Deal Structure Mismatch Stops Private Investors From Adapting Cities, Feds Grapple with Colorado River Emergency, Canadian Wildfire Tech Investments, and More

Are we in a Wile E. Coyote market or a Bugs Bunny market? 

Bear with me, I’ve not lost the plot, I promise. But looking at US stock indices, you’d be forgiven for going a little Looney Tunes yourself. After all, we have an ongoing, highly volatile war in the Middle East that has snarled one-fifth of global oil and liquefied natural gas supply. It has scrambled the distribution of essential agricultural and industrial inputs, from urea to helium. No less an authority than the IMF has said the stop-start conflict is already crimping the global growth rate.

And yet, the S&P 500 index notched a third consecutive record close on Friday, while the Nasdaq achieved a new all-time high. What is going on? Has the market — like Warner Bros’ favorite canine — raced over the cliff and become caught in a temporary state of disbelief before gravity causes it to fall precipitously? Or is it like the floppy-eared Bugs, insouciantly waving off geopolitical risk in favor of US corporate earnings, which have now reached their highest share of GDP since records began?

I don’t know the answer. But I do think there’s a lesson for adaptation professionals worth drawing out from current market behavior: acute events — sudden shocks with plausible, if uncertain, resolutions — are not drivers of market sentiment beyond the very short term. The US-Israel-Iran conflict illustrates this clearly: markets bottomed out 21 trading sessions after the war began, then recovered. The Covid-19 pandemic followed a similar pattern, with the S&P 500 falling from its February 19, 2020 all-time high to a trough of 2,237 on March 23 — a 33-day decline.

If the past is any guide — and with climate change, we know it probably isn't — even a massive climate-related disaster may not move markets the way many expect. A long-feared hurricane landfall on Miami, or a severe drying out of the Colorado River, might barely register in investor behavior. For entrepreneurs and investors, that’s a problem: a pitch built around the next big, scary, multi-billion-dollar weather shock may not be the winning formula for landing clients or earning mandates. Work your way through the chain of reasoning here and you ultimately get to moral hazard. When disaster strikes, the most capable risk transfer actor — central government — swings into action and takes a load of pain off the shoulders of households and businesses alike. 

Where climate change could make a more significant dent in market performance over the medium and long term is through a slow erosion of consumption and demand. In the US economy, at least, the consumer is king. If their spending slows, the market could stumble. However, it often takes time for consumers to adjust their habits to new economic realities –— something that may partly explain the confusing market response to the current crisis.

The implication is that climate change’s macroeconomic effects — higher inflation, rising unemployment, weakening aggregate demand — are more salient to investors than sudden shocks. If this is indeed the case, then adaptation investments that can preserve long-term corporate earnings growth, or expand emerging segments of the economy, may find more willing listeners.

Louie Woodall
Editor, Climate Proof

🔔 A reminder to all readers that I’ll be taking paternity leave shortly, and that the Climate Proof newsletter will continue on a pared-down schedule. Any questions? Email [email protected]

Private investors are shying away from urban adaptation projects because they too often lack clear revenue streams and attractive returns, a new report from the non-profit C40 Cities Climate Leadership Group says.

Cities in emerging and developing economies need US$147bn annually through 2030 for climate adaptation and US$165bn annually through 2050 —  but current investment flows cover only a fraction of that. Notably, private investors are supplying just 3% of adaptation finance needs in the developing world.

The gap persists not because would-be investors are reluctant to invest in adaptation, as many of those interviewed by C40 factor adaptation into their climate investing strategies already. Instead, it is because too few projects meet the threshold for private investment. The non-profit’s analysis of adaptation investments where the private sector has played a role found that these typically have “clear revenue logic” and include “revenue-generating assets”, or are supported by “strong public balance sheets”. These are few and far between, however.

The report, drawing on ten case studies and interviews with institutional investors, identifies four ways to entice private investment into urban adaptation: one, the monetizing of benefit streams from projects through users fees, tax revenues, or land value capture; two, the integration of adaptation components into existing infrastructure that throws off cashflows, like toll roads; three, the de-risking of projects through credit enhancement or green bonds; and four, finding ways to bring the risks associated with these projects in line with commercial investors’ expectations.

C40 also found that many adaptation projects are too small on their own to interest heavyweight investors, and recommends that cities aggregate projects into larger portfolios and pool adaptation with mitigation assets to make them more attractive.

