Loss and damage: Developing Nations at New Disadvantage

The unwillingness of wealthy nations to fulfill their commitments undermines faith in global climate negotiations.

Climate Change Crisis

• As the climate crisis intensifies, two terms are in sharp focus: adaptation and ‘loss and damage’ (L&D).
  • Adaptation: It is the proactive response to climate change, the art of survival using which communities and countries make deliberate choices to prepare for and cope with climate-related challenges.
  • Loss & Damage Funds: L&D represents the irreversible consequences of climate change: impacts that can’t be avoided or mitigated through adaptation efforts. They encompass the real losses that extend beyond monetary value and cut to the core of human rights and well-being. L&D includes economic losses, human casualties, and the degradation of ecosystems and cultural heritage.

Genesis of the L&D fund

• Historic Emission: The call for affluent nations to acknowledge their accountability for historic pollution is more than 30 years old. Historic pollution has elevated the world’s average surface temperature by more than 1 degree Celsius and is currently inflicting damage worldwide, but especially in the poorest nations.
• COP 19: At the 19th Conference of the Parties (COP 19) to the United Nations Framework Convention on Climate Change (UNFCCC) in Warsaw, Poland, in 2013, representatives of member countries formally agreed to establish the L&D fund. It was being created to provide financial and technical assistance to economically developing nations that were incurring L&D due to climate change.
• COP 25: At COP 25, the Santiago Network for L&D was set up, but countries didn’t commit any funds.
• COP 26: Subsequently, at COP 26, the Glasgow Dialogue on finance for L&D was established to continue discussions over the next three years on the fund.
• COP 27: Finally, at COP 27 in November 2022, after intense negotiations, representatives of the UNFCCC’s member states agreed to set up the L&D fund and a Transitional Committee (TC) to figure out how the new funding mechanisms under the fund would operate.
• COP 28: The TC was also to prepare recommendations that countries would consider, deliberate on, and potentially adopt by COP 28.

Impasse at Transitional Committee (TC) meetings 4 and 5

• Bone of Contention of Funds: The fourth meeting of the TC, or TC4, concluded on October 20, 2023, with no clear consensus on operationalising the L&D fund. The principal bones of contention had to do with hosting the fund at the World Bank, the foundational principle of common but differentiated responsibilities (CBDR), climate reparations, and the eligibility of all developing nations for the funds.
• World Bank Financial Intermediary Fund: At the TC5 meeting, developing nations conceded to the fund being hosted by the World Bank Financial Intermediary Fund for an interim period of four years, serviced by a new dedicated and independent secretariat. While the World Bank is yet to confirm that it is willing, let us not forget that it charges an exorbitant overhead fee.
• Non-Commitment by Developed Nations: But the developed nations, particularly the U.S., have remained non-committal about being primary donors to the fund and have rejected references to the CBDR, equity, and liability in the draft.

Multilateralism to volunteerism

• Lack of trust developed and developing countries: The TC5 outcome highlights a profound lack of trust between affluent and emerging economics regarding their historical responsibilities, creating a substantial divide between wealthy and impoverished nations, particularly concerning climate reparations.
• Damage by Developed Nations: The unwillingness of wealthy nations to fulfil intended commitments undermines faith in global climate negotiations and hampers the cooperative spirit necessary to address climate change.
• Issues of Developing Nations: The discontent among developing nations steps from the perception that their concerns and needs are not adequately addressed by the international community, making the path to climate action – and indeed other global issues – even more complicated.
• Watering down of L&D funds: The dilution of L&D funds threatens climate justice and exacerbates the suffering of vulnerable communities in developing nations. These communities have contributed minimally to global ?missions but today bear the brunt of climate change.
• Impact of dilution of funds: The watering down can also increase the number of humanitarian crises, including via food shortage, people displacement, and conflict, and force communities to cope independently with a worsening climate and its consequences.
• Environmental impact: Without adequate L&D funds, there will also be limited capacity to address environmental degradation and the loss of vital ecosystems, which will further worsen environmental crises, causing irreversible harm to the earth.

Way Forward: L&D as a part of climate justice

• Proactive response from developed nations: A successful response to climate change requires us to balance the proactive measures of adaptation with the moral and financial responsibility of addressing the losses and damages that are – regrettably – an inescapable part of a climate-altered world.
• Capability of L&S Funds: The L&D fund was conceived as a critical component of global climate action, recognising that some of the consequences of climate change are irreversible and beyond the capacity of vulnerable nations to handle.
• Climate Justice: So to achieve climate justice, rich countries must meet their obligations to reduce emissions and deliver finance in line with what is fair, and thus uphold the principles of equity, justice, and solidarity in the face of a changing climate.