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There is an urgent need for climate adaptation to avoid huge socio-economic losses (growing
from today’s $6bn to $60bn p.a. by 2050 in the 136 largest coastal cities alone). However, non -
availability of money and gaps in capabilities are huge barriers. A flow of private money, either
besides or apart from public money, needs to be unlocked if adaptation is to happen quickly
enough. Research (ABL / Ricardo AEA, 2013, Defra, 2013) shows that many cities (around 80%
in Europe) have low or very low capacity and therefore cannot specify required resilience
measures.
To unlock money flows and to raise capacity of stakeholders, ARCADIS has developed and
successfully tested a new and unique high level business model, the ‘Resilience Pathway 2.0’,
with European cities and .reached out to potential financial partners, with encouraging results.
Client
Climate KIC
Scope of Services
Climate adaptation, city Master
planning and unlocking
f inances
Contact
Eric Schellekens
Mobile +31627061605
Start Date
11/2013
Completion Date
12/2014
Total Project Cost
€ 350,000.00
Key ARCADIS Staff
Eric Schellekens
Niek Reichart
Jelmer Cleveringa
ARCADIS Project Number
06926002.0000
The Resilience Pathway 2.0 A new way of city and area development with promising climate
impact
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Existing high level engineering skills and products and services have been brought together in
partnership with leading deal-structuring experts and financial organisations to help riverine and
coastal cities to access private and public money for climate adaptation.
Resilience is most needed for long-lasting decisions with outcomes that last 10+ years (e.g.
water and other infrastructure), which need to be viable in unpredictable and fast changing future
climate and energy scenarios, where the status quo is usually the least likely scenario. These
decisions are difficult and / or expensive to reverse (in money and energy terms). This is where
identifying ‘moments of change’ and defining ‘investment opportunities’ seem the way to go,
while creating a ‘marriage’ between technical, financial and social engineering. The main phases
of the Resilience Pathway 2.0 have been explained in the text below.
Phase 1: Scoping. The output of this first phase is a clear briefing document clarifying the
challenges to be addressed, also to identify potential opportunities (‘moments of change’) to
address them. i. Area dynamics and ambitions. The ‘area dynamics’ aspect involves
identifying known and likely activity around which ‘moments of change’ might
be constructed. It is also important to identify the city’s wider agenda and
ambitions.
ii. Climate challenges and other stressors. This building block assesses the
vulnerability of an area or city arising from changes in extreme weather
events and from climate changes in both the short and the long term. It also
defines mitigation and other challenges (as a result of social and
environmental stressors)
iii. Capacity and Framework assessment. The ‘capacity’ element of this
building block aims to define capability gaps that need to be filled to
implement Resilience Pathway 2.0, also to identify framework conditions
(legislation or regulation, incentives, etc., to be taken into account in the
‘optioneering’ phase.
Phase 2: Optioneering. The purpose of the Optioneering phase is to identify one or several
promising, fundable and feasible business cases around a development (or a combination of
developments). These will provide alternative routes to meeting climate and other objectives of
projects that will be attractive to private and other investors. This is a unique and crucial phase,
where bringing high-level engineering and financial thinking together is essential in unlocking
finance for resilience. i. High level solutions. This involves defining and designing at a high
engineering level the development in a way that is profitable and fundable,
while also meeting the ambitions and respecting the parameters identified
during the scoping phase.
ii. Socio economic Cost Benefit Analysis. Fundamental to fundable and
profitable solutions s identifying socio-economic losses and benefits from the
various options.
iii. Financial and legal arrangements. The third building block is to develop
developing suitable financial arrangements for promising options, to test
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whether these financial arrangements align with the interest of investors and
also meet the needs of clients and to reduce risks.
Phase 3: Deal Structuring
The purpose of the third phase, the Deal structuring phase, is to transform the selected
intervention opportunity – as identified in the Optioneering phase – into a contract with detailed
specifications and financial and legal arrangements (e.g. permitting’) to deliver the project
objectives: resilient projects with an acceptable (typically low) risk-return profile. Again, there are
three building blocks. i. Detailed solution engineering and permitting. The first building block
focuses on transforming the high-level engineering approach identified during
the ‘optioneering’ phase into solutions engineered in detail, aligned with the
permit conditions that have been negotiated.
ii. Detailed financial engineering. The second building block focuses on
transforming the high level financial arrangements chosen during the
‘Optioneering’ phase into detailed financial arrangements. For example,
‘Special Purpose Vehicle’ companies need to be set up, detailed contracts
signed, detailed due diligence completed.
iii. Specifications and strategic control. The third building block elaborates the
specifications of the promising opportunities in a detailed way, e.g. to allow
sub-contracts to be let, i.e. aligned with the contract requirements and wishes.
The strategic control aspect focuses on how to avoid collapsing goals.
Phase 4: Project implementation The aim of the project implementation phase is to get the projects or developments realised and
well managed. This phase is a missing link in many strategies.
i. Project realisation. The first building block is about getting the development
realised. This will sometimes differ from traditional project realisation in that
climate adaptation or climate mitigation or both are seen as one of the main
goals of the project or development. Also, more projects will have a
‘breakthrough’ element.
ii. Asset management. The second building block is about the maintenance of
the assets of the project or development in order to optimize the climate impact (and other desired outputs) in the long term as well as over the life of
the project.
iii. Learning and Capacity and Framework development. The third building
block focuses on creating the projects as ‘learning laboratories’, designed to
raise the effectiveness of future interventions. In addition, capacity gaps
identified in the Scoping phase will be addressed l (e.g. by education,
coaching, hiring, etc.).
