Samantha Medlock

In the face of dramatic temperature changes, rising sea levels and devastating super storms, cities around the world are looking at ways to manage their risks. We were recently part of a delegation from the British Consulate that spent two days with a broad assemblage of city of Boston and Green Ribbon Commission stakeholders exploring new finance and insurance tools to advance urban climate resilience.

As insurers and catastrophe modelers, we work with cities all over the world on strategies to promote safer communities that can recover quicker when catastrophes happen. Catastrophe and (re)insurance companies stand ready to quantify risk to communities and craft solutions that reflect local vision and capacities.

In our view, Boston is leading the way for cities around the globe seeking to identify and reduce risks of extreme weather and other effects of climate change. Through its Climate Ready Boston (CRB) initiative, Boston is developing strategies that serve the long-term interests of Boston’s residents and economy. Initial CRB findings, such as the projection that $80 billion worth of Boston properties will be exposed to flooding by 2070, highlight the financial and human risks of inaction.

Peter Civitenga

As a laboratory for innovation, Boston is investing now to understand the nature of the risk it faces, and what steps are needed to assure it will remain a safe, vibrant and inclusive place – better prepared for the natural disaster risks it is likely to face in the future. The city has developed a clear, detailed understanding of its critical resilience challenges, including sea-level rise, heat, extreme precipitation and storm-surge impacts. More importantly, city leaders have been upfront in sharing with Bostonians robust and scalable impact projections data and including residents in the early conversations and decision-making about solutions.

Signaling a new phase in the CRB initiative, city officials have begun exploring specific coastal resilience strategies for the East Boston and Charlestown neighborhoods, and recently released a request for proposals for strategies for the South Boston Waterfront to gather input toward solutions. We are confident these planning and implementation efforts will improve the resilience of this great urban environment.

Boston An Emerging Leader

Because of its innovative leadership, we believe Boston has the opportunity to help set the “rules of the game” for how financial markets work with cities to bring capital and risk protection tools to bear on long-term resilience. Boston’s leaders can do this in a way to ensure the values that cities like Boston care about – job creation, new business development, social equity and quality of life – get included in the “return on investment” equation for these new markets.

Boston can lead efforts to translate city data on climate risks and strengths into terms capital markets can understand, from better-informed bond rating to benefit-cost analyses for resilience investments. The city can also help design insurance-linked finance approaches, such as resilience bonds, that account for reduced disaster and insurance costs and support rapid and resilient recovery when disaster strike. And the city can shape federal programs to support local leadership in resilience and preparedness.

For example, as Congress reauthorizes the National Flood Insurance Program, Boston policyholders can benefit from changes that catalyze data sharing and stabilize the program through greater access to reinsurance markets. And FEMA’s proposed Deductible Program, as well as other innovative efforts like the Flood Risk Management Standard, can support state and local adoption of resilience-based codes and standards. This will reduce dependence on federal disaster assistance and reflect the city of Boston’s leadership in resilience and commitment to responsibly manage federal investments following disasters.

Boston offers an exploitable unique advantage in the form of known, measurable climate threats; high community interest in and low resistance to new ideas; and excellence in technical innovation. Thus, it has the motive, opportunity and capability to establish the rules for climate finance.

Beyond simply taking care of its own, we encourage Boston to play a leadership role in bringing cities, insurance and finance players, and government agencies together to create a new algorithm that turns climate resilience investments into tools for growing urban economies, reducing social inequity, and improving the quality of life in cities.

Cities around the world stand to benefit.

Samantha Medlock is former senior advisor in the White House Office of Management and Budget and currently senior vice president and North America lead for Capital, Science & Policy for Willis Towers Watson, the global advisory, broking and solutions company. Peter Civitenga is manager of client relations at the Boston-based catastrophe modeling firm AIR Worldwide.