Amidst the escalating impacts of climate change across the globe, the concept of Loss and Damage (L&D) has gained increasing prominence. Referring to the irreversible and irretrievable impacts of climate change – that is, beyond the realm of adaptation – that pose significant challenges to human well-being, livelihoods, and ecosystems, the urgency to address L&D has become increasingly evident as the repercussions of climate change intensify. Addressing L&D is not merely an imperative for humanitarian reasons; it is also crucial for upholding the principles of climate justice and ensuring a fair and equitable transition to a low-carbon future.
The devastating effects of L&D were particularly pertinent to the recent COP28 climate conference in Dubai, as countries gathered to assess progress towards the Paris Agreement goals and chart a course forward. Suprisingly, the COP28 had a major breakthrough on its first day by establishing an L&D fund to provide financial assistance to countries that have suffered irreversible damage from climate change, such as lost homes, infrastructure, and livelihoods. The adoption of the framework for the fund was met with applause and a standing ovation from delegates. The initial pledges for the fund were also announced on the first day of the conference, with the UAE, Germany, Italy, and France each pledging $100 million, highlighting the shift from politically-charged liability debates to concrete funding mechanisms. The decision was hailed as a historic step and a huge boost for the COP28 conference. Despite this, the complex, highly nuanced nature of L&D demands that these allegations be put into perspective.
Source NRDC Pledge Tracker
Understanding Loss and Damage
The crippling repercussions of climate change extend beyond the immediate disruptions caused by extreme weather events. L&D encompasses a broader spectrum of harm, including irreversible and irretrievable losses that can have profound and long-lasting consequences for individuals, communities, and ecosystems. Emblematically, the physical destruction of infrastructure, homes, and livelihoods is a stark manifestation of L&D caused by climate change. Rising sea levels threaten coastal communities, displacing residents and inundating vital infrastructure. Extreme weather events like hurricanes, floods, and wildfires can devastate entire towns, leaving behind a trail of shattered buildings, lost livelihoods, and disrupted social fabric.
Beyond the physical destruction, climate change also inflicts intangible losses that are often overlooked but nonetheless profoundly impact communities. The loss of cultural heritage, traditions, and ancestral lands can be devastating for indigenous communities. The erosion of biodiversity and the degradation of ecosystems can jeopardise food security, disrupt natural processes, and undermine the resilience of communities.
A holistic approach to risk management encompasses risk assessment, risk reduction, social protection, rehabilitation and recovery, and transformation. Currently, the IPCC estimates that climate change is already causing between 100 and 200 billion dollars in global economic losses annually, but risk financing might be even broader.
Securitisation Aspects of Loss and Damage
The impacts of L&D extend beyond economic losses, the displacement of communities, the loss of livelihoods, and the destruction of heritage can lead to trauma, anxiety, and a sense of loss. Further, extensive and prolonged damage to critical infrastructure such as schools or hospitals can impact communities in deep yet less obvious ways; for example, reducing access to education and healthcare. These intangible losses can have profound consequences for individual well-being, family dynamics, and social cohesion.
In some cases, the impacts of L&D can even lead to conflict and violence, as communities struggle to adapt to the changing environment and compete for scarce resources. The securitisation aspects of L&D thus underscore the need for comprehensive and integrated approaches that address both physical and intangible harm.
The case of Cyclone Idai
In 2019, Cyclone Idai struck Mozambique, Malawi, and Zimbabwe, causing widespread devastation and loss of life. The cyclone's strong winds and heavy rains caused widespread flooding, destroying homes, infrastructure, and crops. The floods also displaced large numbers of people, who were forced to seek shelter in displacement camps.
The impacts of Cyclone Idai were particularly severe in Mozambique, where the cyclone's storm surge flooded the coastal city of Beira. The floods destroyed many homes and businesses in Beira, and the city's infrastructure was severely damaged. The cyclone also caused widespread food insecurity, as crops were destroyed and people were unable to access food and water.
The combination of these factors led to social unrest in Beira. People were desperate for food, water, and shelter, and were angry at the government for its perceived failure to respond to the crisis effectively. This anger and desperation contributed to an outbreak of violence in Beira, as people looted businesses and attacked government buildings.
The violence in Beira was a direct consequence of the L&D caused by Cyclone Idai. The cyclone's impacts created a situation of extreme vulnerability, rendering people more likely to resort to civil disorder. The violence also disrupted the delivery of humanitarian aid, further exacerbating the suffering of the affected population.
