Currently millions of people live in informal settlements in Latin America. They are the most vulnerable to climate change, because generally they occupy the most hazardous locations (e.g. floodplains) and lack adaptive capacity due to their low social and economical means. For several decades, governments in Latin America have implemented different policies towards informal settlements, such as in situ upgrading and relocations. This dissertation studies how governments decide between the implementation of upgrading or relocation practices considering the impacts of floods due to climate change and variability on informal settlements. It is based on the case of Uruguay and its capital city Montevideo. Research consisted on the analysis of government plans concerning informal settlements and climate change, and interviews to both local and national government representatives. The study will show how in Uruguay the decision is based on technical and economic factors, and that national government plays a major role in the decision making processes, while local governments mainly focus on implementation stages. It will also been shown that communities generally do not have a voice in this decision.