Equitable Adaptation Legal & Policy Toolkit

 

Economic Resilience

Introduction

Children planting in a local community rain garden.
Children participating in the Prince George's County Clean Water Partnership planting and education program, 2018.
(Source: PGCo Clean Water Partnership)

The impacts of climate change — such as sea-level rise, increased temperatures, and more frequent, deadly disaster events — have the potential to slow economic productivity, affect the values of assets such as homes, and disrupt business activities across different economic sectors.See footnote 1 Direct climate-related economic impacts to communities — especially communities on the frontlines of climate change — include, for example: flood zones becoming unlivable, uninsurable, and unfit places to conduct or house businesses; people being unable to commute to work because of a disaster event, or because of the destruction of the facility where they work; customers no longer being able to purchase goods, due either to their inability to get to a business or the disruption of supply chains and deliveries due to hazardous weather. The list is almost endless. Due to these disruptions, the economic viability of many will be affected, but front-line communities already facing challenges will be affected first and worst.

A study recently released by Oxford Economics found that these effects of climate change will occur sooner and have a more significant financial impact than had previously been thought.See footnote 2 By 2050, a 2°C increase in temperature could cut global GDP by as much as 7.5%.See footnote 3 If the temperature increases by 4°C by 2100, global output could be reduced by as much as 30%.See footnote 4 In the United States alone, sea-level rise is expected to destroy billions of dollars in property and displace millions.See footnote 5 Local property taxes — a major source of funding for both critical infrastructure and public services — may be at risk by 2045, as over 120 coastal communities could disappear.See footnote 6

Three row homes are boarded up with overgrow lawns
A neighborhood in Atlanta's Historic Westside
(Source: Westside Future Fund)

In the last five years alone, the United States has spent more than $500 billion recovering from sea-level rise and weather-related events exacerbated by climate change.See footnote 7 Between 2005 and 2017, property value losses in communities along the Atlantic and Gulf Coast added up to $15.9 billion.See footnote 8 Other disaster events exacerbated by a warming climate, such as heat waves, inland flooding, wildfires, etc. also carry high costs. The International Panel on Climate Change has concluded that should the planet warm 2°C, costs associated with damages will reach upwards of $69 trillion globally.See footnote 9  The trend of high recovery costs is expected to continue in a warmer climate. 

These disruptions to the economy disproportionately affect disadvantaged communities, particularly frontline communities that are highly exposed to climate risks and have access to fewer resources, as well as the capacity and political power necessary to respond effectively to a climate event. Often, due to institutional racism and marginalization, communities most affected by the economic impacts of climate change are communities of color, sometimes already located in areas at-risk for heatwaves and flooding.See footnote 10 

Additionally, economic losses affect populations of lower socioeconomic status differently. Climate disasters have a more negative effect on lower-income individuals the world over. According to a report done by the Substance Abuse and Mental Health Services Administration,

“economic losses from natural resources totaled $92 billion in 2015, and average annual losses have been estimated at more than $300 billion a year… Obviously, $1 in losses does not mean the same thing to a rich person and a poor person, and the severity of a $92 billion loss depends on who experiences it. The same loss affects poor and marginalized people far more because their livelihoods depend on fewer assets, their consumption is closer to subsistence levels, they cannot rely on savings to smooth the impacts, their health and education are at greater risk, and they may need more time to recover and reconstruct.”See footnote 11 

“Fundamentally, disaster events often exacerbate unequal access to a variety of resources that can help with recovery, including reliable transportation, stable housing, and job opportunities. Lack of access to these resources has “far-reaching consequences across city economies.”See footnote 12 

To mitigate the economic losses that may result from climate impacts, individuals, businesses, and communities across the country should seek to foster economic resilience so that operations are less likely to stall during extreme weather events and as sea-levels rise. A resilient economy is one that (1) can recover quickly from a shock; (2) can withstand a shock; and (3) in some instances, can avoid a shock altogether.See footnote 13 Establishing a resilient economy “requires the ability to anticipate risk, evaluate how that risk can impact key economic assets, and build a responsive capacity.”See footnote 14 Examples of elements of a resilient economy include resilient infrastructure that helps the community withstand an extreme weather event and recover from it; a workforce that can get back to work quickly after or during an event; a robust and localized economy; and the financial resources to rebuild businesses in the community after a disaster.

