How can a municipality manage its exposure to climate-related risk?
Managing climate risk comprehensively requires collaboration across areas of specialist expertise and the different levels of the municipality’s organisation in order to ensure that the analysis and assessment of risk factors, the planning of strategies and measures, and decisions on measures, objectives and investment spending are brought together. The steps discussed below provide some ideas on how the management of climate-related risk can be integrated into a municipality’s processes at both the political and administrative levels. The questions provided are intended to promote discussion.
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An important starting point in a municipality’s work to manage its exposure to climate risk is establishing a good understanding of what the concept of climate risk involves. A full understanding of climate risk requires an awareness of the overall challenges resulting from climate change, policies on climate change, technological developments and other climate-related drivers for change.
It is very important at the start of this process to create a good understanding of how climate risk will affect the municipality’s administrative and political organisation (both as a whole and in individual areas) as well as the local community and businesses.
This phase of the process will also involve creating a shared understanding of why it is relevant to put climate risk on the local political agenda. It is also important to make it clear that the municipal council has overall responsibility for both sustainability in the local community and societal safety.
This step of the process does not require new investigations or mapping studies. On the contrary, it may be beneficial to make use of the current level of awareness and to focus on establishing a clear understanding of the challenges associated with climate change. This has the advantage of avoiding the risk of losing focus by moving on too quickly to decisions about what needs to be done. If this approach is followed, this first phase is well suited to ensuring that climate risk becomes part of the local political agenda without the use of extensive resources.
Organising the work
This phase can be organised very simply, but it will be necessary to make some time available for the topic. Information-sharing meetings for local councillors at which climate risk is put on the agenda may well be a suitable way of working.
These meetings can be structured as an open conversation and their objective can be to build an understanding of what climate risk involves and of the ways in which climate risk represents a challenge that the municipality needs to address.
A suitable structure for such meetings would include an introductory presentation on the topic of climate risk by the municipality’s executive officers and/or external experts. It may also be appropriate to distribute some relevant information on climate risk (selected to be relevant to the local situation) in advance of the meetings.
It would be appropriate for an information sharing meeting on climate risk to form part of the process leading up the approval of the municipal planning strategy, the municipal master plan (social element and/or land-use element) and the municipality’s policy on societal safety and preparedness (for example when considering the municipality’s risk and vulnerability (ROS) analysis) or alternatively in connection with consideration of the financial plan/budget. Preparations for such information sharing meetings and subsequent follow-up will be a natural part of the executive management’s responsibilities.
There is no need at this stage for meetings to pass any resolution other than that the meeting takes note of the information presented and/or that the meeting wishes to see further work carried out in order for the local/regional exposure to climate risk to be mapped in more detail.
- What does the municipality recognise as climate risk?
- What role does climate risk play in the municipality’s vision and plans for sustainable local development?
- Does the municipality have a unified overview of the challenges and opportunities associated with climate change?
- What aspects of climate risk are part of the municipality’s general overview of the challenges and opportunities associated with climate change? (See the section What is climate risk)
- Does the municipality have a strategy for the transition to a low-emission society that addresses both the municipality’s own activities and the activities of businesses in the municipality?
- What is the current status of the municipality’s work on adaptation to physical climate risk?
- What factors indicate that climate risk should be moved higher up the local political agenda?
In order to ensure its work on climate risk is based on a sound factual foundation and that there is a good basis for informed decision-making, a municipality needs to map its climate risk. This mapping process must address all the various risk factors and apply both a short-term and long-term perspective, and it must also include more complex sequences of events. Scenario analysis may be a useful tool in this work.
During this phase the municipality will, to the extent practicably possible, map its own risk profile. In doing this it will be able to draw on existing information such as its risk and vulnerability (ROS) analysis or its existing climate and energy plans and can use this to map its overall climate risk profile. When mapping its risk profile a municipality may also uncover the need for additional information and knowledge, and the mapping process may accordingly act as the basis (requirements specification) for supplementary investigations and reports.
A municipality can map its risk profile by detailing relevant climate risk factors as well as by evaluating how different risk factors might affect one another (for example businesses, workplaces, depopulation, land-use planning). The work may also necessitate a consideration of which risk factors and consequences are currently assessed to be less relevant but which may become more important on a longer-term horizon.
Scenarios for climate policy and climate change
Since it can be very difficult to reach any conclusion on the likelihood of a specific risk event occurring, particularly over the long term, it can be appropriate to use scenarios. Scenarios are pictures of future situations based on various ‘packages’ of assumptions about what might happen. In order to map risk it is sensible to look at all possible scenarios and future developments, including worst-case scenarios. The Norwegian government’s new planning guidelines for climate and energy use planning and climate adaptation stipulate that “alternative scenarios that are more challenging than national climate forecasts should be assumed” when municipalities are required to assess the consequences of climate change.
