Loss and damage

The representatives of more than 200 nations agreed on the Loss & Damage Fund after COP27 held at Sharm-el Sheikh, Egypt. ‘Loss and damage’ is a demand made by developing /underdeveloped nations from rich polluters for reparations of damages faced by developing nations due to climate disasters caused by the unchecked carbon emissions of the rich nations. Loss and damage was pushed by G77, an intergovernmental organization of developing nations, which made sure it was placed on the agenda of COP27 at the beginning of the conference.

The idea of loss and damage dates back to 1991 when the Alliance of Small Island States demanded to develop a process to compensate for countries affected by the rise in sea level. Then, it took a solid form of a decision as a result of COP when in 2010, the Loss and Damage Programme was initiated at COP16, leading to an establishment of a body, the ‘Warsaw International Mechanism on Loss and Damage’ at COP19 in 2016. Finally, in the Paris agreement, the inclusion of Article 8, Loss & Damage, became the thematic pillar of the United Nations Framework Convention on Climate Change (UNFCCC).

Developing nations are giving an elated response to the announcement of the Loss & Damage Fund, considering it a breakthrough. The announcement to establish a Loss and Damage Fund is no doubt an outcome of the collective and exerted efforts of the bloc of developing nations. The chair of the Alliance of Small Island States Molwyn Joseph, said in a statement: “The agreements made at COP27 are a win for our entire world”.

The prime minister of Pakistan also hailed it, and tweeted: “The establishment of a loss & damage fund at the UN climate summit is the first pivotal step towards the goal of climate justice. It is up to the transitional committee to build on the historic development”.

Though the establishment of the Loss and Damage Fund is a great step towards climate justice. There are several challenges to reap the fruits of the Loss and Damage Fund and may delay the operation of this fund for which the bloc of developing nations will have to continue their fight and demand for justice.

First of all, 2023 is set as a timeline to operationalize the fund. The negotiations to reduce carbon emissions have been going on for decades to save our planet, but climate disaster events are accelerating with every passing year. The commitments to reducing carbon emissions by developed nations are far from practical steps. In such a scenario, any announcement to establish a ‘Loss and Damage Fund’ without definite strategy to meet the timeline will face similar challenges.

The second challenge is to define a proper mechanism to collect funds. There can be four possible options to collect funds in the ‘Loss and Damage Fund’ from nations. One, the responsibility to share the burden and provide funds will be divided among rich polluters equivalent to the quantity of carbon emissions by rich polluters. This mechanism will be opposed by countries that have the highest carbon emissions as the major chunk of the financial burden will lie on them.

Two, there can be an annual amount fixed to be collected like the Green Climate Fund. The targeted money can be equally shared by all rich nations on an annual basis. This idea will be objected to by nations that have a role in global carbon emissions but are not the top polluters. Three, there will be no fixing of responsibility on any rich polluters to provide any exact amount in the fund. Such a mechanism without fixing a responsibility will develop non-serious behaviour among polluting nations and may undermine the ‘Loss & Damage’.

Another challenge is to decide whether rich nations will contribute to the Loss and Damage Fund only or carbon industries earning profits should be made part of it.

The third challenge is the lack of any punitive measures for industrialized and wealthy nations if they fail to provide funds in the Loss and Damage Fund. The same challenge is being faced by the developing nations to collect $100 billion annually for the Green Climate Fund as was promised by the rich polluters. There is a dire need to develop a political and economic deterrence in the form of sanctions for rich polluters to ensure they contribute to the Loss and Damage Fund.

The fourth challenge will be the mechanism of distribution of funds among developing nations facing the damages caused by climate change catastrophes. The allocation of the amount should focus on practical plans of rehabilitation and reconstruction provided by countries impacted by climate-led catastrophes or distributed according to the magnitude of disasters in those countries.

These are some vague areas that require the attention and efforts of the bloc of developing nations to negotiate and fight further to make ‘Loss & Damage’ a practical step and an optimal outcome of COP27.

The writer is a graduate of University of Oxford in Public Policy. She tweets @zilehumma_1