Will COP27 see progress on 'loss and damage' from climate change?

A family moves to a safe place with their belongings after the flood situation worsened in Munshiganj district, on the outskirts of Dhaka, Bangladesh, July 25, 2020. REUTERS/Mohammad Ponir Hossain

A family moves to a safe place with their belongings after the flood situation worsened in Munshiganj district, on the outskirts of Dhaka, Bangladesh, July 25, 2020. REUTERS/Mohammad Ponir Hossain

What’s the context?

With warming-driven disasters hitting the poor harder, pressure is growing for new sources of global funding to repair the harm

SHARM EL-SHEIKH, Egypt - As large swathes of the planet struggle with climate-inflicted woes, from floods in Pakistan to drought in the Horn of Africa, the thorny issue of how to address "loss and damage" driven by global warming is moving up the political agenda fast.

Nine years ago, U.N. climate negotiators agreed to set up a formal mechanism to tackle loss and damage - but little concrete has emerged from it, beyond a donor-backed effort to boost insurance against weather disasters in developing countries.

With frontline nations like small islands being hit harder, they - supported by climate activists - are pushing for funding and technical help to deal with the destruction they face from worsening floods, droughts, storms, heat and rising sea levels.

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In September, U.N. Secretary-General Antonio Guterres waded into the debate with a controversial proposal for rich governments to tax "windfall" profits by fossil fuel companies, which are making billions of dollars from high energy prices.

The money, he proposed, should be redirected to countries suffering loss and damage caused by climate change, as well as to people struggling with the high cost of food and energy. 

Here's why loss and damage is set to be a hot topic at November's COP27 U.N. climate change conference in Egypt:

What is climate change "loss and damage"?

"Loss and damage" refers to the physical and mental harm that happens to people and places when they are not prepared for climate-driven shocks, or are unable to adapt the way they live to protect themselves from longer-term shifts.

It can occur both from fast-moving weather disasters made stronger or more frequent by warming temperatures - such as floods or hurricanes - as well as from slower stresses like persistent drought and sea levels creeping higher.

A large share of "loss and damage" can be measured in financial terms, like the cost of lost homes and infrastructure.

But there are other "non-economic" losses that are harder to quantify, such as graveyards and family photos being washed away, or indigenous cultures that could disappear if a whole community must move because their land is no longer habitable.

A June 2022 report on 55 economies hit hard by climate change - from Bangladesh to Kenya to South Sudan - found they would have been 20% wealthier today had it not been for climate change and the $525 billion in losses inflicted on them by shifts in temperature and rainfall over the past two decades.

Often the poorest families, including some in richer societies, lack the means to recover what they have lost, particularly as aid flows fail to keep up with growing need.

A man wades through a flooded street following heavy rains brought by Tropical Storm Nalgae, in Kawit, Cavite province, Philippines, October 30, 2022. REUTERS/Lisa Marie David

A man wades through a flooded street following heavy rains brought by Tropical Storm Nalgae, in Kawit, Cavite province, Philippines, October 30, 2022. REUTERS/Lisa Marie David

A man wades through a flooded street following heavy rains brought by Tropical Storm Nalgae, in Kawit, Cavite province, Philippines, October 30, 2022. REUTERS/Lisa Marie David

What help is on offer when loss and damage happens?

Despite ever-louder calls for a global fund to help countries and communities recover from and address loss and damage, discussions on setting one up have proceeded at a glacial pace.

This was mainly due to opposition from rich governments - including the United States, Australia and some European nations - that did not want to be held liable for their historically high greenhouse gas emissions or to give more climate finance.

Instead they focused on providing access to insurance against climate and disaster risks to 500 million people in developing countries - an effort that has been expanded and re-launched at COP27 as the Global Shield Against Climate Risks.

But many climate campaigners say insurance cannot be a lasting answer, with losses expected to soar and perhaps become uninsurable as climate disasters intensify.

Funding needs for loss and damage are expected to run into hundreds of billions of dollars per year by 2030. Humanitarian aid also is unlikely to provide sufficient help.

A 2022 study by anti-poverty charity Oxfam found that the amounts needed for aid in response to weather disasters have skyrocketed in the last 20 years, increasing by more than eight times. 

As demand grows, rich countries have met only just over half of the funding appealed for by the United Nations since 2017, leaving a huge shortfall, Oxfam said.

Aid agencies fear the burden of dealing with growing loss and damage will fall on an already over-stretched international emergency response system that will be unable to cope with increasing demands on its limited resources.

So far, dribs and drabs of loss and damage funding from a few governments - including Austria, Denmark, Scotland, Ireland, Belgium and Germany - add up to little more than $265 million.

Will a global loss and damage fund be set up soon?

Heated discussions over the issue are happening in COP27 in Egypt between vulnerable nations and those who could step up and fill the coffers of such a fund.

But analysts have pointed to a recent softening of former strong opposition by some countries, including the United States.

U.S. climate envoy John Kerry said in late October that Washington sees providing help as a "moral obligation" for developed nations.

Small island states and least-developed countries pushed for a new finance facility to be established at COP26 in Glasgow in 2021 but did not succeed.

Instead, a three-year dialogue on how to finance activities to tackle loss and damage was launched as a compromise.

The Glasgow summit did agree to fund the Santiago Network, a body to build technical expertise on dealing with loss and damage, such as helping countries consider how to move communities away from threatened shorelines.

Ahead of COP27, pressure grew again to establish a loss and damage fund at November's U.N. climate conference, although it is still far from clear that will happen, with the United States still pushing back and preferring to harness existing sources of finance.

"The success of COP27 depends crucially on the United States and other richer nations living up to their responsibilities to meaningfully address loss and damage, including delivering a clear near-term pathway for dedicated and ongoing funding," said Rachel Cleetus, policy director of the climate and energy programme at the Union of Concerned Scientists.

An item on addressing funding streams for loss and damage was added to the official agenda for the summit - something vulnerable nations had pushed for hard - though with the caveat that the outcome of the process, to be concluded no later than 2024, would "not involve liability or compensation".

Saleemul Huq, director of the International Centre for Climate Change and Development in Dhaka who has long advised the poorest nations at U.N. climate talks, urged negotiators to at least agree at COP27 to set up a fund - and then hammer out the details of how it will work at next year's climate summit.

The V20 - a group of finance ministers from 58 climate-vulnerable countries - has meanwhile set up its own small loss and damage fund to test how such a mechanism could help communities. The results are expected to be showcased at COP27.

Meanwhile, the U.N. chief's proposal to tax fossil fuel companies to help pay for loss and damage is garnering support, particularly as oil companies rake in record profits.

Other fundraising suggestions have included levies on airlines and financial transactions. 

"It makes total sense for tax systems to build in a way for people to recover from the harm caused by the planet’s biggest polluters," said Teresa Anderson, global lead on climate justice for ActionAid International.

(Reporting by Megan Rowling; editing by Laurie Goering)

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Extreme weather
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