Based on a scenario with a high carbon price, a municipality can evaluate the extent to which its community is exposed to transition risk, for example in relation to companies with a large climate footprint that may be adversely affected by high carbon prices. It is important here to differentiate between exposure and vulnerability: a company with a large climate footprint may nonetheless be well able to tolerate higher carbon prices.
It can be difficult to envisage some scenarios. It may be relevant to include the questions provided for the different industries in a municipality (see "Industries" tab) in a scenario analysis in order to evaluate the effect of climate risk on local businesses.
The Norwegian government’s Climate Risk Commission has recommended in its report Climate Risk and the Norwegian Economy (NOU 2018:17 Full text in Norwegian / Official English Summary) that the Norwegian state should establish and maintain a set of scenarios on matters such as oil and gas prices, CO2 prices and cost trajectories that can be used for stress testing investment spending in the public sector.
- What are the most important physical climate risks facing the municipality, both now and in the future?
- To what extent does the municipality’s maintenance of existing infrastructure and planning of new infrastructure take into account the expected effects of a warming climate (e.g. water treatment, dimensioning of water and wastewater management facilities, location of new buildings/changes in land use)?
- To what extent is the municipality exposed to liability risk (risk of legal proceedings against the municipality) as a result of climate change?
- Which industries and companies in the municipality are exposed to physical climate risk in the form of more frequent extreme weather, changes in weather patterns or increases in sea temperature?
- Which specific industries and companies in the municipality are exposed to transition risk in the form of higher carbon prices (e.g. EUR 55 per tonne for CO2 in 2025), the transition to a circular economy, changes in consumer behaviour, technological innovations that reduce competitors’ climate footprints, falling demand due to reduced activity in fossil-based industries or fossil-driven sectors such as transport?
- Which of the exposed industries are less able to adapt (in response to physical climate risk) or to transition their activities (in response to the risks associated with the transition to a low-emission society) and are accordingly more vulnerable? What role do these industries play in the local economy, and how many jobs do they involve?
- Does land-use planning take into account the risk that industries and businesses that are exposed and vulnerable to transition risk may be adversely affected by this risk, and that this may lead to a reduction in activity levels and depopulation?
- What consequences will the transition to a low-emission society have for both existing and planned local-government infrastructure in terms of its dimensioning and location (e.g. the transition to a circular economy and its consequences for waste management)?
- Has the municipality defined targets in relation to the transition to a low-emission society, e.g. reductions in car journeys? Is it likely that political or public dissatisfaction and opposition will cause difficulties in relation to the implementation of such measures and the achievement of these targets?
- To what extent is climate change in other parts of the world considered to be part of the municipality’s risk profile? Are local businesses exposed to such risk through, for example, supply chains?
- To what extent does the municipality’s existing risk and vulnerability analysis illuminate the municipality’s climate risk profile?
The work carried out by the municipality to map its climate risk profile will provide the foundation for a discussion of how it should respond to the challenges that it faces. The municipality’s work on its planning strategy may provide a good platform for discussing climate risk.
The objective for this phase is to clarify which areas should be prioritised for attention, but it also provides an opportunity to consider dilemmas and conflicts between different targets. One example might be that a development location designed to address the transition to a low-emission society might involve additional development in an existing developed area and/or development close to the coast. It is also important in this phase to discuss how future work will be organised both within the municipality administration and in terms of interaction with residents, businesses, regional authorities etc.
In this phase it should be possible to delineate challenges in relation to the implementation of measures, for example challenges in respect of expertise, capacity or financing.
Discussion in this phase could also address how climate change adaptation and the transition to a low-emission society can be more strongly integrated into the municipality’s work on dialogue and communication. This can be crucial to ensuring good dialogue with residents, preparing the basis for collaboration and ensuring that measures intended to deal with climate risk attract general support in order to reduce exposure to execution risk. Communication on climate risk can also provide a starting point for other forms of involvement and participation by both the public and local businesses, and can expand work on climate risk from ‘paper to people’.
Organising the work
Discussions can take place in political information sharing meetings that preferably represent part of the municipality’s core planning and decision-making processes (the municipal planning strategy, the social element of the municipal master plan, the land-use part of the municipal master plan, the municipal financial plan/budget etc.).
There is a requirement (cf. Section 10-1 of the Planning and Building Act) for all municipalities to produce an updated municipal planning strategy during the first year of the new municipality council electoral term (e.g. in 2020). An assessment of climate risk could thus form part of the basis for a unified local policy on climate change adaptation and the transition to a low-emission society. This also relates to the municipal council’s responsibility to ensure that the municipality has taken steps to provide societal safety and to contribute to sustainable development (cf. the Objectives section of the Planning and Building Act).
The discussion phase can therefore also be a good opportunity to reinforce the municipal planning strategy as a strategic platform for the municipality’s work on managing its exposure to climate risk.
It will often be appropriate in this phase for a discussion paper to be produced that summarises the technical considerations and addresses the challenges and opportunities that climate change represents for the municipality. The main objective for this phase is to establish a shared basis of understanding in order that decisions on which measures should be prioritised can be taken in the next phase.