The US Treasury called on the World Bank to scrap its 45% climate finance target, with Secretary Bessent telling the IMF-World Bank Spring Meetings the goal “distorts economic decision making” and distracts it from its “core mission” of poverty reduction. Bessent also pressed the IMF to drop climate change from its country financial health surveillance work, framing both moves as a return to core mandates. (US Treasury)

JP Morgan’s climate advisory unit warns that financial markets are systematically mispricing climate tipping points — abrupt, potentially irreversible Earth System shifts — because traditional valuation tools aren’t up to scratch. A UN Environment Programme survey of 32 global banks found only 5% have somewhat integrated tipping points into risk assessments. The bank recommends institutions conduct scenario planning and tabletop exercises to better understand these risks and their potential impacts. (JP Morgan)

ESG shareholder resolutions filed at US companies dropped 47% in 2026 to 184 proposals, as investors shifted to private engagement with companies amid a hostile regulatory environment. According to Proxy Preview’s 2026 report, there were only 39 climate-related resolutions this cycle, mainly focused on transition plan disclosure and emissions targets. New filings this year targeted AI data center strain on electricity grids and water supplies, and proposals linking executive pay to climate safety metrics. (Proxy Preview)

Europe's top banking supervisor moved to streamline climate risk reporting for lenders, proposing a tiered disclosure framework that cuts requirements for smaller banks. The draft rules introduce three obligation levels based on institution size, and would allow smaller lenders to file a single annual template covering physical and transition climate risks. The supervisor also plans to scrap EU Sustainable Taxonomy-linked supervisory templates entirely. A public consultation runs through July 10, with changes slated to take effect September 2027. (European Banking Authority)

The British Virgin Islands will formally launch the Virgin Islands Climate Change Trust Fund this Tuesday (April 21), a legally established financing mechanism targeting infrastructure protection, coastal defense, and disaster preparedness. The fund is seeded with more than US$5.5mn through the territory’s Environmental Levy. (The Virgin Islands Daily News) 

The Health Action Alliance launched Extreme Weather + Work, a new employer readiness initiative backed by 11 founding members including Google, CVS Health, and Disney. The program aims to bridge a yawning climate preparedness gap among US employers — while more than 80% of US workers experienced at least one weather-related job disruption in the past year, only 4% of employers have assessed the risks their workforce faces. Members of the initiative gain access to peer-learning networks, regional resilience workshops, and tools including Mercer’s Climate Health Cost Forecaster. (Health Action Alliance)

The US Interior Department revealed emergency plans for the Colorado River system on Friday in response to a potential water and energy crisis caused by the region’s extreme drought conditions.

The department is ordering steep cuts to reservoir releases from Lake Powell — one of the system’s two main reservoirs — while diverting water from a separate upstream reservoir to prevent important power infrastructure from failing. Together, the measures are projected to raise Powell’s water level by 54 feet, buying the system another year of operational stability. At stake is the water and power supply for more than 40 million people across seven Western states.

Record low snowpack and a hot, dry winter have pushed the system to a breaking point. Without intervention, Lake Powell could fall below the elevation at which Glen Canyon Dam can generate hydropower as early as July.

However, Interior’s fix comes with its own problems. Lower Powell releases will accelerate the decline of Lake Mead — the system’s other major reservoir — potentially slashing the Hoover Dam's hydropower output by 40% by fall.

President Trump is expected to nominate Cameron Hamilton as Administrator for the Federal Emergency Management Agency (FEMA), filling a leadership vacuum that has left the agency under acting heads for 15 months. Hamilton, a former Navy SEAL, was ousted from the acting role in May 2025 after testifying before Congress that FEMA should not be eliminated — a position at odds with Trump’s stated goal of dismantling the agency. He has since aligned more closely with the administration’s reform agenda, calling FEMA an "overextended federal bureaucracy" that fosters state dependency. (NBC News)

The Supreme Court unanimously ruled that oil companies, led by Chevron and Exxon Mobil, can move Louisiana coastal erosion lawsuits from state to federal court, dealing a setback to more than 40 county-level suits seeking billions in damages. The decision shifts climate liability cases to venues considered less favorable to plaintiffs. Louisiana has lost roughly 2,000 square miles of coastline since the 1930s and is pursuing a US$50bn restoration plan, but its primary funding source — Deepwater Horizon settlement money — is nearly exhausted. (New York Times)

Homeowners insurance instability is widening wealth and racial divides in the US housing market, with climate risk falling hardest on communities least equipped to absorb it, according to a Brookings Institution analysis of Treasury Department, FEMA, and Census data. In majority-Black ZIP codes, premiums rose disproportionately relative to home values between 2018 and 2022 — a cost that low-income buyers may find prohibitive. Low-adaptive-capacity households, meaning those unable to retrofit homes or relocate, face cascading exposure as coverage becomes unaffordable or disappears. (Brookings)

