Pathways to Resilient Growth: Strengthening Climate Adaptation

A sliver of green land, 21 kilometres long, splits the River Danube in two as it flows through Vienna. Covered by grass and trees, it cools the Austrian capital, offers a haven for biodiversity, and provides a popular recreational space for residents to enjoy bathing, water sports, or simply a barbecue in the sunshine.

But this is not a natural island. It's a feat of human construction, created between 1972 and 1988 when the City of Vienna carved out a relief channel parallel to the main river to strengthen the flood-prone capital's defences. When flooding threatens, barriers are raised and excess water rushes safely through.

The Danube Island is a living example of how long-term investment in resilience against natural hazards can also yield strong economic, social and environmental benefits.

More than one in three people in Europe and Central Asia are highly exposed to rising climate risks such as floods and drought, which damage growth, livelihoods and public finances. The World Bank estimates that if the region's countries fail to adapt, they could lose an average of 6% of GDP by 2050, with some suffering much higher impacts.

The good news is that, contrary to common belief, investing in resilience is not purely a drain on resources. It yields triple dividends. First, it avoids the cost of losses when a hazard hits - if crops are protected from drought, for example, or cities less vulnerable to floods. Second, the economy gains in investment, productivity and jobs. And third, it can provide wider social and environmental benefits, as the Danube Island shows.

"Adaptation and resilience are not just environmental issues - they are core development priorities," said Xiaoqing Yu, the World Bank's Director for the Western Balkans. "Adaptation is not just about reducing vulnerability and managing climate risk. It's about strengthening the foundations and resilience in a way that supports longer-term growth."

Integrated approaches, increased finance

Effective climate adaptation requires integrated approaches where national planning, budgeting and sectoral policies work in coordination rather than in isolation. Investment is crucial, yet countries across Europe and Central Asia face common constraints in mobilizing sufficient finance for adaptation.

"The numbers and the urgency speak for themselves," said Elisabeth Gruber of Austria's Ministry of Finance. "Floods, economic shocks, displacements are all economic costs from climate change, and these costs are rising rapidly."

To tackle these shared challenges, international experts joined policymakers and practitioners from across the region in Vienna on June 10-11, 2026, for Pathways to Resilient Growth: Planning, Financing, and Investing in Climate Adaptation at Scale. Held under the umbrella of the World Bank's Climate Support Facility (CSF) and the Vienna Development Knowledge Center, the event provided an opportunity to exchange practical experiences, drawing directly from the CSF's Western Balkans Plus Program.

Supported by the Austrian government, the program helps countries to move forward on climate action and green growth by bridging the gap between planning and implementation. As of 2024 it had informed nearly $800 million in World Bank lending, supporting critical project design and preparation activities such as upstream analysis and feasibility studies, as well as investment and roll-out.

But the financing challenge remains stark. The Europe and Central Asia region has the world's third-highest adaptation investment needs, yet adaptation finance is the lowest among all regions as a share of GDP. Private sector investment, crucial to scaling up adaptation finance, is still not fully leveraged.

"Many climate adaptation investments generate returns that are comparable to or even higher than other public investments, yet they're often viewed through the lens of cost that has to be incurred," said David Groves, the World Bank's Lead Climate Specialist.

Private sector finance for adaptation also remains low because, compared to climate mitigation investments such as renewable energy, it's harder for investors to quantify financial returns.

There are other barriers to climate adaptation in Europe and Central Asia: governance capacity is often lacking; aging infrastructure is expensive to adapt at scale; the insurance sector is underdeveloped; and citizens and businesses often lack trust that funding is directed to the best use.

Highlighting practical solutions

Drawing on experience from World Bank projects, host country Austria, and participants from around the region, the event highlighted practical approaches to these challenges.

For example, Austria conducted a broad, two-year participatory process with stakeholders across the country to shape its National Adaptation Strategy and National Adaptation Plan, and has identified model regions for climate adaptation.

Poland is developing a pilot project aimed at launching 'resilience certificates' for adaptation finance as a mechanism for channelling private sector investment into nature-based solutions.

A World Bank-supported project in Albania is reforming the system of water resource use and withdrawal tariffs to increase resilience and sustainability. The government has embedded a climate change principle into its investment procedures, so that climate risks are explicitly reflected in feasibility studies, planning documentation, and budgeting.

"It's better to invest before the risk is materialized, as it will cost more later to invest," said Renald Petriti of Albania's Ministry of Finance.

Among adaptation initiatives in Montenegro, the World Bank is supporting a project to revitalize Lake Plav, which is slowly silting up because of land degradation, so that it can realize its huge potential as a draw for recreation and tourism and bring economic benefits to a relatively poor area. A plan to scale up investment will explicitly include adaptation considerations, helping to meet European Union directives.

Petronela Despoiu of Banca Transilvania said the Romanian commercial bank had issued 1.5 billion euros in sustainable bonds in the past three years, and has also established a blue finance product extending loans to micro, small, and medium-sized enterprises in the water sector.

"Climate adaptation is already a material risk in our portfolio, but also an emerging opportunity," she said. As the region faces an increased urgency for climate adaptation and resilience, financing and deploying effective solutions at scale is both a challenge and an opening.