This chapter will discuss how individuals, businesses, and communities can prepare for climate impacts, and how economic resilience can be built into a community. It will describe the various tools available to individuals, business owners, and community policymakers that can help establish a more resilient economy. These include (1) tools that focus on developing the economic resilience of individual community members; (2) tools that focus on business development and resilience planning; (3) statewide programs that promote economic resilience; and (4) funding and financing options that can help individuals, businesses, and communities put these tools into effect. Finally, it will feature case studies and programs that have been implemented specifically to help bolster economic resilience of disadvantaged communities.

Goals for Equity-Centered Economic Resilience

  • Ensuring the community is involved in the creation of programs designed to promote economic resilience: There is no “one size fits all” type of program that will immediately ensure economic resilience within a community, especially for those on the front lines of climate change impacts. Creating economic resilience will require the implementation of a variety of programs, tools, and policy changes. To develop a plan that will help to promote economic resilience, policymakers will need to work with community groups to learn what programs and policies will be the most likely to help affected community members. Creating a comprehensive resilience plan requires that community engagement begin early in the planning process, and that diverse groups and individuals have the opportunity to speak about their experiences, needs, and priorities. Essentially, neighborhood leaders, stakeholders, and individual community members should be involved “early and often” throughout any planning and development process.
  • Creating awareness within disadvantaged communities of the economic impacts of climate change and the programs in place to promote economic resilience: Policymakers can foster awareness about the risks that climate impacts pose to frontline communities as the first step in a community engagement process that builds support for economic resilience programs.See footnote 15 Residents that understand the risks that climate change and extreme weather events pose to their community are more likely to have access to and to participate in the opportunities available to enhance economic resilience. To combat the lack of awareness of climate risks and ensure equal access to resources, discussions involving economic resilience strategies must secure input and involvement from the community including residents, the business community, and nonprofits. For example, if businesses commit to local hiring requirements, members of nearby disadvantaged communities need to be informed about these types of opportunities. Policymakers can enhance the likelihood of diverse participation by mandating contracting and subcontracting targets with minority and women-owned business enterprises (MWBE) in the procurement of supplies and the provision of services to further resilience plans. Local governments can also play an important role in advertising available sources of funding to local businesses that adopt local hiring requirements. Nonprofits can facilitate outreach to inform community groups and frontline neighborhoods about workforce development programs.
  • Minimizing the disruption climate impacts have on businesses owned and operated by frontline community members: From an economic standpoint, climate disruptions statistically adversely affect disadvantaged communities more than others.See footnote 16 Disadvantaged community members often “lack the financial resources for flood insurance and access to networks to rebuild as quickly.”See footnote 17 As a result, businesses owned and operating in flood-prone communities are not always able to get up and running or “bounce back in the years that follow.”See footnote 18 Because of this, policymakers, nonprofits, and community groups should educate business owners about the tools analyzed in this chapter to help ensure that businesses can either remain open during disaster events, or at least reopen shortly after this type of event occurs.

Background

An equitable approach to building and strengthening a resilient economy requires identifying the structural and institutional barriers to full economic participation and adopting equity-based approaches that include community engagement at each stage of adaptation planning. Frontline communities are often disproportionately affected by climate change in a variety of ways. For example, low-income families and individuals, including people of color, are more likely to live and work in flood zones that have inferior infrastructure; households reporting below-average incomes are less likely to be able to afford flood insurance on their homes and businesses that can help to finance rebuilding; and frontline community members in many instances do not have the financial resources to relocate either temporarily or permanently from areas that are particularly vulnerable to the impacts of climate change.See footnote 19

