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Volume 14 , Issue 1, 2019 Community Develop Community Community Development INNOVATION REVIEW Strategies to Address Climate Change Risk in ment Innovation Review | Volume 14, Issue 1, 2019 14, Issue Volume | Review Innovation ment Low- and Moderate-Income Communities POSTAGE & FEES PAID POSTAGE SAN FRANCISCO, CA SAN FRANCISCO, PERMIT NO. 752 PERMIT NO. PRSRT STD Community Development INNOVATION REVIEW The Community Development Innovation Review focuses on bridging the gap between theory and practice, from as many viewpoints as possible. The goal of this journal is to promote cross-sector dialogue around a range of emerging issues and related investments that advance economic resilience and mobility for low- and moderate-income communities. The material herein may not represent the views of the Federal Reserve Bank of San Francisco or the Federal Reserve System. Laura Choi Co-Editor Ian Galloway Co-Editor Jesse M. Keenan Guest Issue Editor Community Development INNOVATION REVIEW Material herein may be reprinted or abstracted as long as the Community Development Innovation Review is credited. Federal Reserve Bank of San Francisco. 2019. “Strategies to Address Climate Change Risk in Low- and Moderate-Income Communities,” Federal Reserve Bank of San Francisco Community Development Innovation Review 2019-1. Available at https://doi.org/10.24148/cdir2019-01 Table of Contents Strategies to Address Climate Change Risk in Low- and Moderate-Income Communities Climate Adaptation and Community Development ..........................................................................5 Jesse M. Keenan Flood Risk and Structural Adaptation of Markets: An Outline for Action .........................................13 Michael D. Berman Real Estate as a Tool for Adaptive Banking ....................................................................................29 Asaf Bernstein, Matthew Gustafson, and Ryan Lewis Rebuild to Fail or Rebuild to Adapt: How CRA Lending Can Guide Climate Change Disaster Response ...............................................39 Mark Northcross Insurance Innovation and Community-Based Adaptation Finance ................................................47 Shalini Vajjhala and James Rhodes Forest Finance Unlocks Opportunities for Rural Communities: Exploring the Triple Bottom Line Impacts of the Forest Resilience Bond Model .............................55 Nathalie Woolworth and Zach Knight Community Resilience and Adaptive Capacity: A Meaningful Investment Across Assets .......................................................................................65 Natalie Ambrosio and Yoon Kim Hunting for Money: U.S. Cities Need a System for Financing Climate Resilience and Adaptation ................................................................................................ 71 John Cleveland, Jon Crowe, Lois DeBacker, Trine Munk, and Peter Plastrik Climigration and the Private Sector ...............................................................................................79 A.R. Siders and Carri Hulet Building Community Wealth through Community Resilience ........................................................87 Johanna Bozuwa and Thomas Hanna Building on Shared Values to Engage with Mainers on Climate Change .......................................97 Elizabeth Rogers, Anna Brown, and Keith Bisson Embracing the Challenge of Climate Education and Engagement ................................................105 Caroline Lewis America Adapts: The Value of Podcasting in Climate Communications ........................................111 Doug Parsons and Dan Ackerstein Healthy Aging: A Conceptual Model of Community-based Solutions in the Face of Climate Change and Global Demographic Changes .....................................................................119 Seciah Aquino, Josefina Flores Morales, Max Aung, Mary Keovisai and Jennifer K. McGee-Avila The Critical Role for Young People and Schools in Resiliency Planning ...................................... 127 Deborah McKoy, Amanda Eppley, and Shirl Buss Drawing a New Roadmap: The Resilient by Design Bay Area Challenge ...................................... 137 Allison Brooks Promoting Equitable Climate Adaptation through Community Engagement ................................ 