‘Loss and Damage’, a major COP27 bone of contention

The COP27 summit follows a series of disasters, from floods in Pakistan to drought in China, Africa, and the U.S. West. This has intensified developing country demands for a special "Loss and Damage" fund.

What is loss and damage (L&D)?

• The term ‘losses and damages’ refer 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.

Occurrence of loss and damages:

• Loss and damage occur when the frequency and intensity of existing climate impacts increase to such an extent that countries and communities are not equipped to handle them.
• Their capacity to prepare, cope, recover, recoup or rebuild is no longer there. For example:
  • Shelter seeking more than 30 million people in Pakistan displaced by floods.
  • Relocating communities in Fiji away from coastlines that are underwater because of rising seas.
  • Frequent cyclones in Odisha due to a rise in sea level temperature in the Bay of Bengal region.

How serious is the issue?

• Vulnerable populations are hardly able to recover from one impact and they are hit with another and then another. They can’t keep on rebuilding their lives.
• The World Bank estimates that between 32 and 132 million people could fall into extreme poverty due to climate change, depending on the scenarios.
• Even with the current combined pledges of 193 parties under the Paris Agreement, the world is on track for over 2.5º C of warming.

Present Status:

• Industrialized countries have contributed most of the excess historical emissions responsible for global warming, yet developing countries and small island nations are paying the price.
• The question, of who should pay for those damages and other costs is expected to spark intense debates at COP27.
• Those advocating for L&D finance facilities believe that at COP27, it’s important to foreground these discussions and establish a source of funds.

Climate Funding:

• Climate funding so far has focused on cutting carbon dioxide emissions in an effort to curb climate change.
• Loss and damage funding would be different, in compensating costs that countries can't avoid or "adapt" to.
• But there is no agreement yet over what should count as "loss and damage" in climate disasters - which can include damaged infrastructure and property, as well as harder-to-value natural ecosystems or cultural assets like burial grounds.
• A June report by 55 vulnerable countries estimated their combined climate-linked losses over the last two decades totaled about $525 billion, or about 20% of their collective GDP. Some research suggests that by 2030 such losses could reach $580 billion per year.
• At the COP26 in Glasgow, the G7, a coalition of 134 developing countries, and China proposed the ‘L&D Finance Facility’ (LDFF), a dedicated stream of finance to specifically address losses and damages.
  • LDEF could be a separate fund similar to the Green Climate Fund, likely sit within the UNFCCC, and be responsible for channeling loss and damage finance to nations.

Who will fund the LDFF?

• The vulnerable countries are asking the industrialized world to finance the LDFF. But the industrialized countries have not initiated L&D discussions within the formal framework of the COP.
• At COP26, the S., Canada, and Australia stalled the negotiations, demanding evidence on what the amount of finance needed is and on what the measures are for tackling loss and damage.

Reasons for the Delays:

• Industrialized countries have deployed several delaying tactics to keep LDFF from becoming a reality, for example: Deflecting blame to shrugging off responsibility and liability.

India’s stand:

• India has highlighted that L&D finance will be a key negotiation point in COP27.
• But its updated NDC submitted in August 2022 has no mention of L&D.
• India has to explicitly identify these issues in its NDCs, in order to get them formally recognized.