Climate Adaptation Investment and the Community Reinvestment Act

This report was conducted by the Federal Reserve Bank of San Francisco and Harvard University to explore the connection between climate adaptation and resilience and the Community Reinvestment Act (CRA), which encourages banks to invest in and address the credit needs of low- and moderate-income areas and underserved rural areas. The CRA was enacted in 1977 and, according to the Federal Reserve, “requires the Federal Reserve and other federal banking regulators to encourage financial institutions to help meet the credit needs of the communities in which they do business, including low- and moderate-income (LMI) neighborhoods.” This study explores models for developing community resilience investments that may qualify for CRA credits, allowing institutions that don’t traditionally focus on climate adaptation to incorporate resilience considerations while fulfilling CRA requirements.

The study was built on research into CRA statutory authority and administrative rules, semi-structured interviews with 23 experts, and geospatial analysis of overlaps of CRA eligible areas and areas that have had federal disaster declarations in the past 20 years. The ultimate goal of this research is to “provide a basis from which regulated banks, community development organizations and local governments can find common ground in developing models of practice that facilitate society’s collective adaptation to climate change.”

The Community Reinvestment Act (CRA) was implemented to encourage banks to financially invest in and meet the credit needs of areas characterized by communities with low- to moderate-income and historically underserved rural populations. These communities are also some of the most vulnerable to the impacts of climate change. As the report states, community resilience is inhibited when communities lack the resources to adapt, recover from, and prepare for disasters. This resource seeks to draw a connection between investment in low-income communities through CRA-credited initiatives and closing the disproportionate gap between climate impacts and community resilience.


The study begins with an analysis of what considerations and tradeoffs should be determined before investing in adaptation and resilience projects, including feasibility, community interest, and investment equity. It then walks through the workings of the Community Reinvestment Act, including its objectives, how banks are regulated under the CRA, and the types of community investments that can earn banks CRA credits.

The study investigates the hypothesis that (1) a disproportionate number of counties in the contiguous US that have received a disaster declaration in the past 20 years include at least one CRA eligible census tract and (2) the number of counties that received disaster declarations and have CRA eligible tracts will have increased over that time. Analysis proves the first hypothesis, finding among other evidence that 57% of counties that have had disaster declarations over the last 20 years contain at least one CRA eligible census tract. It also found that on average, one in every two people impacted by a disaster in these counties has lived in a CRA eligible tract. This indicates that there is significant overlap between communities in need of financial investment and economic growth and communities affected by extreme weather events, which are increasingly exacerbated by climate change.

The report then proposes suggestions for community investment projects that build climate resilience and simultaneously qualify for CRA credits.


Publication Date: June 2019

Authors or Affiliated Users:

Related Organizations:

  • Harvard University
  • Federal Reserve Bank of San Francisco

Related Toolkits:


Resource Category:

Resource Types:

  • Policy analysis/recommendations


  • Socioeconomic

Go To Resource