Social impact bonds can finance a green community revolution in the Arctic

Investing in Indigenous-led adaptation could transform the Arctic’s relocation problem.

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Communities such as Kivalina, Alaska, need to relocate, but struggle to fund the funds to do so. Could a special class of bonds be an answer? (Relocate Kivalina)

A village is destroyed. What next? The community rebuilds. What if it happens again? Rebuild again? What about a third time? And who will pay for all this? Climate change is forcing Indigenous communities across the Arctic to answer these questions, and there are no easy answers.

Forced community retreat caused by climate change is a growing phenomenon globally. The World Bank estimates that climate change could force over 140 million people to migrate by 2050. These relocation efforts will cost in the trillions of dollars by some estimates. However most of the funding which has been allocated to deal with climate related challenges has been focused on mitigation, as opposed to adaptation. Further, public funding available for climate change adaptation and mitigation falls far short of anticipated costs.

The Alaska Institute for Climate Justice reports that, “Since 2008, more than 25 million people have been displaced annually due to rapid climate change events.” Arctic Indigenous communities are some of the most dramatically affected by melting permafrost and receding sea ice caused by a changing climate. For some of these communities, who have seen their villages damaged and homelands altered, community retreat may be their only option.

Developing funding streams for relocation forced by climate change is critical for the future of Indigenous communities who need to retreat now. This is also a growing market. As more communities globally are negatively impacted by climate change, there is a greater demand for technologies and solutions that enable the creation of sustainable and climate resilient communities. Social impact bonds are one tool that could help finance these efforts, by partnering private investors, government agencies, technologists and indigenous communities in the building of the climate adaptation field.

Indigenous people have been living for centuries in concert with nature. Arctic peoples often point out that constant adaptation to ‘change’ is simply a part of what they do and who they are. They are the experts in their environment, an expertise that has often been overlooked in the past.

Over the past several years, dozens of architects, designers and innovators have partnered with indigenous communities to create designs for housing and climate adaptation technologies that leverage local knowledge. These designs range from a house with skis for its foundation to a fully off-grid media lab — high tech, but also conceived with Indigenous understanding. However, these blueprints have not yet been deployed at scale because of a lack of funding.

The loss of one’s home is a tragedy, however if village retreat can be done in a way that ensures Indigenous participation and adequate financing, the building of a new village has the potential to be a transformative opportunity. New forms of financing like social impact bonds can make these transformative opportunities possible, by facilitating partnerships between private investors, designers, technologists and local communities. By empowering Indigenous-led innovation in the face of climate migration we can open the door for a new green community revolution.

In past community relocation attempts, three key barriers — lack of funding, leadership and policy — have traditionally hindered a successful retreat and village rebuild. At this moment there is no dedicated funding, point agency, or policy framework to guide communities in need of relocation due to climate change. In a perfect world, governments would have the cash and the consensus to fund and coordinate Indigenous-led relocation projects that take advantage of the latest technology. However, this is not the case, and we’ve seen the limits of what government funding can accomplish. The conversation needs to shift to focus on non-governmental solutions. That’s where social impact bonds have the potential to play a catalyzing role.

The world is not short on capital — $43 trillion of assets is under management in the United States alone. Rather than limit financing discussions to the traditional government players, communities should look to the world of investors to attract new capital for these projects. Social impact bonds are a public-private partnership that allow private investors to front capital for public projects. They have been effectively deployed in cities across the U.S. and Europe as a way to tackle social problems that can be objectively measured. In the creation of a new social impact bond, investors, communities, and governments will partner to set specific project objectives, which if met will create not only social returns for communities but also financial returns for investors. Given the growing trillion-dollar demand for climate adaptation solutions, the potential for return on investment could be significant.

Indigenous communities already have the vision and localized knowledge to adapt to the effects of climate change. Social impact bonds will give communities the financing necessary to achieve their visions. By setting specific goals for community sustainability, Indigenous inclusion, and scientific research, it would be possible to construct projects that would not only make more vibrant communities, but also provide substantial opportunities for testing new technology and developing innovative findings in climate change adaptation.

We need a way to deploy and test Indigenous-led innovations at scale, so we can gain a better understanding of how to leverage this knowledge in all communities that may face relocation. Using social impact bonds to develop ambitious Indigenous-led village development projects could provide a world-class proving ground for corporations, startups and researchers alike who are working in partnership with Indigenous communities to build the climate adaptation space — and helping us to answer the hard question of what to do when climate change forces us to rebuild.

Brittany Janis is a Master of Public Administration candidate at the Harvard Kennedy School. She serves on the HKS Sustainability Working Group. Before attending HKS, Janis was a major gift officer at Environmental Defense Fund

This piece is one of a series of op-eds written by students of the Arctic Innovators Course at the Harvard Kennedy School’s Arctic Initiative. You can read the full series on this site.

The views expressed here are the writer’s and are not necessarily endorsed by the Arctic Initiative or ArcticToday, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary (at) arctictoday.com.