Addressing L&D effectively requires a holistic approach that goes beyond traditional disaster relief and recovery efforts. It necessitates a focus on prevention, mitigation, and adaptation strategies that strengthen the resilience of communities and ecosystems. Moreover, it calls for the development of innovative financing mechanisms and risk management tools to support vulnerable populations and ensure equitable access to recovery resources.
Key Components of Loss and Damage Discussion at COP28
The new funding arrangement includes a new fund, the Adaptation and Loss and Damage Facility (ALDF), which will provide funding to support vulnerable countries in addressing L&D. The facility is expected to be operational in 2024. The evolution of the L&D dialogues demonstrates the growing recognition of the need to address this critical issue. As climate change continues to intensify, the need for effective L&D responses will only increase, although any solution arising will only be effective if adequately funded.
The Transitional Committee
The Transitional Committee on the Operationalisation of the New Funding Arrangements and Fund for Addressing L&D (TC) was established by decisions 2/CP.27 and 2/CMA.4 at COP27 and CMA4 respectively. The TC's role is to advise the Conference of the Parties serving as the Meeting of the Parties to the Paris Agreement (CMA) on the operationalisation of the new funding arrangements and the ALDF.
However, from the get-go, the TC faced a number of challenges, highlighting the difficulty of properly driving a comprehensive debate on L&D and reaching satisfying implementation. For instance, the lack of a universally agreed-upon definition of L&D rendered conversations tenuous as the debates around the scope of action of the TC was yet unclear. This has made it difficult to develop clear operational guidelines for the ALDF.
Traditionally, discussions surrounding L&D have been more complex due to their disproportionate impact on developing nations. Developed nations have often resisted providing financial support for L&D, citing concerns about legal liability. Yet despite these challenges, as L&D becomes more prevalent in developed countries as well, the conversation is evolving, with the TC making progress in developing recommendations for the CMA on the operationalisation of the new funding arrangements and the ALDF.
Evolutions at COP28
The landmark deal to help most vulnerable countries pay for the irreversible impacts of climate disaster was agreed on the first day of the COP28. Pledges to the newly established fund reached $700 million from a number of countries, including France, Germany, Italy, Denmark, the UE, and the UAE. The deal is a major win for the UAE in particular, as the country has been harshly criticised for its oil and gas expansion plans. However,, climate justice advocates have criticised the agreement for not specifying the long-term sustainability of the fund.
Nevertheless, the L&D fund is a crucial step in addressing the climate crisis, as the costs of climate change are already reaching unsustainable levels. The ALDF is envisioned to receive contributions from a diverse range of sources, including grants and low-interest loans from both the public and private sectors, as well as innovative funding mechanisms. The World Bank is set to initially manage the fund for four years, despite opposition from developing countries who are wary of its involvement. This concession came with certain conditions attached, such as a requirement for streamlined procedures and a clear exit strategy after four years. The agreement also aimed to address developing countries' concerns about the World Bank's high operating costs, bureaucratic processes, and perceived influence by the United States.
As for the donor pool, the COP28 agreement "urges" developed countries to contribute to the fund, while other nations are only "encouraged". This leaves the door open for richer developing countries like China, the UAE, Saudi Arabia, Qatar, South Korea, and Russia to participate, although with little success so far. Additionally, while the ALDF will be accessible to all developing countries "particularly vulnerable" to climate change impacts, the specific definition of vulnerability – a key point of contention – remains undefined in the COP28 text, thus persisting as a point of ongoing discussion.
However, it is essential that the fund is properly funded and that developing countries have easy and direct access to it. The pledged funding by countries at the COP28 is a mere fraction of the irreversible damage developing nations are currently facing from global warming. As stated above, the World Bank estimates that L&D in developing countries alone could cause as much as 70 billion dollars in economic losses annually, and the IPCC estimate it could reach as high as 2.7 trillion dollars globally per year by the end of the century. With these numbers in mind, the 700 million dollars pledged seems far from meeting expectations.
As such, these pledges are a positive step towards addressing the growing threat of L&D, but more needs to be done. Developed countries need to make much larger pledges and provide grants, not loans, to the L&D fund. They also need to support developing countries in taking action to address the root causes of L&D, such as climate change mitigation and adaptation.
Furthermore, it is disheartening to see that the United States, which has a long history of being the world's largest greenhouse gas emitter and is currently the largest oil and gas producer, has pledged only $17.5 million to the L&D fund. Similarly, Japan – the third-largest economy in the world – has offered a mere $10 million, underscoring a clear lack of engagement with L&D by these major economies. Despite this, the European Union's pledge to provide €225 million over the next five years stands out as a positive step forward.
