During the AMS Scientific Conference in April, researchers from AMS Institute analyzed the dynamics and challenges of climate risk management strategies in Amsterdam. In a workshop bringing together stakeholders from governmental, business, and academic sectors, participants discussed several constraints and challenges of de-risking Amsterdam from the changing climate. Urban areas face diverse challenges and risks, prompting a division of the discussion into three topics: new development areas, transformative areas, and existing areas.

The perspectives below reflect those of the individuals involved, not the organizations.

New development areas

The need to build more houses and economic zones is pressuring cities to expand. Integrating climate measures at the early stages of development plans is essential for cost-effective and climate-safe city expansion. Can future disasters be avoided if investments in climate adaptation are made now? Can flood-prevention measures be integrated with urban heat and drought measures to create livable and equitable new districts?

Challenges and Strategic Solutions

The primary challenge in new developments is establishing a viable business case for climate adaptations. The difficulty arises from the lower return on investment in these areas compared to transformations or existing districts, particularly in early development stages. This is due to the lack of infrastructure, services, and sufficient population density for profitable ventures.

“If governments regulate and lead the real estate market with climate adaptation policies, the private sector will follow.”

Sophie Kraaijeveld, ING.

Municipalities are expected to lead climate adaptations through policies and regulations, prompting banks, developers, and insurers to align with emerging standards¹. This requires significant municipal investment in climate measures and constructing higher buildings to maximize revenue, attracting investors. However, this creates split incentives², as municipalities face financial risks while developers determine the profitability of development plans³. Unlike developers, municipalities cannot choose investment locations due to spatial, economic, and social constraints.

Cost Estimation and Collaborative Efforts

Estimating the cost of climate adaptation measures is complex and requires collaboration. Factors influencing cost estimation include size, type, purpose, and the effectiveness of measures compared to uncertain future climatic events⁴. Different risk perceptions among actors in the real estate development chain further complicate these estimations. Therefore, developers, banks, insurers, and municipalities should collaborate during the planning stage to shape spatial plans fairly and profitably⁵. Academia can play a pivotal role in bringing together all actors in the development chain.

Transformative areas

Climate adaptation in transformation areas requires extensive collaboration between public and private actors. Municipalities create adaptation measures, but developers must also contribute to making these areas future-proof. The roles of private and public partners must be clear to implement collaborative climate adaptation measures effectively.

Navigating Spatial Constraints and Collaboration

Climate risk awareness and land availability are crucial in area development. In transformation areas, space is needed for physical adaptation measures, such as water squares and green parks. Existing residences and businesses constrain space for new mobility infrastructure and energy solutions, requiring negotiations between municipalities and developers. Effective collaboration is essential to ensure comprehensive climate adaptive measures in these areas.

“A changing climate means dealing with uncertainties that demands a need to re-assess how we work together, arrange a business case, and develop new policies for climate resilience.”

Kasper Spaan, Waternet.

Valuation Challenges in Climate Adaptation

Climate adaptation measures do not currently reflect asset values for several reasons. Valuation models do not include these measures, and measuring their financial impact is complex. Valuators are reluctant to change methodologies, and EU templates do not yet include climate risk in asset values.

Existing Cities

As we de-risk our cities from climate change, the main focus is reducing climate risk impacts. However, a recovery plan is also necessary in case of a climate disaster. Are we organized to ensure that our city bounces forward economically, socially, and environmentally?

Addressing Governance and Recovery Challenges

Despite advanced water management systems, the perception of climate risk remains low in the Netherlands due to the high confidence in the water management system. The responsibility for recovery in flood-affected neighborhoods is unclear, and asset owners depend on municipal development plans. Governance structures within municipalities hinder the swift implementation of spatial measures after flood events, which consequently creates confusion for asset owners in the affected areas.

Banks aim to safeguard mortgage revenue by providing loans for house renovations, requiring additional guarantees and increasing community vulnerability. In Miami for example, citizens continue building in flood-prone areas despite frequent floods. Preserving flood plains and open spaces may help, but avoiding new construction in flood-risk areas is the primary solution. Raising awareness among citizens is crucial for their active role in the recovery process.

Next steps

Climate change poses significant challenges for city developers. While municipalities own public spaces and assets, de-risking the city should be a shared responsibility among public and private actors. The next phase of this research will investigate the needs of city actors to overcome these challenges, forming a comprehensive knowledge base on the needs, challenges, and contributions of all actors. This knowledge base aims to illuminate the complexity of climate adaptations in the city, paving the way for innovative and collaborative solutions to de-risking our cities.

1. “If governments regulate and lead the real estate market with climate adaptation policies, the private sector will follow.” Sophie Kraaijeveld, ING. ↩︎
2. “If the system is flood prone, the future cost of climate impact on living/livability can be enormous, with the risk of uninsurable and ultimately stranded assets. Investing in climate adaptive new areas is all about value preservation: how to make sure that the area and its assets remain attractive and livable in 30, 50, 100 years?” Rutger de Koning, Bouwinvest. ↩︎
3. “Municipalities and/or developers are faced with the challenge of raising funds and involving parties in the investment upfront, but who will benefit in the end? We need to realize that costs for climate adaptation will be made sooner or later and that we best do it at the most cost-efficient moment of the project which is probably in the design stage and not afterwards as a repair.” Jeroen Rijsdijk, Aracadis. ↩︎
4. ‘‘Choosing another area to invest as an alternative option will pose other challenges. There are already spatial constraints, polders, constructions, etc. and the question is: who is the problem owner? How are we going to determine the adaptation costs? The Municipality remains the responsible actor in the end.” Domingo Regalado van Os, Gemeente Amsterdam. ↩︎
5. “A changing climate means dealing with uncertainties that demands a need to re-assess how we work together, arrange a business case, and develop new policies for climate resilience.” Kasper Spaan, Waternet. ↩︎

Authors: Maged Elsamny, Abdi Mehvar, Samuel Hartman