Directing public and private capital to build resilience in Australia
In a changing climate, natural disasters are becoming more frequent and severe, leading to increasing costs. To reduce these risks and costs, there is a need for government, industry and community to work collaboratively on approaches to climate and disaster resilience.
Fundamental change needs to occur in organisational roles and behaviours, including in how incentives, data creation and sharing arrangements, types of assessments, and investment criteria are managed and implemented.
Piloting a Resilience Investment Vehicle
IAG, National Australia Bank, CSIRO, state government agencies and the Australian Government, are collaborating to develop a pilot project that will seek to fund built, social and natural interventions that build community resilience to natural hazards.
The Resilience Investment Vehicle (RIV) pilot aims to explore how public and private capital could be directed to finance new and/or adapt existing infrastructure that builds resilience, reduces disaster risk and can derive a financial return for investors.
The pilot will adopt a local, place-based approach. This approach will address complex issues where causes and consequences are often interlinked and require collaboration across sectors to address the issues and create changes that align with local values and meet community priorities.
The aims of the pilot are to:
- prove the concept with a view to implementing the approach across other regions at scale
- build the understanding and capabilities required to enable the development of projects eligible for resilience investments
- capture and share learnings that contribute to building the conditions of a national resilience investment market.
The learnings from the RIV Pilot Program will be applied to new resilience investment projects and tested for scalability and replicability in multiple contexts. Additional stakeholders will be encouraged to participate and contribute to the development of the RIV methods, systems and processes.
The near-term focus of the RIV is the development of three pilot project opportunities. Two of the pilots translate cutting edge science (including from CSIRO) into measurable and tangible actions to reduce bushfire and cyclone risk at the household level, while the other is a cross-sector initiative that aims to reduce flood risk at the catchment scale.
Through the pilots, we aim to develop scalable investment strategies and build the required capabilities in effective community engagement, assessing resilience benefits, aligning incentives and returns with risk reduction and resilience benefits, and developing suitable financing approaches.
The pilots will also test solutions to the key barriers to unlocking capital for resilience, including:
- measuring resilience outcomes and ascribing a financial value so resilience-building interventions can be monetised
- clearly communicating the risks and benefits of resilience-building interventions
- requiring governance arrangements for collaboration between government, the private sector, and the research sector.
Resilience investment will enable communities – and the infrastructure, services, and systems on which they depend – to be resilient and prepared to deal with all types of hazards. Government, researchers, industry, and community sectors will work closely together to define, measure, and invest in resilience outcomes for communities and nature.
Resilience investments in built infrastructure, society and nature will acknowledge and measure climate risk and resilience outcomes. Financing, regulatory knowledge and legal frameworks will enable investment at scale, where benefits and value to the affected community are recognised and understood.