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The term ‘Loss and Damage’ is the economic and non-economic impacts of climate change, including extreme events and slow onset events, in countries that are particularly vulnerable to the adverse effects of climate change.
Industrialised countries have contributed an estimated 92% of excess historical emissions that responsible for the increasing global warming. But developing countries and small-island nations are paying the price, as extreme weather events cause economic and non-economic losses and damages.
While India has highlighted that L&D finance will be a key negotiation point in COP27, its updated NDC submitted in August 2022 has no mention of L&D. The economic damage and losses in India from climate change is said to be around 1.8% of its GDP annually by 2050.
Those advocating for a loss and damage finance facility (LDFF) believe that at the climate conference COP27, to be held this year in Egypt, it is important to foreground the discussions and establish a funding facility.
Ahead of the 27th United Nations Conference of Parties (COP) to be held in Cairo, Egypt, in November 2022, there are growing demands for a Loss and Damage (L&D) Finance Facility under the United Nations Framework Convention on Climate Change (UNFCCC). Experts tag COP27 as the first climate summit in “the era of loss and damage.”
In 2022, over 119 record-breaking extreme weather events hit developing countries, resulting in billions of dollars of losses. Mongabay-India reported that there’s now an urgency to foreground Loss and Damage at the climate conference COP27.
The Intergovernmental Panel for Climate Change (IPCC) has two definitions for ‘loss and damage’.
The term ‘losses and damages’ refers to the economic and non-economic impacts of climate change, including extreme and slow onset events, in developing countries that are particularly vulnerable to the adverse effects of climate change. It’s destructive, irreversible, and cannot be addressed by mitigation and adaptation measures.
Loss and Damage (upper case), or L&D, is a “political debate under the United Nations Framework Convention on Climate Change (UNFCCC) following the establishment of the Warsaw Mechanism on L&D in 2013” to discuss losses and damages.
For example, Odisha in eastern India frequently witnesses cyclones from the Bay of Bengal, where sea surface temperatures have risen and are likely to increase by 2.0°C -3.5°C by 2100. The state faces sea level rise, intense cyclones, ocean acidification, storm surges, and so on.
This cascades into impacts on, among other things, monsoon activity, losses in fisheries and agriculture, damages to coastal infrastructure.
With improved disaster preparedness, there has been a dramatic reduction in the loss of life. Yet, Odisha continues to suffer from climate impacts, reducing human and ecosystems’ capacity to recover.
These impacts do not occur in isolation, Bharadwaj said. Other socioeconomic factors like poverty, low literacy, social marginalisation increase the risk of survival, food insecurity and livelihood loss.
In her work, she’s found that when livelihoods based on agriculture and fishery are destroyed in Kendrapara in Odisha, people without a social safety net undertake distress migration and end up in situations like trafficking.
Working in inhuman and exploitative conditions creates tertiary impacts for these people, who often suffer from frustration and mental health issues, along with other health and poor sanitation issues. Some of these impacts are incalculable.
“Vulnerable populations are hardly able to recover from one impact and they are hit with another and then another,” Bharadwaj explained. “So, they can’t keep on rebuilding their lives. This is what loss and damage is, and millions of people – as well their ecosystems – are suffering this for no fault of theirs.”
The world is 1.1 degrees Celsius warmer than what it was before industrialisation, and locally, many places have breached that limit too. The IPCC’s sixth assessment report (AR6) noted that losses and damages from climate change will increase rapidly with further warming, in many cases producing risks that people and nature will not be able to adapt to.
Even with the current combined pledges of 193 Parties under the Paris Agreement, the world is on track for over 2.5 degrees Celsius of warming. Near-term actions that limit global warming to 1.5 degrees Celsius, can reduce losses and damages but not eliminate them.
L&D was brought up as a demand in 1991 by the island country of Vanuatu, which was representing the Alliance of Small Island States (AOSIS). Thirty-one years and 26 COPs later, this demand has not been realised.
