Economic: Funding

Overview

Adequate and available funding will be a prerequisite for state and local governments to implement managed retreat strategies. Nationally, there is a perception that retreat can only occur — or primarily occurs — in the aftermath of a disaster or extreme weather event. Part of this narrative is driven by the availability of federal funding in disaster recovery contexts, which are delivered through the Federal Emergency Management Agency’s (FEMA) Hazard Mitigation Grant Program (HMGP) and the U.S. Department of Housing and Urban Development’s (HUD) Community Development Block Grant–Disaster Recovery (CDBG–DR) program. As governments implement a diverse suite of tools in a pre-disaster and more comprehensive fashion, increased types and amounts of funding across all levels of government will be needed. Most managed retreat strategies will require funding — particularly those involving acquisitions, environmental conservation and restoration, and affordable housing and infrastructure investments in receiving communities. Generally, there is insufficient funding for climate adaptation, let alone managed retreat. This lack of funding will be exacerbated by the global coronavirus pandemic because of the crisis’s impacts on federal, state, and local budgets and the economy. 

The section presents a thorough, but non-exhaustive list of funding options and examples that have been used nationally to fund the implementation of different tools for managed retreat and different components of comprehensive strategies. This section includes federal, state, and local funding sources that could be applied in a managed retreat context. This section also includes examples of funding from case study programs and projects featured in this toolkit. Although the focus of this toolkit is on developing proactive or “managed” retreat responses, both pre- and post-disaster sources are included below given the amount of money that flows in a disaster context that can supplement pre-disaster sources. 

Overall, most of the currently available funding sources can be used to support planning initiatives; acquire property for hazard mitigation or open space purposes; and implement projects to restore, conserve, and facilitate the inland migration and higher ground establishment of coastal ecosystems, namely wetlands. This summary, however, reveals gaps in the funding system for managed retreat. In particular, new types of funding will be required for data collection and monitoring, community engagement efforts, and affordable housing, infrastructure investments, and critical services in receiving areas. In addition, federal, state, and local policymakers should assess whether there are opportunities to use existing funding in new ways under current legal and policy authorities, or if more significant reform is needed. 

Practice Tips

Priority and overarching practice tips for funding managed retreat include: 

• Leverage and combine funding and in-kind support from multiple sources to support different components of a comprehensive managed retreat strategy over time: Funding for managed retreat should be viewed holistically. Multiple sources of funding will likely be needed to support different aspects of comprehensive managed retreat strategies, from planning and community engagement efforts to acquisitions, relocation assistance, and ecosystem restoration and conservation. Moreover, given the likely longer-term and phased nature of many adaptation strategies, governments should also evaluate different public and private funding sources over varying time periods. To develop successful, layered funding strategies, governments must be knowledgeable about each potential type of funding, particularly for federal sources — including its purpose, eligible uses, any restrictions or limitations (e.g., timing, future land uses), and reporting, monitoring, and other administrative requirements. For grants in particular, this knowledge can also help governments identify where one type of funding may be used as a match for another. Governments can also evaluate opportunities to provide in-kind support like land or staff time to implement managed retreat strategies (e.g., Los Cerritos Wetlands Restoration and Land Swap, Long Beach, California). Federal and state agencies and regional entities can play important roles in helping resource-disadvantaged or -constrained communities overcome informational and educational barriers to learning about, applying for, and administering a diversity of funding options.
• Create sustainable state and local funding sources and other revenue streams for climate adaptation and managed retreat: Given the competitiveness and limitations of federal funding, particularly in a disaster recovery context, state and local governments will have to evaluate and develop alternative state and local sources where they do not already exist. Local context and community needs will help governments assess what new types of funding (e.g., grants, loans, bonds, taxes) will be more politically feasible and maximize the attainment of priority goals and objectives. Where annual appropriations or consistent revenue streams are available — such as from property, stormwater, or business taxes that support buyout programs like those in Harris County, Texas, the Charlotte-Mecklenburg County region in North Carolina and New York City, and the State of New Jersey, respectively — governments can create predictable sources of funding that will support and sustain community adaptation efforts. Furthermore, to adequately support the consideration and implementation of managed retreat strategies, multiple types of activities should be eligible for funding, in addition to capital projects. For example, local governments and communities, especially in historically resource-disadvantaged areas, are often in need of additional funding to aid them in planning, collecting data, long-term monitoring and evaluation projects (e.g., shoreline change, ecosystem restoration), designing and facilitating community engagement processes, and meeting other administrative needs, such as hiring and training new and existing staff. 
• Evaluate new opportunities to finance managed retreat strategies: Financing managed retreat is an evolving area of study. Nonetheless, governments can work through public-private partnerships, such as with universities and environmental consultants and nonprofits, to evaluate opportunities to finance, among other things, property acquisitions and the conservation and restoration of publicly owned lands. Tools like wetland mitigation banks and Transfer of Development Rights (TDR) programs can create a potential market to finance some components of managed retreat. For example, the Harris County Flood Control District is permanently preserving 910 acres of bought-out land as a “Greens WetBank” for government and private developers that need wetland mitigation credits to offset losses elsewhere. Here, developers will foot the bill for wetland restoration. Similarly, 76 acres of degraded wetlands that are a part of a 154-acre land swap in Long Beach, California will be restored via a mitigation bank. In addition, more than 144,290 acres of rural and resource lands were conserved and protected through the market for development credits created by the King County TDR Program in Washington. As a result, more than 2,400 potential dwelling units have been relocated from rural to urban areas. Despite these examples, more innovation will be needed. In particular, it will be important for governments and other partners to engage in pilot projects, where possible, to ground truth and adapt market theories to meet local context and needs.