Climate Mitigation and Adaptation with Smart Incentives

Developing infrastructure and providing services for urban inhabitants require massive financial resources, including the aim to climate-proof the city. Through the study of numerous cities globally, UN Habitat provide examples that other cities can adopt to enhance municipal finance by generating diverse portfolio of income stream. This includes Intergovernmental transfer (such as unconditional grants or shared taxes), Expansion of local revenue collection, Public-Private Partnership (PPP), etc. Local municipality can also earmarked the city budget specifically for climate adaptation and mitigation programs to ensure that the program is truly being implemented.

However, the various additional income streams in the local government level should be supported by the higher level of government. It is important to ensure that functional decentralisation goes hand in hand with fiscal decentralisation. Legal frameworks should allow local authorities to raise revenue to provide local services and amenities need. On the hand, the national or state authorities should also extent of authority that local municipalities can control to develop the city, for example creating a supportive environment for the mobilisation of investment capital in the city level. National government can also take role as Public Credit Guarantor to allow city accessing loans. 

Reference:

Urban Planning Law for Climate Smart Cities: The Urban Law Module of the Law and Climate Change Toolkit by UN Habitat

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