Climate cash pivots to new reality of a hotter, wetter planet

Government and private money is pouring into plans to control flooding, address extreme heat and shore up infrastructure to withstand more severe weather caused by climate change.

Nearly all of the spending on climate change has gone to prevention, including reducing fossil-fuel use and developing technologies to lower carbon dioxide in the atmosphere. Those mitigation efforts haven’t been enough.

Funds aimed at addressing the effects of climate change recently accounted for about 5% of the roughly $1.3 trillion spent annually on all climate efforts, according to a report from the Global Center on Adaptation and the Climate Policy Initiative, a pair of nonprofits.

“Adaptation has been the unpopular kid at the party for a long time. That is starting to change," said Jay Koh, managing director at the Lightsmith Group, an investment firm with one of the few adaptation funds. Its investments include an environmental consulting firm and an artificial-intelligence startup that focuses on protecting critical utility and energy assets.

For private-sector investors, putting money into adaptation is a bet that mitigation won’t fully address climate change or will take longer than expected. The cost of adaptation is immense, particularly if mitigation efforts are delayed. The longer society waits to address climate change, the more it will spend to fend off the impact of hotter, wetter weather, researchers say.

Government money to limit the effects of climate change is going to places such as the low-lying Philadelphia neighborhood of Eastwick, where streets named after the planets have flooded with increasing frequency in recent years.

During big storms, including Tropical Storm Isaias in 2020, nearby Darby Creek and Cobbs Creek overflowed, creating streams of muddy water several feet high that swept up cars and ruined basements.

Brenda Whitfield, a 76-year-old retiree who has lived in Eastwick since the 1970s, said the disruptions have become more frequent. “Every time a heavy rain comes, we have anxiety," said Whitfield, who is part of a community group called Eastwick United CDC that advocates for actions to protect the area from flooding.

When it rains, Whitfield and her grandchildren check the water level of Cobbs Creek and alert their neighbors so they can prepare or evacuate when needed. Flood insurance now costs Whitfield’s family and her neighbors thousands of dollars a year, up from roughly $800 when her family first got it about 30 years ago.

Sea-level rise because of climate change is making flooding more common. To address the situation in Eastwick, the federal government is spending more than $10 million to construct flood barriers several feet high and restore nearby wetlands to help control flooding. The local government plans to install flood gauges, which would allow the city to send alerts to residents.

The Eastwick grants are a sliver of the billions of dollars being awarded by the Federal Emergency Management Agency and the National Oceanic and Atmospheric Administration for similar projects such as sewer and drainage upgrades, dam and utility pole reinforcement and coastal restoration efforts.

“If we don’t make our coastal communities more resilient, then the people who live in these communities and rely on our coasts for their livelihood will be very severely affected," Secretary of Commerce Gina Raimondo said on a recent call about funding awards.

The money is part of a slew of climate tax credits, grants and loans mostly funded by the 2021 infrastructure law and 2022 Inflation Reduction Act. The Energy Department, Environmental Protection Agency and other offices are racing to award funds and show progress before November’s elections. Many analysts expect that a second Donald Trump term would slow climate-spending programs.

It is difficult for investors to put money into adaptation because projects such as flood barriers, tidal gates and raising roads threatened by rising water levels often don’t offer attractive returns and are mainly jobs for governments, which have long funded flood-prevention projects.

That is increasing the need for new programs, but many local and state agencies don’t have the money for these projects.

New York City Mayor Eric Adams recently called for more federal support for coastal projects after announcing the start of construction on a $200 million effort to rebuild and raise a portion of the southern tip of Manhattan to protect against rising water levels.

Adaptation efforts are also starting to go beyond grant funding. The Occupational Safety and Health Administration recently proposed a rule that would require companies to give workers enough rest and water to manage extreme heat.

Overseas, there are efforts to protect poor people from the cost of weather events. A nonprofit called Climate Resilience for All joined with insurance company Swiss Re and the Self-Employed Women’s Association in India to award 50,000 low-income women small payments to compensate them for the cash lost to extreme heat earlier this year.

The women contributed to the insurance products and most of the money came from philanthropists.

“The longer that we delay the transition, the counterbalance to that is the more money has to be spent on adaptation and resilience," said Chris Goolgasian, a portfolio manager at giant asset manager Wellington who manages one of the few other private-sector adaptation portfolios. It holds public companies such as heating, ventilation and air-conditioner equipment makers, engineering firms and water companies.

Eric Niiler contributed to this article.