicate that relying on external sources has required trade-offs between policy agendas, resulting in a fluid understanding of "climate adaptation" on the ground. While the urban finance system appears to have encouraged experimentation in Surat, it may constrain the effectiveness of climate adaptation at the city level. Dependence on intergovernmental transfers and grant aid limits the ability of cities in India to set and maintain local priorities, thereby narrowing the scope for effective and sustainable climate adaptation outcomes. Limited fiscal autonomy has hindered access to alternative sources to finance, such as public-private partnerships and municipal bonds. It has also contributed to a project-based approach that may compromise a longer-range and more comprehensive vision for adapting to climate change. In this setting, experimentation and innovation in financing climate adaptation at the city level will be crucial to moving forward. Keywords: urban climate adaptation, municipal finance, multilevel climate governance, India.