Unlocking Climate Resilience Through Land Value Capture

Imagine living in a place where climate hazards threaten not just public safety, but the very future of your neighborhood’s value and stability. Battered by repeated flooding or constant wildfire threat, homes and businesses become uninsurable, basic infrastructure deteriorates, companies relocate, and people increasingly move away to seek safety and opportunity.

Cities around the world are facing this reality, and must adapt to the impacts of climate change with purpose and innovation.

Drawing from new research by the Lincoln Institute of Land Policy, this StoryMap illustrates how cities can tackle these challenges head-on, using land value capture to fund essential climate action projects that turn risk into resilience.

Through more than a dozen case studies around the world, explore the dynamic relationship between climate risk and land values, the potential for land value capture to promote climate action, and real examples of how places are using this tool to build a climate-resilient future. ( Jump to the map here. )

What Is Land Value Capture?

Land value capture is based on a simple yet profound premise: public action should generate public benefit.

As cities expand and build new infrastructure, government actions often increase the value of land. The increased land value presents an opportunity to fund future development and climate resilience projects. But how?

Land value capture (LVC), also called land value return, refers to policies that allow a community to recover and reinvest land value increases resulting from public investment and other government actions — creating a source of funding for climate action and other public investments.

When public investments like parks or transit hubs, or green infrastructure and flood mitigation investments, increase surrounding property values, LVC mechanisms such as betterment levies, developer contributions, and charges for building rights ensure that part of this added value is used for community benefit.

These tools ensure that urban growth benefits the entire community, while advancing positive fiscal, social, and environmental outcomes.

Using Land Value Capture to Fund Resilience

While climate risks present significant challenges, cities around the world are beginning to realize that investments in climate adaptation aren’t just about protection – they’re also about potential.

Recognizing the potential for public climate actions to enhance property values and attract new investment, cities globally have developed innovative policy tools to convert some of those property value gains into funding for further resilience measures.

LVC tools provide the mechanisms to transform the land value benefits of climate action into sustainable funding for the challenges ahead. The following examples highlight the diversity of instruments available to advance climate resilience.

Boston, Massachusetts

Located in Boston’s fast-growing Seaport District, the city-owned, 190-acre Raymond Flynn Marine Industrial Park faces significant climate risks — including frequent flooding and the long-term threat of sea-level rise. The cost to flood-proof the industrial park was estimated in 2018 to exceed $200 million.

After considering traditional sources of capital, including grants and municipal bonds, the city realized it could tap into demand for growth in the neighborhood to partially finance the costs of the flood mitigation infrastructure.

Through planned investments in seawalls and other flood mitigation infrastructure, combined with regulatory actions to increase the allowable density of developments in the park, the city significantly increased land values that can now be recovered through the newly established Climate Resiliency Infrastructure Contribution Program (Kim 2024).

As the city allows new development to be built in the industrial park, the developers agree to pay into a fund that will be used to cover the cost of the flood infrastructure.

This approach illustrates how cities can combine strategic urban planning with value capture tools to fund critical climate resilience projects.

Barranquilla, Colombia

With a population of around 1.3 million people, Barranquilla is considered the economic hub of Colombia’s Caribbean region, yet severe flooding threatens the quality of life of its residents.

During extreme rain events, which have become more frequent and intense due to climate change, the area’s natural topography and urban expansion create torrents of stormwater that flood the main downtown streets. These floods, known as arroyos, halt traffic, damage infrastructure and property, and even take the lives of residents.

In response, the city identified the need for a massive investment in building new underground culverts for stormwater management. This required excavating existing streets in the core downtown area of the city to install pipes and culverts, and was estimated to cost around $190 million.

To fund this ambitious project, the city turned to a common land value capture tool that has been used to finance public works projects in Colombia for decades:  the betterment levy (Maldonado, De La Sala, Alterman, Macías, & Silva 2023).

To cover the costs of the investments, owners of the properties that benefit from the flood mitigation infrastructure are charged a certain amount, which varies depending on property type and income.

Given the clear benefits of the projects to individual property owners and their quality of life, the city faced little opposition to the use of betterment levies.

Santa Fe, Argentina

With a population of about 700,000, Santa Fe sits between two major rivers and is highly vulnerable to flooding from rising water levels and extreme rainfall.

Catastrophic flooding events in 2003 and 2007 brought renewed attention to reducing flood risks in the city. In addition to updating its land use plan, creating new flood reservoirs, and investing in drainage and water pump projects, the city focused on reducing stormwater runoff, a major contributor to urban flooding, from individual properties.

Using a type of developer obligation (sometimes also referred to as an exaction or impact fee), the city’s Ordinance 11.959 requires new construction projects, developments, or large renovations to install stormwater retention systems on-site in exchange for municipal approval (Maldonado, De La Sala, Alterman, Macías, & Silva, 2023).

The value generated by the city’s approval for construction or renovation is recovered by the public in the form of a decentralized stormwater retention system that mitigates flooding and adapts to climate change across the city.

In the first six years of this policy, hundreds of buildings installed new stormwater retention systems that had a capacity equivalent to more than 40 flooded street blocks.

The ordinance serves as a blueprint for integrating risk management into urban planning, highlighting how strategic regulatory frameworks can build sustainable, climate-resilient cities.

Turning Risk into Opportunity

The examples above show how cities are already harnessing land value capture tools to finance urban climate action. But public climate action can also boost property values.

New research highlights myriad other ways that public climate action, from green infrastructure to climate resilient urban design, can increase property values in different contexts — opening the door for more places to recover incremental gains in property values for additional public benefit.

