The Weekly: Financing the Missing Asset: Why Municipal Bonds Have Struggled to Finance Climate Resilience
Bespoke deals are too complex to scale. Broad “green” designations are too vague to measure. A middle route can fund adaptation at the pace climate risk demands.
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- Get on the early access list: The Resiliency Company has teamed up with The Nicholas Institute to produce a report on the lessons from six states that have scaled IBHS FORTIFIED roof adoption. Be the first to know. - Feature: Why municipal bonds have struggled to finance climate resilience. - From the archive: New Jersey's stormwater utilities are a funding source for flood infrastructure. - In the news: How to build homes that can survive extreme heat.
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Save Your Seat: The 2026 Rebuilding with Resilience Summit in Los Angeles on August 18th
Since the first Rebuilding with Resilience Summit convened in June 2025, Los Angeles has moved from ideas to action—testing new approaches to rebuilding that reduce wildfire risk, improve insurability, and make resilience more financially viable for communities recovering from disaster.
The Resiliency Company, in partnership with the Department of Angels, is convening builders, community leaders, advocates, local governments, financing partners, insurers, and resilience practitioners for a day focused on collaboration, strategy, and implementation built around one question: How does rebuilding with resilience become the norm?
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Get early access to our report: How States are Financing Property-Level Resilience
States across the country are developing innovative approaches to finance property-level resilience investments that reduce future losses from natural hazards.
The Resiliency Company has teamed up with The Nicholas Institute to produce a report on the lessons from six states that have scaled IBHS FORTIFIED roof adoption.
The report, which will be released in the next few weeks, includes lessons for policymakers, philanthropy, insurers, and investors seeking to scale resilient housing.
Financing the Missing Asset: Why Municipal Bonds Have Struggled to Finance Climate Resilience
In Part I of a series on embedding resilience into public finance, Matt Posner, the Head of Public Finance for The Resiliency Company, explains why municipal bonds have struggled to finance climate resilience and what can be done about it. He makes the case that a middle route exists between bespoke deals and broad green designations that can fund adaptation at the pace climate risk demands. In this newsletter, we share a summary of his article.
Resilience finance in the municipal market has generally occurred in two different, yet equally inept ways. On one side are transactions that are too narrow: bespoke, highly-engineered deals that cannot scale. On the other side are transactions that are too wide: general obligation bond issuances, where resilience outcomes become difficult to track or measure. Together, this means fewer bankable projects, higher costs of capital, and a market that can't fund resilience at scale. But a middle route can fund adaptation at the pace climate risk demands.
Too-Narrow: Deals Can't Scale Because Every Transaction Reinvents Its Own Rules
The first structural problem is bespoke resilience finance transactions. The power of the municipal bond market, and securities in general, is that they can scale. These are financial instruments that can package millions, if not billions, of dollars into programs and projects. Yet, as the resilience discussion has evolved, many public finance solutions forgo scalability from the get-go by engaging in unique transaction-types.
Environmental Impact Bonds (EIBs), blended capital structures, and a variety of special purpose vehicles are a few examples of resilience finance models that are difficult to scale. While the structures vary, these more bespoke options redistribute risk and reward among participants.
Many of these projects are valuable concepts, but they’re not scalable across thousands of local governments and do not take advantage of what the muni market can really deliver when it comes to resilience needs. Instead, they tend to cost more for taxpayers due to these complexities.
Too-Wide: Bonds Raise Money Without Proving They Reduce Risk
If the first problem is excessive customization, the second problem is excessive generalization, where broad “green” designations are attached to traditional general obligation bond issuances.
Because the cost and bespoke nature of that transaction made replicability difficult, states and large issuers began labeling portions of massive bond offerings as “green” or “climate” bonds—applying a green label to what they were already doing. As a result, many of these issuances were simply conventional general obligation (GO) bonds—backed by the full faith and credit of a municipal or state government—that now carried a green designation. In most cases, the bonds did fund verified “green” projects, but because of the funding mechanism, the same bonds could also fund ineligible projects.
A Middle Path Exists Between Bespoke Deals and Generic Green Bonds
Municipal finance already has mature systems for evaluating liabilities, issuing debt, managing reserves, building capital improvement plans, and matching repayment sources to public investments. These systems have financed generations of roads, schools, water systems, and economic development. Rather than replacing them, resilience finance should begin by working within them.