The UK Parliament’s Environmental Audit Committee launched an inquiry into the Treasury’s role in climate and nature policy, examining whether fiscal rules are constraining environmental investment. The cross-party probe will scrutinize how Treasury spending decisions affect the UK’s ability to meet legal climate obligations, whether long-term risks from climate change and biodiversity loss are adequately priced into economic planning, and how far the Treasury has acted on Dasgupta Review on the Economics of Biodiversity. Committee Chair Toby Perkins warned that without Treasury backing, species protection, climate adaptation, and the net-zero transition risk stalling. (UK Parliament)

A survey by the Smart Transportation Alliance (STA) of 177 experts across 27 countries in Europe found that 87% consider their national transport networks highly vulnerable to intensifying climate extremes, while just 13% believe infrastructure is adequately designed to withstand climate emergencies. Nearly 90% of respondents identified preventive maintenance as essential to resilience — a finding the STA frames as requiring sustained EU-level investment. (Smart Transportation Alliance)

Every 10 homes destroyed by climate disaster per 10,000 residents raises homelessness by 1 percentage point, according to a UCLA-led national study published in JAMA Network Open. The finding establishes homelessness as a predictable climate outcome and a legitimate focus of climate policy. (Santa Monica Daily Press)

Canadian early-stage technology investor NorthX Climate Tech is deploying CAD$2.2mn (US$1.6mn) across three British Columbia wildfire technology companies. The follow-on capital investments target CRWN.ai, Nova, and Skyward Wildfire Technologies — each of which addresses a different aspect of wildfire risk.

CRWN.ai will use the capital to deploy up to 500 monitoring devices across transmission corridors in British Columbia, as part of its first full field operation. Nova will expand its aerial fire-mapping platform, advancing from the use of drones to a true multi-platform system spanning helicopters, satellites, and ground sensors. Nova already serves more than 200 clients across North America and Australia.

Skyward is pioneering a technology that allegedly reduces lightning-caused ignitions, Canada’s most destructive wildfire driver. It will use its funding to support the build out of hardware and software for field tests.

NorthX, backed originally by the British Columbia and federal governments, together with Shell Canada, has now committed CAD$52.1mn (US$38mn) across 82 projects.

Ulysses, a San Francisco-based startup, raised a US$38mn Series A round to build networked fleets of autonomous vehicles that operate above and below the ocean surface. The round was led by Andreessen Horowitz, following a US$8mn seed investment led by Pebblebed. Investors include Booz Allen Hamilton, Lowercarbon Capital, and Harpoon. The company is targeting ocean infrastructure monitoring, seagrass restoration, and defense surveillance. (Ulysses)

NanoTech Materials closed a US$29.4mn Series A led by HPI Real Estate & Investments to scale its ceramic-particle coating technology, which is designed to cut building cooling loads by up to 50% and resist extreme wildfire temperatures. The Houston-based company will use the capital to expand its primary manufacturing facility and accelerate commercialization of its Cool Roof Coat, Wildfire Shield, and Insulative Coat product lines. (NanoTech Materials)

Improved short-term temperature forecasts could cut US heat-related mortality by 18% to 25% by 2100 — enough to offset projected climate-driven deaths — according to new research published in PNAS. The University of Arizona-led study combined National Weather Service forecast data, county-level CDC mortality records, and a 2025 survey of professional meteorologists to model three forecasting scenarios across four warming trajectories. The greatest mortality risk arose when forecasts underestimated heat. Researchers warn that declining investment in forecasting infrastructure could reverse those gains, contributing to additional fatalities as extreme heat events intensify. (University of Arizona)

Observational constraints project a ~50% AMOC weakening by the end of this century (Science Advances)

Humidity may amplify the temperature-related health risks in the context of climate change (Scientific Reports)

Prenatal and postnatal droughts interact in shaping cognitive development (Communications Medicine)

Does climate change vulnerability matter for the allocation of adaptation finance? An empirical analysis of donors and instruments over the period 2019-2023 (Agence Française de Développement)

The macroeconomic case for investing in climate adaptation (Grantham Research Institute on Climate Change and the Environment)

Long-term adaptation pathways for Venice and its lagoon under sea-level rise (Scientific Reports)

Thanks for reading!

Louie Woodall
Editor