Other funds
The L&D fund will allow developed countries to increase their financial support for developing nations and join the list of multilateral funds for climate change mitigation and adaptation measures under the UN Framework Convention on Climate Change. Developed countries can enhance their financial support through pledges to the four multilateral funds and the GCF.
Here is a quick rundown of the main multilateral funds:
- The largest multilateral climate fund in the world, the Green Climate Fund, provides both adaptation and mitigation funding to developing countries. It received a total of $32.3 billion through its initial resource mobilisation and two replenishments.
- The Adaptation Fund provides financial support for climate adaptation projects in developing countries. So far, the Fund has received cumulative pledges reaching $1.3 billion and receives funding from proceeds from carbon trading under the Kyoto Protocol.
-The Least Developed Countries Fund provides financial support for adaptation projects in the 46 poorest countries in the world. This fund received $2 billion in cumulative contributions since its creation.
- The Special Climate Change Fund provides financial support for adaptation, technology transfer, mitigation, and economic diversification projects in developing countries, and received a total of $383 million.
Challenges and Next Steps
While the adoption of the ALDF at COP28 represents significant progress in addressing L&D, there are still substantial challenges to overcome to ensure its effective implementation. The lack of a universally accepted definition of L&D impedes the development of clear operational guidelines, while the reluctance of developed countries to provide financial support poses another significant hurdle. Several critical steps remain to be taken to ensure its effective implementation.
Firstly, the TC must finalise the operational guidelines for the ALDF. These guidelines will clarify the fund's purpose, eligibility criteria, and disbursement mechanisms, enabling transparent and equitable access for affected countries.
Secondly, a comprehensive funding strategy for the ALDF is indispensable. The TC is currently working on identifying potential sources of funding, including contributions from developed countries, levies on carbon markets, and new donor mechanisms. The strategy should also outline mechanisms for raising and disbursing funds to ensure the ALDF's long-term sustainability.
With a defined governance structure in place, the ALDF should then establish an elected board to enhance accountability and credibility. This board would be responsible for overseeing the fund's operations, ensuring transparency and equitable decision-making. While the new board will be officially appointed at COP29, it is crucial to lay the groundwork for its formation and empower it to effectively manage the ALDF as soon as possible. This will allow the fund to swiftly respond to the urgent needs of vulnerable nations and demonstrate its commitment to addressing the escalating losses and damages caused by climate change.
Capacity building for ALDF delivery is also essential in addressing the lack of experience in implementing L&D solutions. Training and support programs should be developed to empower national and local stakeholders to effectively utilise ALDF resources and implement mitigation and adaptation strategies.
Further, early action and prevention should be at the forefront of ALDF efforts. By proactively addressing climate risks and strengthening resilience, vulnerable communities can minimise the likelihood of irreversible losses. The ALDF should support initiatives that promote disaster preparedness, infrastructure strengthening, and sustainable land-use practices.
As reiterated in the Draft decision CP.28/CMA, local communities must be empowered to play a central role in developing and implementing L&D solutions. Their knowledge and insights are invaluable in tailoring interventions to local contexts and ensuring cultural sensitivity. Enabling local participation will foster ownership and sustainability of L&D initiatives.
Finally, collaboration and cooperation among stakeholders are paramount to addressing the climate crisis effectively. The ALDF should facilitate partnerships between governments, international organisations, civil society, and scientific communities to share expertise, exchange knowledge, and coordinate efforts. This collaborative approach will maximise the impact of L&D mitigation and adaptation strategies.
The successful implementation of the ALDF hinges on a multi-pronged approach that encompasses the development of operational guidelines, the establishment of a robust funding strategy, the creation of an effective governance structure, capacity building for local stakeholders, a focus on early action and prevention, and fostering collaboration among stakeholders. By addressing these critical aspects, the ALDF can play a pivotal role in supporting vulnerable nations and building a more resilient future for all.
Conclusion
Addressing L&D caused by climate change is a complex and multifaceted challenge that requires a concerted global effort. The creation of the ALDF at COP28 represents, on paper, a significant step forward in recognising the need for dedicated support for vulnerable countries. However, much work remains to be done to ensure that the ALDF is adequately funded, governed in a transparent and accountable manner, and delivers effective solutions to the challenges of L&D.