Welcome to the Fund and Finance Heat Action module! The Fund and Finance Heat Action module provides guidance on how to quantify potential benefits from heat resilience and preparedness interventions and identify sources of funding and financing.

Investing in heat resilience does not always require new sources of funding or financing. In many cases, heat-related considerations can be integrated into existing or ongoing plans, guidelines, and projects with minimal added financial cost. However, heat-related planning and projects can also require new capital investment and dedicated operational budget. Factors such as geographic context, governance structure, project partners, local regulations, available budgets, and creditworthiness will influence available resources. Identifying the potential returns from a given project—both economic and health benefits—is also often an important step in making the case for either funding or financing.

Sources of funding and financing for heat resilience range from public finances or public-private partnerships to commercial or concessional loans and grant funding from local, regional, or national governments and humanitarian, development and philanthropic organizations. Working with your national government may open up direct funding, such as through funding from the Inflation Reduction Act in the United States, or new sources of finance through international mechanisms like the Green Climate Fund or the Global Environmental Facility.

Given heat’s cross-cutting impacts, a variety of funds–for health, energy efficiency, emergency response, etc.–might be utilized for heat resilience projects. Look broadly across sectors and funding streams when beginning your search.

Funding sources

• Intergovernmental transfers
• Taxes
• Land value capture
• User fees/tariffs
• Fines/penalties redirected for other uses
• Official development assistance
• Dedicated climate funds

Financing sources

• Development finance
• Government-issued debt
• Public-private partnerships

Even in cities with considerable cooling infrastructure in place, heat-related risks will intensify during heat events. Disaster risk finance instruments help to ensure that the government has liquid assets to put toward responding to (or anticipating) a heat event, for example using insurance. These instruments can fund the immediate response necessary to save lives during a heat wave, from setting up cooling centers to running awareness campaigns, as well as to help meet huge costs to businesses, governments, organizations, communities and households in terms of wider health impacts, reduced productivity and damage to infrastructure.

Around the world, various frameworks and pilots are being explored or developed for heat risk transfer or related humanitarian interventions including forecast-based humanitarian payouts during heat waves. A few examples include the Start Network in Karachi, Pakistan, the International Federation of Red Cross and Red Crescent Societies (IFRC) in Hanoi, Vietnam, and commercial options in Delhi, India and California, United States. These are examples of a new type of mechanism for ensuring that cities have the funds on hand, when they need them, to deploy a heat wave response.

Investment in heat resilience measures can result in reduced energy costs, healthcare expenditures, and infrastructure damage as well as improved labor productivity and other benefits. Estimating the full range of benefits can be an important part of making the case for investment, while quantifying some of these benefits on an ongoing basis or retrospectively can be a prerequisite for certain kinds of investment, such as impact bonds.