The ‘Loss and Damage’ fund was formally agreed to be established in 2013 at 19th Conference of the Parties of the United Nations Framework Convention on Climate Change. It was created to provide financial and technical assistance to economically developing nations to mitigate the loss and damage they incur due to climate change. In this context, loss and damage represents the irreversible consequences of climate change which can’t be mitigated through adaptation efforts such as economic losses, human casualties, and the degradation of ecosystems and cultural heritage.
Development over the years
COP 25 – the Santiago Network for L&D was set up.
COP 26 – the Glasgow Dialogue on finance for L&D was established
COP 27 – UNFCCC’s member states agreed to set up the L&D fund and a Transitional Committee (TC).
COP 28 – TC to prepare recommendations that countries would consider, deliberate on, and potentially adopt.
Challenges faced by L&D Fund
- The fund is expected to be hosted by the World Bank Financial Intermediary Fund for an interim period of four years. World Bank has not yet confirmed its willingness to host the fund. Yet, if it does host, it is expected to charge an exorbitant overhead fee making it difficult for the developing countries to utilize the fund.
- The developed nations, especially the U.S., have remained non-committed about being primary donors as cost for historic pollution so caused. Further they rejected references to the common but differentiated responsibilities (CBDR), equity, and liability in the draft, forcing the fund to rely on their voluntary support.
- Currently there is no indication of the size and no consensus on the structure of the fund yet.
Expected consequences of watering down of L&D fund
- The unwillingness and inaction of the developed nations undermines faith in global climate negotiations and hampers the cooperative spirit.
- The developing nations are worried that their concerns and needs are not adequately addressed by the international community.
- It threatens climate justice and exacerbates the suffering of vulnerable communities in developing nations.
- It may lead to increase in the number of humanitarian crises, such as food shortage, people displacement, and conflict.
- It will also reduce their capacity to address environmental degradation and the loss of vital ecosystems.
- Climate-change-induced instability can have security implications in vulnerable nations.