Funding Climate Resilience: Trust, Enabling Conditions, and the Questions That Remain
This is the fifth installment in a blog series from CA FWD and Insurance for Good. CA FWD and Insurance for Good have partnered to develop an actionable guidebook that outlines replicable funding and financing strategies for risk reduction and resilience. This blog summarizes key themes from discussions by the expert workgroup convened through the partnership; special thanks to Jaimes Valdez, Portland Clean Energy Fund; Abby Sullivan, Philadelphia Office of Sustainability; and Shayne Kavanaugh, Government Finance Officers Association.
By Carolyn Kousky, Nuin-Tara Key, and Joel Martinez
There is no shortage of lists cataloguing possible funding mechanisms for resilience investments — taxes, fees, special district assessments, surcharges. The harder question is which ones are the right fit for a given place, within a given community, under a given set of legal and political conditions. Our workgroup's discussions have surfaced two factors that are frequently underestimated, but needed to secure consistent funding for resilience: trust and an enabling state environment.
Trust: Building the Foundation for Sustained Funding
The Portland Clean Energy Fund (PCEF) offers a compelling example of what sustained funding can look like when trust is built carefully. The fund — a 1% surcharge on large retailers that generates roughly $200 million annually — was born not from City Hall, but from a grassroots coalition of dozens of nonprofits. It passed by a two-to-one margin in 2018 with communities as a key partner in defining the problem and the solution. The fund has no sunset date, which enables multi-year planning and real delivery on long-term commitments.
Research from the Government Finance Officers Association reinforces this lesson. Their analysis of California ballot initiatives found that revenues tied to a specific purpose consistently fared better with voters — not because of legal earmarks, but because people could see what they were paying for. More than the transparency, however, is the impact of engaging potential supporters during the problem-definition phase — not just presenting them with a finished proposal. This helps make sure that solutions are tailored to need and improve outcomes.
Trust between departments within a local government is equally critical. When resilience teams develop funding proposals in isolation — without early, genuine collaboration with finance departments and other key internal stakeholders — the result can be resistance rather than partnership. That resistance rarely stays contained to the original issue; it can spread to undermine broader efforts to embed resilience into capital planning and budgeting. The lesson is straightforward: co-design with all necessary departments from the start, or risk losing the internal political ground needed to move anything forward.
The State Enabling Environment
A funding mechanism that works in one place may be legally unavailable in another — not because local leaders lack creativity or will, but because the state enabling environment shapes the boundaries of what's possible just as fundamentally as local conditions do.
State enabling environments vary significantly — and those variations have real consequences for local resilience funding. Laws that reflect longstanding policy choices in one state may foreclose approaches that are standard practice elsewhere, regardless of how well-designed those approaches might be. For example, the state of Pennsylvania has a strict tax uniformity law that prohibits taxing different classes differently — making a Portland-style retail surcharge entirely off the table. That is, local governments in Pennsylvania cannot tax large corporations at a higher rate than a local mom-and-pop store, making corporate taxes that vary based on a metric like size or revenue, as used in Portland, impossible. The legal and political architecture of a state shapes what's possible just as much as local preferences and priorities do.
States can also affirmatively expand what's possible. In California, SB 852 created a promising enabling framework through Climate Resilience Districts (CRDs), authorizing jurisdictions to pool multiple funding and financing mechanisms — tax increment financing, benefit assessments, bonds, and grants — to address risk at the appropriate scale. While there is limited uptake of CRDs, the potential is real. CA FWD’s Resilience District Incubator, developed in partnership with Resilient Cities Catalyst, builds on that potential by working with pilot communities to understand what it takes to move CRDs from statutory authority to practical application as usable local and regional resilience funding tools.
What This Means Going Forward
No single funding mechanism works in every location for every type of resilience investment. Local fiscal context, state law, institutional relationships, and community history all shape what's viable. The workgroup's conversations continue to point toward a consistent conclusion: just like other infrastructure or programmatic investments, adaptation investments go further — than any prescribed list of tools — when grounded in trust and responsive to enabling conditions. Getting both right is where the real work lies.
Yet even as we refine our understanding of what makes funding mechanisms work, critical questions remain.
How can we better quantify the value of resilience investments so that residents — and their elected officials — can see what they're getting for their money?
What local engagement strategies can build and sustain public support for new and dedicated revenue sources?
And how can funding strategies that work in one location be tailored to navigate — and adapt to — the varied legal and governmental structures across states and localities?
These questions are the practical obstacles standing between promising frameworks and real investment on the ground. CA FWD and Insurance for Good are committed to working through them with our workgroup, and we will continue sharing what we learn as this work develops.
