This paper examines the relationships between climate-related vulnerabilities, adaptation practices, institutions, and external interventions to show the role and importance of local institutions in climate change. The increasing attention to adaptation to climate change has not come with sufficient emphasis on the local nature of climate adaptation and on the role of local institutions and local governance in shaping adaptation practices. This paper presents two research projects on adaptation and institutions at the World Bank which aim to illuminate precisely these existing lacunae in theoretical and practical knowledge about adaptation. Focusing on the linkages between adaptation strategies and institutions, the first study shows the critical role institutions play in determining the nature and outcomes of adaptation strategies in a territorial development context and will try to demonstrate how past decentralized and area-based approaches on local development could be used to strengthen local adaptive capacity and resilience to climate change related risks. The second study focuses on an assessment of the relative costs and benefits of different adaptation responses related to a subset of climate hazards (particularly droughts and erratic rainfall), and the role of institutions in reducing the costs of adaptation.