A group of men stand on a rooftop behind a solar panel they just installed. They are wearing orange shirts and construction vests, and raising their arms in a celebratory way.
Students from the RichmondBUILD program complete a solar installation project.
(Source: RichmondBUILD)

Partnerships between the federal, state, and local governments have created programs intended to overcome racial bias in employment and encourage economic participation of historically marginalized groups. It is, however, important to note the terminology and phraseology of many of these programs. In the past, “minority-owned businesses” and “vulnerable communities” have been used as terms of art in the economic sector. Oftentimes, these programs have been referenced as such to ensure that these frontline businesses or communities are allocated a percentage of various funding and contracting opportunities. As a result, some of the material or available policy tools referenced in the chapter may refer to businesses as “minority-owned” and communities as “vulnerable.”

Today, federal programs for Minority Business Enterprises (MBEs) and Women Business Enterprises (WBEs) (MWBEs collectively) are carried out by state and local governments and include a certification process qualifying MWBEs to bid and enter into contracts with government entities as a contractor or subcontractor. State and local governments can include laws and ordinances that address hiring goals in workforce development and training programs to build and strengthen economic resilience. At the state and local level, policymakers have passed provisions that establish programs to support diversity development initiatives and aspirational goals for agencies to utilize certified MWBEs as contractors and subcontractors. 

Moving forward, we suggest that implementers of these programs and tools would do well to avoid these misleading terms to help phase out these unflattering and misleading impressions. Policy implementers and facilitators should avoid phrases like “vulnerable” or “minority” for a variety of reasons. For instance, while the effects of climate change disproportionately impact these communities, they often are more resilient than other communities because they have had to overcome these impacts time and time again. Such communities often have strong social cohesion, cultural bonds, and practices that promote resilience. As a result, it is misleading to call these communities “vulnerable.” Additionally, “minority” is also misleading in that non-white people make up a significant percentage of the American population.

School-age children and an adult educator stand outside near a rain garden and hold up a paper map of the Anacostia Watershed, which they are discussing.
Children participating in the Prince George's County Clean Water Partnership planting and education program, 2018.
(Source: PGCo Clean Water Partnership)

Finally, it is important to note that outreach to community members in the development of plans and programs at the earliest stages of project design and planning can provide essential input about the existing economic vulnerabilities, needs, and priorities of the community. Community engagement that begins during the design of the plan or program is more likely to foster strong partnerships between communities and program implementers while educating implementers about climate impacts and other challenges facing the community. The community engagement process often involves organizing convenings with the community and taking time to process and support the requests and expertise of local leaders. Any creation or decisionmaking events or processes should also be completely transparent; frontline communities must be able to trust that programs and policies developed are promoting their economic resilience. 

