The devastating floods in Pakistan and historic droughts in Africa this year highlights that loss and damage (L&D)—economic and other losses related to climate impacts—is not a problem of the future, but a present one. The United Nations Framework Convention on Climate Change (UNFCCC) 27th Conference of the Parties (COP27) saw a historic breakthrough agreement to establish funding arrangements to address L&D, which includes an L&D fund – an outcome championed by developing nations for three decades. L&D economic impact is difficult to quantify and even more difficult to manage in developing nations, with unknown and uncertain future economic estimates. There is still a long process ahead before a fund for L&D is operationalized, and there are still many unanswered questions on the arrangements. However, a holistic look at action on L&D through other UNFCCC processes, global initiatives, international courts, and potential involvement of the private sector leaves greater hope for effective remedies and avenues for progress on addressing, minimizing, and averting L&D.
Learn more about loss and damage
Read about the institutional structure and processes for L&D under the UNFCCC and Paris Agreement.
Loss and Damage under the UNFCCC
The COP27 agreement on the L&D fund is important but many questions remain.
Pushing for funding arrangements, that would include a L&D fund, into the late nights and extending negotiations, developing nations endured with one voice at COP27. The agreement on funding arrangements for L&D is significant as it is first of its kind to acknowledge monetary resources to respond to and address L&D for those most vulnerable.
The decision creates a 24-member “transitional committee,” which will provide recommendations and a proposal by COP28, and the funding arrangements and L&D fund potentially will be agreed upon at COP28 in December 2023. The committee will look at “potential sources of funding…including innovative sources,” opening the door for creative financing options along with mobilizing new and additional resources. Countries also asked that the Glasgow Dialogue (a two-year dialogue on funding arrangements for L&D) focus on the L&D agreement from COP27.
There are still a lot of practical questions around the fund that remain unanswered: How much is the fund going to provide and to whom? Where will the money come from? How will Parties contribute to this fund when they aren’t able to meet the $100 billion climate finance goal? There is still a great deal of work to be done before developing nations have access to an L&D fund. Additionally, multilateral climate funds in the past have a reputation of slow operationalization and progress. Read more about the considerations and options for an L&D finance facility.
Santiago Network for L&D: steps forward are clear
The focus on the L&D funding arrangements largely overshadowed an important mandated decision on the institutional framework of the Santiago Network. The Santiago Network is an important tool to connect developing countries with the technical assistance on L&D. Parties at COP27 agreed on the Santiago Network’s secretariat, advisory board, and a network of member organizations, bodies, networks, and experts that will be appointed at COP28 in 2023. This was a mandated decision for COP27 and establishes the structure of the Santiago Network that will support its implementation. Giving leadership positions and platforms to some of the groups most affected by L&D through the Advisory Board is essential for marginalized communities receiving assistance. The Board will have three additional representatives: including one from the women and gender constituency, one from indigenous people’s organizations, and one from the children and youth non-governmental. Nevertheless, continuing funding arrangements for the Santiago Network were not specified, leaving room for discussion at COP28 and beyond on exactly how the Santiago Network will be funded.
Wider efforts on Loss and Damage
Building L&D global initiatives: the Global Shield and Early Warning for All
UNFCCC processes are not the only means to address, minimize, and avert L&D. The G7 and the V20 (‘the Vulnerable Twenty’) formally launched the Global Shield against Climate Risks at COP27, which aims to fix flaws in the humanitarian aid system by improving insurance, risk pooling, and social security systems so that aid comes fast and effectively. New, initial finance pledges total over $200 million. Implementation is meant to begin immediately.
Additionally, the UN Secretary General officially launched the Early Warning for All at COP27 with a $3.1 billion plan to ensure everyone on the planet is protected by early warning systems by 2027.
While the Global Shield and Early Warning for All will kick start global initiatives on addressing L&D, there is still room for increased participation of the private sector and other non-Party stakeholders (civil society, financial institutions, business and industry, non-governmental organizations, local governments, etc.) in other avenues that are still being explored. It is critical to include non-party stakeholders in the solutions going forward for addressing, minimizing, and averting L&D.
Are the courts the future of L&D?
Pacific Island leaders and developing countries are seeking other avenues on L&D outside of the UNFCCC process to draw attention to and seek remedies for the impact that climate change has on their countries. On November 29, 2022, Vanuatu and 15 other countries submitted a draft resolution to all UN member states to kickstart the inclusive consultation process that will lead to a UN General Assembly vote to request an International Court of Justice (ICJ) advisory opinion. While the ICJ has no binding authority, it could give leverage to establish legal avenues for climate litigation either internationally or domestically. The question could ask the ICJ to define the legal consequences for countries that have caused L&D. Additionally, there is also increasing domestic litigation around the world related to climate impacts.
See C2ES’s brief on An ICJ Advisory Opinion on Climate Change: Ten Questions and Answers for more information.
In recent years and at COP27, substantial movement has been made on L&D. However, L&D is a complex issue and must be solved by creative solutions. COP28 will be critical in further defining and clarifying finance arrangements for L&D, and continued collaboration between Parties and non-Party stakeholders is essential for progress on L&D.
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