145 Kokei Otosi Investing in the Virtuous Cycle ...................................................................................................153 Robert Freudenberg Pre- and Post-Disaster Investments in Housing and Community Development Under the CRA ............................................................................................................................161 Laurie Schoeman Foreword Ian Galloway October 2019 Co-Editor, Community Development Innovation Review ithout smart, proactive investments in adaptive capacity and resilience, low- and moderate-income (LMI) communities will likely be disproportionately affected by climate change-related events.1 This issue of the Community Development Innovation Review explores these investment opportunities and Wcalls on the community development sector to take a leadership role in preparing vulnerable regions most at risk for a “new abnormal.”2 This issue would not have been possible without the extraordinary work of its guest editor, Jesse M. Keenan. A leading thinker on climate change risk—even adding the helpful term “climate gentrification” to the lexicon—Jesse recruited a remarkable group of thirty- eight authors to write for this issue. Their contributions, and Jesse’s, advance the community development sector and help us better prepare for a changing world. Despite the challenges that lie ahead, I’m encouraged by the work that’s already begun. As recently as this summer, in fact, the Low Income Investment Fund—a national Commu- nity Development Financial Institution—issued a $100 million “Sustainability Bond,” the first public offering directly aligned with the United Nations’ Sustainable Development Goals.3 If that’s any indication, the community development sector has already begun to mobilize capital to address the impacts of climate change in LMI communities. Enjoy this issue of the Review. 1 See, for example: Anderson, M. and McMinn, S. “As Rising Heat Bakes U.S. Cities, The Poor Often Feel It Most,” All Things Considered, National Public Radio (September 3, 2019), available at https://www.npr. org/2019/09/03/754044732/as-rising-heat-bakes-u-s-cities-the-poor-often-feel-it-most. 2 Former California Governor Jerry Brown (November 11, 2018), as cited by Allison Brooks in her article, Drawing a New Roadmap: The Resilient by Design Bay Area Challenge. 3 Low Income Investment Fund, “$100 Million in Sustainable Bonds for Social Impact: Announcing LIIF’s First Bond Issuance,” https://www.liifund.org/news/post/100-million-in-sustainable-bonds-for-social-impact- announcing-liifs-first-bond-issuance/. Community Development INNOVATION REVIEW 5 Climate Adaptation and Community Development Jesse M. Keenan daptation is defined as an “[a]djustment in natural or human systems to a new or changing environment that exploits beneficial opportunities or moderates negative effects.”1 A more complete definition of adaptation “involve[s] both building adaptive capacity thereby increasing the ability of individuals, groups, or Aorganizations to adapt to changes, and implementing adaptation decisions, i.e., transforming that capacity into action” [emphasis added].2 In this regard, a central hallmark of adaptation is about building a capacity for not only managing risks (i.e., moderating negative effects) but also for taking advantage of beneficial opportunities. As such, climate adaptation and community development are uniquely aligned in that capacity building has been a central tenet of community development. Until recently, popular action driving climate adaptation has been squarely nested within the public and civic sectors. Yet, with a greater empirical foundation for understanding the true distributed costs of climate impacts, there is greater recognition that the private sector must play a more fundamental role in guiding and resourcing climate adaptation interven- tions and investments. The private sector has always adapted—one either adapts to new markets, products, or services or they go out of business. But the current calculus is more than a function of market share. It is a function of where there will be a market at all. In this regard, there are both risks (and uncertainties) and opportunities with climate adaptation. Banks and lending institutions, including Community Development Financial Institu- tions (CFDIs), play a key role in shaping our economy and the general trajectory of private sector enterprise. Increasingly, the banking and financial services sectors have begun to understand the risks and uncertainties associated with climate change. Whether it is asset management or asset pricing, the methodological and technological capacity to measure and estimate costs are nearly commensurate with any other avenue of commercial and enterprise risk.3 Perhaps what is less understood are the full range of potential opportunities that climate adaptation could engender in the advancement of sustainable economies and communities. This issue of the Community Development Innovation Review highlights not only modes and degrees of interdependency and mutual interest, but also methodologies and models 1 U.S. Global Change Research Program. “Climate Change: Glossary” (2019), available at https://www. globalchange.gov/climate-change/glossary.