Key Players

  • Federal Government: Federal agencies can provide a myriad of resources to facilitate economic resilience, including funding opportunities and data collection relating to weather events and sea-level rise. For example, certain agencies, such as the EPA, DOT, FEMA, and HUD may be able to identify and/or provide data relating to climate assessments, floodplain risks, hazardous materials facilities, etc. Additionally, several funding programs offered by federal agencies can help pay for resilience improvements in infrastructure (both private and public) or to support recovery efforts after disasters. Some federal agencies also offer programs that help to enhance economic resilience, such as the Department of Energy’s Green Jobs Training Center, the National Institute of Environmental Health Sciences’ Environmental Career Worker Training Program, and the Energy Information Administration’s Renewable Energy Incentives Program.
  • State Governments: State governments work to create economic resilience within communities through the creation of funding opportunities, as well as the development of programs that enhance resilience. State government entities, like the Departments of Energy or Environment, can support the implementation of green energy transition plans that help to create a more resilient economy. Other state agencies — such as Departments of Transportation and Housing — can help to provide funding and data. These agencies are much “closer to the ground” to address the climate issues that can affect a community. Many states’ planning and economic development agencies help build adaptation and resilience strategies into the legislation they promulgate and resources they offer local governments. By adopting legislation that requires local governments and communities to take adaptation and climate resilience into account, policymakers at the state level can help to ensure that economic resilience is built into a community.
  • Local Governments: Municipal agencies and staff may have direct relationships with local business owners and operators, and thus may be more likely to recognize what is needed to ensure economic resilience in their own communities. Depending upon the agency, specific staff members can help with emergency preparedness, provide population and community asset data, offer assistance in creating an economic development plan, or play a role in land use planning and zoning initiatives. Additionally, city and community departments interact with local businesses regularly for permits, planning, public works, etc. Throughout these processes, local governments can play a role in informing business owners of economic resilience opportunities and programs while supporting their applications for technical and financial support. Additionally, local governments can draft ordinances that establish MWBE participation goals for contractors and subcontractors. Under several federal and state emergency response programs, local governments must comply with MWBE participation targets as a condition for receiving federal funding.
  • Chambers of Commerce: The goal of local chambers of commerce is to “further the interests of local businesses, advocate for the business community, and promote local economic growth.”See footnote 20 As a result, local chambers of commerce can be excellent resources for facilitating small business engagement. Since they are so ingrained in the local community, they can also help share information on opportunities and trainings that promote strategies for economic and community resilience.
  • Banks: Different banks may partner with local governments and small businesses to offer incentives for building a resilient economy, such as reduced interest rates, financial literacy classes, and specific savings accounts. These types of programs can help small businesses stay afloat during extreme weather events that slow business, as well as assist workforce members that are part of a frontline community. In promoting smart financial decisions, banks “can help stabilize the workforce and keep them local while businesses reopen.”See footnote 21 
  • Utility Companies: To facilitate business resilience, micro-grids and off-grid renewable energy sources can be integrated into the traditional grid system. This integration would allow for businesses to continue normal operations during extreme weather events that cause power outages. Additionally, because electricity is essential to a resilient economy, local governments can work with utilities to ensure that critical systems, such as electricity, wastewater, stormwater management, etc. remain functional and resilient. 
  • Nonprofit Organizations: Nonprofit organizations, whether national or local, provide several resources to help build a resilient economy, including funding, toolkits, knowledge, and networking opportunities. Some nonprofit organizations also offer programs for local workforces that help to educate and train employees in at-risk industries to transition to jobs in sectors that are more resilient.
  • Business Owners: Engaging the local business community is vital to creating a plan for a resilient economy. The local workforce and business sector may have knowledge of specific climate impacts that need to be addressed to develop a plan for a resilient economy. Local business owners can also help to identify skills that are most needed in the community to promote economic resilience. Business owners can also help direct employees and community members to potential training resources and develop and facilitate training programs that will build a workforce for emerging climate-resilient businesses. 

Policy Tools

This section describes tools that can and have been used to facilitate the development of economic resilience in regions that are particularly vulnerable to climate impacts. The tools focus on four areas: individual community members, business, statewide plans, and funding.

Tools that Focus on Developing the Economic Resilience of Individual Community Members 

These tools target (1) workforce development (2) hiring policies, and (3) youth engagement

Policymakers can play a role in supporting individuals by offering increased access to job opportunities and small businesses that train and hire members of the community. By prioritizing individuals most at risk of experiencing the economic inequalities associated with climate impacts, programs and policies can ensure that traditionally marginalized residents are given the opportunity to participate in workforce development and training programs that ultimately support the creation of a resilient economy. Local governments and agencies can also implement hiring policies that encourage, incentivize, and/or require that a percentage of a business’s workforce include members of the local frontline community. Community and career training centers and youth groups should be engaged to inform younger residents about resilience planning, help businesses employ local “at-risk” teenagers in jobs that train and promote more resilience-friendly occupations, and educate community youth on the importance of resilience.

Tools that Focus on Developing the Economic Resilience of the Business Sector

Businesses — especially local, smaller businesses — are essential to the resilience of a community’s economy. Unfortunately, they can also be negatively affected by a climate event. As a result, it’s critical to consider the tools available to help facilitate recovery after an emergency event, as well as practices that can help to keep a business open and operational, should a disaster event occur.

