Global South cities require urgent injection of climate finance

Flash floods that swept through cities in China’s Guangdong province in May 2025, forcing more than 3,000 people to evacuate, was an unwelcome reminder of the impact that the weather can have on urban environments in the global South.

With climate change seen as a major contributing factor to floods and other disasters, cities continues to brace for more damaging and potentially fatal event. According to WaterAid, nine out of 10 climate disasters are water-related while weather-related disasters such as flooding and drought have increased by 400% in the last 50 years.

Flood in Hongyang Town, Guangdong Province, China. Image credit, Weather Monitor

Over the half century leading up to 2021, the world’s urban population ballooned from 1.19 billion to 4.46 billion residents, coinciding with a 1.2°C rise in global temperatures compared to pre-industrial times. Indeed, cities account for 70 per cent of global greenhouse gas (GHG) emissions.

While cities have contributed significantly to climate change through the economic growth they've fostered, they also represent key sources for climate solutions—particularly important given that nearly 70 per cent of humanity will live in urban areas by 2050. But how much will the adaptation and mitigation work and who will pay?

In a detailed report published in June 2025, Banking on Cities, the World Bank has attempted to put a price tag on the cost of redeveloping cities in its core clientele of low- and middle-income countries in more resilient and low-carbon ways.

Certainly, people living in the cities of the Global South are particularly vulnerable to effects of climate change. They are more likely to host informal settlements without adequate defences against floods and high winds. They are often located on coasts, making them more vulnerable to tidal floods. On top of that, a history of colonisation and exploitation has left many with a lack of resources to address the challenge of climate change.

Capital for capitals

The takeaway from the 170 pages of analysis is that the annual bill will range from $256 billion to as much as $821 billion. Since it is looking at a 30-year investment programme the cost vaults up to a total of between $7.9 trillion and $25.5 trillion. Inevitably this dwarfs the $831 billion in urban capital finance that the Cities Climate Finance Leadership Alliance estimated was raised in 2021–2022.

It is worth remembering that this is the estimate for low- and middle-income countries rather from the higher and middle-income cadre, where costs of both clear-up and prevention would likely be higher — although of course finance may be easier to access because of the sophistication of capital markets in most northern hemisphere.

At the most recent summit of heads of state, COP29, nations agreed to a new goal of providing at least $300 billion a year by 2035 for climate action in developing countries. While much will likely to cities there is no guarantee of that. For that reason city leaders used the annual meetings of the Bank and the International Monetary Fund to demand a seat at the table when monies are allocated.

Leaders at COP29 also called on all players to work towards a target of mobilising $1.3 trillion in international finance. Certainly, the bulk of the finance will need to come from private and philanthropic finance as many governments are either nursing their own debts, such as the UK, and/or are turning away from international overseas aid, such as the US. The World Bank urged cities to focus on three targets: securing funding; arranging financing; and maximizing efficiency.

They can find their own funding even in straightened times from sources such as fees for public transport and waste collection or taxes from higher values property. Finance can come from securing so called hybrid finance — partnerships between the public and private sectors — and instruments such as green bonds.

Thames Barrier, east London. Picture: author

The idea of a funding gap for measures needed to help poorer countries that should, both morally and practically, filled by richer countries is very familiar. Wealthy countries can be decisive and loosen the taps when they want: after the devasting floods of 1953 the UK government pushed through the plan to build the Thames Barrier. It cost £535 million or approximately £2.4 billion in today’s money). It has been raised closed 221 times in 42 years, each of which may have prevented billions of pounds of damage in its financial and wealthy residential districts.

While rich countries should morally fund efforts to protect millions of vulnerable people in poorer countries, there is also a selfish motive. As floods and tornadoes either destroy or make coastal cities uninhabitable it will create a new wave of migration by climate refugees. Given how sensitive migration is in the Global North that is perhaps the most powerful motive for financiers in the West to loosen the purse strings.