With the right strategies, cities can use climate actions to not only safeguard their built environment and their residents, but also attract investment and generate new revenues.

Green stormwater infrastructure elements, such as bioswales and rain gardens that mimic natural systems to capture stormwater and reduce runoff, aren’t just environmental additions that reduce flood risks. They can also boost property values significantly.

In New Haven, Connecticut, a recent study revealed an 8.8 percent premium in home values near bioswales (Cohen, Dietz, & Huang, 2023).

This translates to a substantial $1.38 million in potential new revenue, offering a funding source for further climate resilience initiatives if recovered through a land-based finance instrument. By integrating such climate-forward strategies, communities can link environmental benefits with tangible revenue streams.

In Philadelphia, investing in green stormwater infrastructure has proven effective in boosting property values, with homes near installations appreciating by up to 15 percent, according to a recent Lincoln Institute working paper.

The study examines the impact of a variety of green stormwater infrastructure types — including rain gardens, wetlands, tree trenches (shown here), pervious pavement, green roofs, and cisterns — on nearby home values, and explores alternative financing options the city can use to recover this value in a sustainable and fair manner (Cohen, Huang, & McMillen, 2024).

Buenos Aires, a coastal metropolis bisected by multiple urban streams, suffers from severe flooding that constrains economic activity and development potential.

 

However, recent investments of $338 million in flood defenses have been projected to generate a net land value increase of $379 million across the urban area (Goytia, 2023).

These investments not only stabilize land markets in flood-prone areas, they also increase development potential. A recent study shows that when such flood mitigation investments are combined with zoning changes, the land value increases can be significant.

The example of Buenos Aires demonstrates how strategic flood defenses and land use regulations can enhance both public safety and economic value in vulnerable urban areas.

Copenhagen faces growing risks from intense rainfall, called cloudbursts, which overwhelm drainage systems and cause flooding.

The city’s €1.3 billion Cloudburst Management Plan enhances flood resilience through innovative projects like green corridors, retention basins, and stormwater parks (Goytia, 2023). These features channel excess water while doubling as public amenities, such as parks and community hubs.

By reducing flood risk and adding multifunctional green spaces, the plan is expected to raise property values by €188 million, which could be partially recovered through the use of LVC tools.

The case of Copenhagen illustrates how cities can use climate adaptation investments to make urban environments not just safer, but more vibrant places as well.

Looking Forward

As climate threats like flooding and storms intensify, cities face growing challenges to safeguard life, critical infrastructure, and property values.

From Mumbai to Miami, these risks are reshaping urban landscapes, forcing cities to rethink how to finance essential investments in climate resilience.

Governments should see land value capture as a viable planning and financing tool to support their climate resilience needs. The following section highlights several key themes from recent research that should be considered for mainstreaming LVC as a tool to support climate action.

Land-use planning, markets, and climate risk

Strong land-use regulations and transparent risk information are critical for markets to accurately price climate risks and to ultimately facilitate the use of land value capture tools. Creating these conditions is crucial for ensuring equitable climate adaptation.

In the Nigerian city of Lagos, the informal land market and inequality around resilience make it difficult to price flood risks accurately.

Wealthy areas like Victoria Island benefit from protective infrastructure, while vulnerable communities like Ikorodu remain unprotected.  (Goytia, 2023)

Miami presents a more developed market, where flood risks are priced into property values with discounts of up to 10% for flood-prone properties (Goytia, 2023).

However, the city’s reliance on expensive resilience infrastructure, such as seawalls, places pressure on funding.

Here, land value capture mechanisms offer a way to capture rising property values in protected areas to reinvest in future resilience projects.

Similarly, in Ho Chi Minh City, Vietnam, where persistent flooding affects over 1.5 million residents annually, flood-prone properties see a 7.5 percent price discount, compounded by a 1.5 percent decline with each additional flood event (Goytia, 2023).

Buyers with flood experience are willing to pay a 5.2 percent premium for safer properties, but rapid urbanization in high-risk areas shows the market’s underestimation of long-term risks.

These trends highlight the urgent need for scalable investments in flood management systems to protect both infrastructure and economic resilience​​​.

Equity and engagement

When implementing land value capture policies, local governments must engage the public and address equity concerns to avoid worsening existing spatial inequalities or displacing residents.

Tools like developer obligations often benefit wealthier areas experiencing ongoing investment, potentially neglecting vulnerable communities.

Without a long-term vision and public support, fragmented, property-level adaptation interventions can create isolated safe zones amid unprotected areas. To promote fairness and public acceptance, governments should collaboratively design LVC mechanisms that distribute benefits more broadly and consider exemptions for low-income groups.

When tailored to local contexts, LVC can support equity by redistributing resources, reducing public sector burden, and funding public investments more effectively.

Promising potential

Cities across the globe are already using land value capture tools to finance local climate resilience and mitigation efforts, demonstrating the concrete potential for LVC to accelerate climate finance. Still, more can be done, and practitioners globally are recognizing the potential to innovate new applications of LVC to meet local needs.

A recent survey in Accra, Ghana, for instance, found that 76 percent of built environment professionals agreed that land value capture can be used to finance green infrastructure investments in low-income urban communities (Cobbinah and Korah, 2024).

Land value capture is a powerful instrument for urban resilience, recovering some of the benefits created by public investments and reinvesting them into community resilience.

By integrating equity, engagement, and smart land-use regulation, cities can use LVC tools to transform climate risks into opportunities, creating vibrant, resilient urban spaces that foster economic growth and sustainability.

Explore the Map

Use this map to explore research and case studies from more than a dozen cities around the world — from Accra to Zhengzhou — that are using or evaluating land value capture tools to finance and promote climate action.