COP28 Approved Agreement on New “Loss and Damage” Fund for Vulnerable Countries

Context: This article is based on an Editorial “Loss and damage fund approved at COP28 summit: All you need to know” Which was published in the Indian Express. At the 28th Conference of Parties (COP28) being held in Dubai, a loss and damage fund to help vulnerable countries cope with the impact of climate change has been officially launched.

• However, it was first announced during COP27 in Sharm el-Sheikh, Egypt, last year. 

What damage to the climate has been caused by industrialization?

• A High Disruption: The Industrial Era started in 1850, impacting Earth’s natural mechanism for the production and absorption of greenhouse gases. 
  • Greenhouse Gases (GHGs): It comprises methane, nitrous oxide, water vapour, and carbon dioxide (CO2)—with CO2 responsible for most of the global warming. 
• Contribution in Emission of Greenhouse Gases (GHGs):
  • By Developed Nations: Presently, the US, the UK, Russia, Canada, Japan, Australia and the EU are considered to be responsible for 65% i.e. two-thirds of all emissions.
  • Largest Emitter: China is responsible for 30% of global emissions every year.
  • The Scenario of India: India is responsible for only 4% of historical emissions. 

What is the background of the Loss and Damage Fund?

• Suggested by: The Fund was first suggested by Vanuatu in 1991.
• Need of the Fund: A global financial package to ensure compensation to vulnerable nations.
  • It also recognises the world has failed to prevent climate change from happening.
    • The changing climate has impacted lives, livelihoods, biodiversity, cultural traditions, and identities.

What is the concept of loss and damage?

• Classification: Loss and damage is often categorized as either economic or non-economic. 
• Economic Loss and Damage: These are negative impacts that can be assigned a monetary value.
  • Examples: The costs of rebuilding infrastructure that has been damaged due to a flood, and the loss of revenue from agricultural crops that were destroyed due to drought. 
• Non-economic Loss and Damage: These are negative impacts where it is difficult to assign a monetary value. 
  • Examples: Trauma from experiencing a tropical cyclone, loss of community due to displacement of people, or loss of biodiversity.
• Interpretation: Loss and damage means different things to different groups and there is no agreed definition within the United Nations Framework Convention on Climate Change .

What is the extent of loss and damage?

• A High Loss: As per research, 55 vulnerable countries have suffered $ 525 billion combined climate crisis-fuelled losses in the last 20 years. 
• Accelerating Rate: The number is estimated to reach $ 580 billion per year by 2030. According to the IPCC, losses and damages will increase in future as global warming continues to rise. 

What are the operational details of the Loss and Damage Fund?

• Management: Oversight by the World Bank in the initial phase, funded by rich nations and some developing countries.
• Funding: The initial funding is estimated to be $475  million — $100 million (UAE), $275 million (EU), $17.5 million (US) and $10 million (Japan).

What is the significance of the Loss and Damage Fund?

• Climate Justice: The loss and damage fund is a fundamental expression of climate justice.
• A Positive Step: Agreement on this fund is a good thing in recognising inequality as the causes and effects of climate change. 
• Relevant for Further Future Decisions: It also means it cannot be used as a bargaining chip over other crucial parts of these negotiations and other positive steps could now focus on the assessment of progress towards meeting commitments to the Paris Agreement.
  • The Paris Agreement aims to hold warming to 1.5°C to limit further dangerous levels of climate change. 

What challenges and concerns are associated with the Loss and Damage Fund?

• Initial resistance to the World Bank’s role due to fears of increased control by richer nations.
• Lack of clarity on the periodic replenishment of the fund and voluntary contributions. 
• Conditions set for the World Bank’s management, like transparency and potential exit clauses.

Conclusion:

The Loss and damage fund is a critical component of global climate action and climate justice. After agreeing with the Fund, now it’s time for the world to need accessible, timely, and sufficient disbursement of funds to those most affected.