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Why climate-change 'loss and damage' will be a hot topic at COP27

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
explainer

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

By Megan Rowling

BARCELONA - As large parts of the planet struggle with climate-inflicted woes, from floods in Pakistan to forest fires in the United States, the thorny issue of how to address "loss and damage" driven by global warming has risen up the political agenda.

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

With frontline nations like small islands being hit harder, they - backed by climate activists - are pushing for funding and other help to deal with loss and damage from worsening floods, droughts, storms, heat and rising sea levels.

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At September's United Nations General Assembly, 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.

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

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 harm and destruction that happens when people and places are not prepared for climate-driven impacts, and have not or cannot adjust 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.

What help is on offer when loss and damage happens?

Despite ever-louder calls for a global fund to assist countries and communities in addressing loss and damage, discussions on setting one up have proceeded at a glacial pace.

This is mainly because of fierce opposition from rich nations - including the United States, Australia and some European countries - that do not want to be held liable for their historically high greenhouse gas emissions or provide more climate finance.

Instead some donor governments have focused on expanding access to insurance in developing countries.

The InsurResilience partnership launched in 2017, for instance, aims to bring financial protection against climate and disaster risks to 500 million people, including small-scale farmers, by 2025.

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 humanitarian 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. 

Humanitarian 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, just the governments of Scotland, Denmark and the Wallonia region of Belgium have specifically committed cash to help with loss and damage, totalling only about $15 million.

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

A tough fight over the issue is expected at COP27 in Egypt between vulnerable nations and those who would be expected to step up and fill the coffers of such a fund.

Small island states and least-developed countries pushed for a 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 is growing again for creation of a loss and damage fund at this year's U.N. climate conference - but it is not yet on the official agenda.

At the U.N. General Assembly in September, the Alliance of Small Island States (AOSIS) - countries among the most vulnerable to sea-level rise and other climate impacts - pushed hard for progress at COP27.

"Having talk shops on this until 2024, by way of the Glasgow Dialogue, does not serve our people who are experiencing loss right now," said Walton Webson, the AOSIS chair from Antigua and Barbuda.

He urged governments to commit to "strong support for loss and damage response finance" at COP27.

U.N. chief Guterres said it was "high time for a serious discussion and meaningful action" on loss and damage, adding he hoped COP27 would take it up "as a matter of climate justice, international solidarity and building trust".

The Climate Vulnerable Forum, a grouping of 55 countries from Asia, Africa and Latin America, have launched a #PaymentOverdue social media campaign to highlight the lack of internationally agreed financial support for communities suffering loss and damage, to promote the sharing of solutions and to raise funds for those worst-affected. 

The V20 - a group of the Climate Vulnerable Forum's finance ministers - has also set up a 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 likely to garner 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.

"The proposals being put forward at the U.N. General Assembly ... show that the funds can be found to help those on the frontlines of the climate crisis, and that there is no reason for rich countries to keep blocking progress,” she added.


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Extreme weather
Climate policy
Loss and damage



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