At the COP26 in Glasgow, the G7, a coalition of 134 developing countries, and China, proposed the Loss and Damage Finance Facility (LDFF), a dedicated stream of finance to specifically address losses and damages.
Zoha Shawoo, associate scientist at Stockholm Environment Institute, said that LDFF could be a separate fund similar to the Green Climate Fund, likely sit within the UNFCCC, and be responsible for channelling loss and damage finance to nations.
The vulnerable countries are asking the industrialised world to finance the LDFF. But the industrialised countries have not initiated L&D discussions within the formal framework of the COP.
Rich, industrialised countries have contributed an estimated 92% of excess historical emissions, causing an increase in global temperatures. But it is the developing and vulnerable countries that are hit the hardest by climate change impacts.
Climate justice is at the heart of L&D. From deflecting blame to shrugging off responsibility and liability, industrialised countries have deployed several delaying tactics to keep LDFF from becoming a reality, L&DC noted.
Fears over strict liability and compensation is a key reason many developed countries have blocked the progress on L&D. Distributing finance on the basis of strict liability would be politically infeasible within the UNFCCC and would also impose burdens on vulnerable countries to prove liability, a brief co-authored by Shawoo noted.
“Instead, it might be more effective to deliver loss and damage finance on the basis of solidarity, whilst also accounting for historical responsibility and the polluter pays principle,” Shawoo told Mongabay-India.
The existing climate finance architecture is not suited to addressing loss and damage, Shawoo said.
While adaptation and mitigation funds help avert or minimise losses, there is no clear mechanism to deal with the third component: addressing loss and damage once a climate catastrophe hits, experts at the World Resource Institute noted.
And humanitarian assistance, Shawoo explained, is geared towards emergency responses within four to six weeks of a disaster. It doesn’t fund longer-term rehabilitation, planned relocation or rebuilding livelihoods following sudden onset events and slow-onset events, or non-economic loss and damage.
A separate mechanism offers the opportunity to design a fund that is fit for purpose and aligned with core principles of accessibility and recipient ownership, Shawoo said.
In September 2022, Denmark became the first nation to allocate $13 million towards L&D. Last week, the European Parliament called for LDFF to be agreed on at COP27 and to secure $100 billion in international climate finance.
The LDFF will ensure a comprehensive response to climate impacts by coordinating, overseeing and providing accountability for the finance and support, over and above climate finance.
L&DC notes that “it could be designed to both rapidly distribute finance for emergency relief (based on parametric triggers) and also to support longer-term actions such as rebuilding or relocation programmes.”
Countries need to do locally led needs assessments to work with communities to determine how much finance would be needed and what specific activities would need to be funded, Shawoo explained.
Bharadwaj said countries need to demand for funding for loss and damage in their Nationally Determined Contributions (NDCs), a formal mechanism within UNFCCC for quantifying global targets and level of finance and support needed to achieve climate ambition and manage climate impacts.
"While India has highlighted that L&D finance will be a key negotiation point in COP27, its updated NDC submitted in August 2022 has no mention of L&D," she said. The economic damage and losses in India from climate change is said to be around 1.8% of its GDP annually by 2050.
“But have they even listed out any measure for loss and damage? No,” Bharadwaj said. “Unless India explicitly identifies these issues in its NDCs, they may not be formally recognised. NDCs must clearly articulate the needs, providing strong arguments for finance they need.”
Shawoo’s latest research, scheduled to be published ahead of COP27, shows it would be rather than a top-down approach, it would be effective to have countries submit their requests for finance with limited conditionalities imposed on how it is utilised.
“Finance that is distributed as grants, particularly small grants that are directly targeted towards and reach grassroots organisations and local communities, are likely to be more effective–especially since they would give local communities greater autonomy and decision-making power over how the finance is utilised,” she said.
Huq said operational details and financial architecture can be negotiated once the LDFF is established. Developing countries, activists and negotiators want an agreement to establish LDFF at the COP27. And they are hoping the industrialised countries don’t block it during negotiations.
(This article was originally published at Mongabay. It has been re-published here with permission.)
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