The real opportunity is finding better ways to value resilience within the debt instruments we already have. Here is how this could look with typical muni bond structures:
A resilience district, for example, could issue land-secured bonds to finance neighborhood-wide participation in the Insurance Institute for Business & Home Safety’s FORTIFIED Neighborhood program.
A stormwater utility could issue revenue bonds backed by its existing stormwater fees to finance resilience projects.
Each structure uses an existing municipal finance tool but broadens the definition of what constitutes a financeable public asset. Instead of paying solely for concrete, pipes, or roads, these transactions finance measurable reductions in future fiscal risk.
Once governments can consistently demonstrate that connection, resilience no longer requires bespoke financing structures; it becomes another investable category within the municipal market.
How to Sell Flood Infrastructure: Make It a Park | The Epicenter | Cities spent decades building pipes and pumps to move water out fast. Hoboken tried absorbing it instead—and cut flooding by 88%.
Uneven Adaptation: Insurance Pricing and Household Climate Resilience | Brookings Institution | A Brookings study finds that rising insurance premiums do not push all homeowners toward greater resilience. In Florida, wealthier households responded to higher costs by investing in storm-resistant upgrades, while lower-income households were priced out of adaptation. The findings point to the importance of targeted subsidies for resilience upgrades.
Specialty Farmers Adapt Harvests to Extreme Heat | Insurance Journal | As extreme heat shortens harvest windows and strains crops, many specialty farmers are adapting with earlier work hours, crop diversification, and other resilience measures. But unlike commodity growers, many lack access to practical crop insurance, exposing gaps in federal crop insurance programs.
What Extreme Heat Means for State Budgets | Pew | States are confronting unprecedented strain on their public balance sheets as extreme heat drives up public healthcare costs, damages vital infrastructure like buckling bridges, and wipes out billions in agricultural revenue. Policymakers are turning to climate mapping tools and heat action plans to meet these rising fiscal pressures.
The Economic Value of Wetlands in Reducing Riverine Flood Losses in the USA | Nature | Wetland destruction across the United States since 1985 has driven a staggering $10.1 billion increase in federal flood insurance claims. Analyzing decades of property data reveals that individual claim amounts rise for every hectare of upstream wetland lost. A Nature paper finds that for at least one-fifth of American subwatersheds, the financial benefits of conserving these natural buffers well outweigh the costs.
Read more about resilient public infrastructure and government solutions on The Epicenter here.
Real Estate & Construction
How to Build Homes That Can Survive Extreme Heat | Grist | America’s total reliance on air conditioning has created a dangerous architectural vulnerability, leaving modern homes completely defenseless against heat waves if the power grid fails. Ancient passive cooling strategies like white reflective paint and calculated shading can cut energy bills in half and transform modern buildings into protective thermoses that preserve human life during blackouts.
Louisiana FORTIFIED Roof Program Expands With $64M in Excess Funds | WDSU | Louisiana is adding $64 million to its Fortified Homes Program, expanding grants for stronger roofs beyond coastal communities into more inland regions. Since launching in 2023, the program has helped nearly 5,000 homeowners upgrade to IBHS Fortified standards.
Read more about resilient real estate on The Epicenter here.
Private Investment
Global Climate Finance Crosses USD 2 Trillion, but Pace Needs to Accelerate to Reach Climate Goals | Climate Policy Initiative | Global climate finance surpassed an unprecedented $2 trillion for the first time, yet annual investment growth is slowing. When it comes to resilience, the CPI report finds that private investment remains a missing piece, as public funding alone cannot meet escalating needs.
Fern's Long Shadow: What US CEOs Said About Climate Risk in Q2 | Climate Proof | Corporate America faced an extended financial hangover in the second quarter as executives continually cited the lingering damages of Winter Storm Fern. Transcripts from hundreds of top U.S. public companies reveal that winter freezes, data center climate exposure, and looming wildfire liabilities are preoccupying boardrooms.
Read more about private investment on The Epicenter here.
The Statistic of the Week
30x increase
Between 1985 and 2024, acreage burned by high-severity forest fires in California increased by 30x. A UCLA study found that this is likely due to the suppression of frequent, lower-grade fires that removed forest floor fuels without killing trees.
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The Epicenter helps decision makers understand climate risks and discover viable resilience solutions. The Epicenter is an affiliated publication of The Resiliency Company, a 501(c)3 nonprofit dedicated to inspiring and empowering humanity to adapt to the accelerating challenges of the next 100+ years.