Tools for improving business resilience include (1) Comprehensive Economic Development Strategies (CEDS), which are plans to direct economic development in a community in a way that is often greener and more resilient; and (2) Business Continuity Plans that business owners can create to better prepare both employers and employees to act when a climate disruption occurs. 

Tools that Focus on Developing Economic Resilience through Statewide Planning

The incorporation of statewide plans or strategies into a local community resilience plan or program can help to create economic resilience from a top-down perspective. By leveraging state resources and implementing statewide resilience plans, individuals, business, and communities will be (1) better able to recover quickly from a shock; (2) better able to withstand a shock; and (3) in some instances, better able to avoid a shock altogether. This section identifies examples of how statewide planning can be used to promote economic resilience.

Funding Tools for Promoting Economic Resilience

There are a variety of sources that can help fund the realization of these plans, programs, and tools in the real world, including, but not limited to: the federal government, non-profits, private businesses, and local governments. In many cases, funding need not come from one single source — those looking to introduce these strategies can finance their vision through a combination of available and applicable sources. This section identifies potential funding strategies and examples for promoting economic resilience.

 

Tools

Workforce Development and Training Programs

Workforce development and training programs that connect residents to the tools and resources for green careers may be an effective approach to mitigate high levels of existing unemployment while building the foundation for economic resilience. One way to facilitate the growth of a resilient economy is to train workers living in or employed within a specific region in the clean energy sector – especially those workers that have been historically left out of the labor market.

Local Hiring Requirements or Incentives

In addition to providing workforce development and training, state and local policymakers can cultivate partnerships with project developers to create local hiring requirements and incentives for employers and small businesses. These arrangements are often project-specific and promulgated through project labor or community workforce agreements.

Youth Engagement

As the economy shifts toward cleaner, greener, and more resilient jobs, the demand for well-trained people with the ability to work in the sector will continue to grow. Youth training and employment programs are an excellent way to begin education and job-skill training in sector-specific jobs early, thereby better ensuring successful careers. These types of programs often focus on hands-on training that students can participate in over the summer.

Comprehensive Economic Development Strategies

Businesses — especially local, smaller businesses — are essential to the resilience of a community’s economy. Unfortunately, they can also be negatively affected by a climate event. As a result, it’s critical to consider the tools available to help facilitate recovery after an emergency event, as well as practices that can help to keep a business open and operational, should a disaster event occur. This section discusses Comprehensive Economic Development Strategies (CEDS), which are plans to direct economic development in a community in a way that is often greener and more resilient. The U.S. Economic Development Association (EDA) — a Bureau within the U.S. Department of Commerce — oversees the CEDS development program. Regional planning offices create CEDS to develop recommendations for a more prosperous and resilient regional economy. 

Business Continuity Plans

Climate events can have lasting effects on businesses: supply chain disruptions; customer access to storefronts; and infrastructure and property damage. Businesses should enhance their resilience through the development of a business continuity plan that explicitly takes climate change impacts into account. Business continuity plans are risk management tools that business owners create to facilitate the long-term survival of their business by identifying their risks and establishing approaches that either help to avoid risks or direct what actions should be taken in the event that risk is realized. 

Statewide Plans and Programs

State governments and agencies may have access to resources that local governments, non-profits, local businesses, and individuals may not, including funding and financing availability, more staffing and employees available, and pre-existing relationships with federal agencies and/or nationwide organizations. State agencies can connect local experts and stakeholders with data on climate-related impacts, and existing partnerships between state agencies and the federal government can be leveraged to provide additional funding for green infrastructure and clean energy projects. State-level employee experts with knowledge of best practices can also help to create resources for policymakers in localities that do not have this type of access or knowledge.

Funding Tools for Economic Resilience

There are costs associated with implementing or executing each of these economic resilience strategies or tools. Luckily, there are a variety of sources that can help fund the realization of these plans, programs, and tools in the real world, including, but not limited to: the federal government, non-profits, private businesses, and local governments. In many cases, funding need not come from one single source — those looking to introduce these strategies can finance their vision through a combination of available and applicable sources.

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