- Which issues command attention as the most important challenges for the municipality in relation to climate risk?
- What dilemmas does the municipality face when choosing between climate change adaptation measures and strategies aimed at transitioning to a low-emission society?
- What appear to be the municipality’s major challenges in relation to measures to deal with the various types of climate risk?
- How should the municipality organise its work on the management of climate risk, including making use of opportunities for dialogue with businesses?
- How will work on the management of climate risk be integrated into the municipal planning strategy and its consideration of planning and building applications?
- To what extent does the municipality need to carry out more detailed work to map its exposure to climate risk?
In order to ensure that measures that reduce exposure to climate risk are implemented, it is important that the municipality’s strategies and resource allocation are well coordinated. Targets and action plans must be consistent with land-use planning and the municipality’s budget and investment plans. Some municipalities establish a separate climate budget to ensure that good measures are implemented.
The municipality’s discussions of climate risk will provide the basis for the creation of proposals regarding what concrete measures should be prioritised. It is crucial that the municipality’s decisions in this area ensure the availability of resources and mandates for the measures in question to be implemented.
The kind of measures that might be involved can include competence development, changes to the organisational structure, physical measures (infrastructure etc.) and the allocation of financial capacity, as well as strengthening the involvement of stakeholders and resources in the local community.
Decisions will mainly be taken by agreeing financial allocations for physical investment by the municipality (planning work in accordance with the Planning and Building Act) and in connection with approving the financial plan/budget. This means that it will be the responsibility of the Chief Municipal Executive to ensure that the outcome of the municipality’s consideration of climate risk results in concrete proposals for decisions on land-use planning and budgets. In practice, this will mean that the level of priority accorded to the management of climate risk must be considered in conjunction with other considerations. This is where the preparatory work on climate risk and building up understanding and knowledge of climate risk issues will come into effect.
In order for specific measures to be implemented, proposals must also be produced for how the measures will be financed, including the approach and conditions that the municipality will apply in respect of arranging loans to finance investment.
Organising the work
In this phase the Chief Municipal Executive will be responsible for providing the decision-making basis for consideration by the elected councillors. In practical terms, it will typically be the executive officers responsible for land-use planning and for the municipality’s financial planning who carry out the work to ensure that the evaluation of proposals related to climate risk results in agreement on concrete financial allocations and priorities. In this phase it will be crucial that the municipality’s executive management, and particularly the Chief Municipal Executive’s senior management team, is well coordinated.
Some municipalities have started to establish separate climate budgets in order to ensure that concrete climate measures are implemented. For example, the City of Oslo now requires that the City Council can only approve budget plans if they generate reductions in emissions in accordance with the city’s climate strategy. This approach ensures that climate measures are given a high priority in budget negotiations.
- In which locations in the municipality will new building be permitted?
- What infrastructure investment will the municipality undertake?
- Is there sufficient clarity about how physical climate risk and transition risk could affect planned locations and investment spending?
- How will the municipality’s organisation be strengthened in order to manage climate risk (new appointments, competence development, changes to the organisational structure etc.), particularly in relation to risks that affect a number of different sectors, for example transition risk for the business sector, consequences for employment and population growth, consequences for changes in land use and the dimensioning of new infrastructure?
- What tools will the municipality use in order to help local businesses prepare for the transition to a low-carbon society?
- What measures will be implemented to reduce physical climate risk (i.e. to ensure adaptation to climate change)?
- How will the municipality develop its collaboration with and the involvement of local stakeholders in order to manage climate risk?
- What approach should the municipality apply when arranging financing for measures intended to manage climate risk?
Managing climate risk is not a “one-off” process but represents ongoing work that will be integrated into more and more new areas of the municipality’s evaluations and decisions over time.
The transition to a low-emission society and the management of physical climate risk represent significant challenges for Norwegian municipalities. It may therefore be more appropriate to see the management of climate risk as an innovation and learning challenge that needs continuous follow-up in order to ensure that experiences, changes to challenges facing the municipality and new opportunities are discussed. This will ensure that both knowledge and experience can be developed in a way that enables the municipality to be more flexible and agile in the face of changes, which will in turn will help to develop a more robust local community.
Organising the work
In order to ensure continual follow-up, it will be natural for the effect of the measures that have been implemented to be evaluated as part of the municipality’s work to appraise its performance, for example in connection with the municipality’s annual reports. This evaluation might also discuss what requirements need to be addressed in relation to the municipality’s future work on climate risk management.
In order to quantify the results achieved in the follow-up phase, the municipality should develop the capability to use key figures or key performance indicators as a tool for the ongoing evaluation process. The work involved in identifying such indicators will also be a useful tool for strengthening the municipality’s knowledge base (for example through reports or evaluations) and for creating greater understanding of the importance of managing climate risk locally.